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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Elizabeth Sager X-To: Brenda Whitehead X-cc: X-bcc: X-Folder: \Elizabeth_Sager_Dec2000\Notes Folders\Sent X-Origin: Sager-E X-FileName: esager.nsf ---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 12/28/99 07:10 AM --------------------------- Stuart Zisman 12/27/99 10:55 PM To: Elizabeth Sager/HOU/ECT@ECT, Rodney Malcolm/HOU/ECT@ECT, archie.malcolm@sympatico.ca cc: David Portz/HOU/ECT@ECT Subject: Draft of Confirmation for Physical Transaction with Merrill (Moosehead) As we discussed, attached is my draft of a confirmation under the Master Energy Purchase and Sale Agreement by and between EPMI and Merrill Lynch Capital Services, Inc. In addition to the comments/questions noted within the Confirmation itself, I have the following thoughts/questions: 1) Note that the Enron Corp Guaranty is currently limited to an aggregate amount of $30,000,000 (this may become an issue late in the day when the folks over at Merrill figure out that this is one of the disadvantages to using a confirm as opposed to doing a sep. transaction with a separate and distinct Enron Corp. Guaranty); 2) Per Section 1.1 of the Master, in the event of any conflicts between the Master and a Confirm for a particular transaction, the Confirm governs; 3) Section 1.4 of the Master Agreement makes reference to a "Qualified Financial Contract" - is that applicable to this Transaction? Might this somehow cause the accountants to treat the Transaction differently?; 4) Do we need to negate the reference to a "Forward Contract" in Section 4.6 of the Master (Elizabeth we spoke about a concern that you had regarding this exact issue); 5) What changes should be made to the Confirm given the agreed to changes in the ISDA (Severability and Notice Update for example); 6) The last sentence of the Master appears to be missing some language. It currently reads "Disallowance of cost pass-through or any unfavorable or any Affiliate of the Non-Defaulting Party shall not constitute a requirement for a change to the terms of this Agreement."; 7) Should we still eliminate the last portion of Section 8.1(ii) of the Master to permit free assignment to an Affiliate (this previously was a big issue given our concern that we might have to assign certain rights to an Affiliate in the event of a bankruptcy). Section 8.1(ii) currently reads: Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party, which consent may be withheld in its sole discretion; provided, however, either Party may, without the consent of (but with notice to) the other Party (and without relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement and all Transactions hereunder as a whole or the accounts, revenues or proceeds hereof as a whole in connection with any financing or other financial arrangements, (ii) transfer or assign this Agreement to an Affiliate of such Party; provided, that such Party's Credit Support Provider issues a Credit Support Document substantially in the form provided in connection with the execution hereof,; 8) The draft of the Confirmation does not make reference to any of the 3 "Facilities". Does it have to for acct purposes even though the only time that it was used was in the sections deal with gas supply (which did not make it into the Confirmation) and Section 6.2 of the prior physical agreement which used to make "Buyer responsible for charges imposed on the delivery of Energy from a given Facility but related to the operation of third party transmission" (this provision is not reflected in the Master and I suspect that Merrill would object strongly to its incorporation); 9) Did we ever determine whether the draft of the Confidentiality Agreement that I prepared was executed by Merrill?; and 10) The Master currently defines Stranded Costs but does not contain the standard provision regarding the same (should this be introduced???)
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