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Caroline,
In order to try and meet your timing requirements on your other priority de= al=20 I devoted my time at the end of last week to working on identifying=20 acceptable Anguillan counsel, getting them approved by Jim Derrick and=20 preparing a derivatives legal survey for counsel, which process can normall= y=20 take up to several weeks. Please note my email sent Friday night for the= =20 update on that project. My comments on the latest Union Spring comments ar= e=20 as follows: With respect to item 1, I have made one slight modification for clarity, th= at=20 the new Manager be acceptable "to Party A". With respect to item 2, I have further modified the tax representation to= =20 conform it to the tax documents the counterparty is able to provide by=20 removing references to being able to transact from a location within the=20 United States. With respect to item 3, I have agreed to their change. With respect to item 5, we still require an opinion of counsel. With respect to item 6, the changes are agreed to. =20 With respect to item 7, as I mentioned to you last time we spoke about Unio= n=20 Spring, I cannot agree to their ERISA change. Our outside counsel who is o= ur=20 expert on these issues does not agree the change is acceptable. We need a= =20 citation to an applicable statute or regulation that would exempt the=20 arrangement from the prohibited transactions prohibitions of ERISA. You h= ad=20 indicated you would get them to send their references to a code section so = we=20 could have some new context in which to review the change. As of now I hav= e=20 not received any rational or code section references. With respect to item 8, I have made the change. All other marked changes not mentioned on the list were agreed to. Attached please find a revised blackline draft of the Agreement which=20 incorporates Paul's and my comments. Regards, Brent Hendry =09Caroline Abramo =0903/30/2001 06:01 PM =09=09=20 =09=09 To: Brent Hendry/NA/Enron@Enron =09=09 cc: Fred Lagrasta/HOU/ECT@ECT, Per Sekse/NY/ECT@ECT, Paul Radous/Cor= p/Enron,=20 William S Bradford/HOU/ECT =09=09 Subject: RE: Union Spring Fund Ltd. ISDA hello??? brent- can you please look over and comment on erisa and outside= =20 counsel issues and any others you have.. i want to rap this up monday... no= =20 reason why this has to drag on.... ---------------------- Forwarded by Caroline Abramo/Corp/Enron on 03/30/200= 1=20 06:59 PM --------------------------- From: Paul Radous/ENRON@enronXgate on 03/30/2001 04:35 PM To: Caroline Abramo/Corp/Enron@Enron, Brent Hendry/NA/Enron@Enron cc: =20 Subject: RE: Union Spring Fund Ltd. ISDA Caroline and Brent My comments to items 1, 4, 9 and 10 follow: 1. I am ok with Virginia's proposal 4. Ok 9. I would argue that Union Spring's position actually creates the=20 "administratively burdensome and somewhat silly" situation it nominally see= ks=20 to avoid. My suspicion is that Enron will not, in fact, always be holding= =20 Union Spring's cash. Please refer to the definition of "independent amount= ": (A) =01&Independent Amount=018 means with respect to Party A, the amount s= pecified=20 as such for Party A in each Confirmation, or if no amount is specified, zer= o=20 and means with respect to Party B the amount specified as such for Party B= =20 which may be either increased or decreased from time to time in a=20 Confirmation, which amount as modified shall be the Independent Amount=20 applicable for all outstanding Transactions, provided, however, that in no= =20 event shall Party B=01,s Independent Amount be less than $100,000 if there = are=20 any outstanding Transactions Further, Paragraph 3 determines the amounts of collateral to be exchanged. So, if Enron was out of the money more than the Independent amount, all of= =20 Union Spring's money will be returned. As the transaction moved further in= =20 Union Spring's favor, Enron could be called on to post margin. Assume the= =20 independent amount is $200,000 and Enron was out of the money $230,000. =20 Under Union Spring's $10,000 transfer rounding proposal, Enron would post= =20 $30,000. Under Enron's proposal, Enron would post $100,000. Day 2 the=20 exposure increases to $240,000. Under Union Spring's proposal, Enron would= =20 need to post another $10,000. Under Enron's proposal, no exchange of cash= =20 would be warranted until another $100,000 of exposure had accumulated. It = is=20 precisely because Enron wants to avoid exchanging nominal amounts of cash= =20 that we want the rounding amount to be $100,000. 10. We can increase the guaranty amount to $10MM. Given the expected=20 positions with Union Spring, we don't anticipate that they would ever have = a=20 value at risk in excess of this amount. As you know, Corp. will not provid= e=20 an unlimited guaranty.... -----Original Message----- From: Abramo, Caroline =20 Sent: Thursday, March 29, 2001 11:40 AM To: Hendry, Brent; Radous, Paul Subject: RE: Union Spring Fund Ltd. ISDA can we talk about this asap.. thanks, ca ---------------------- Forwarded by Caroline Abramo/Corp/Enron on 03/29/200= 1=20 12:39 PM --------------------------- Virginia Loebel <VLoebel@WILLOWBRIDGE.COM< on 03/29/2001 11:00:55 AM To: "'Caroline.Abramo@enron.com'" <Caroline.Abramo@enron.com< cc: Michael Franko <MFranko@WILLOWBRIDGE.COM<=20 Subject: RE: Union Spring Fund Ltd. ISDA O.K. Caroline, I think we're just about finished with this. I've marked th= e attached Annex and Schedule and hope the changes are acceptable. You will see that we've accepted virtually all of the changes your counsel had made to the last draft as well as the new language that he inserted. There are = a few points that needed further clarification due to the additional new wording as well as some clean up where previously agreed changes did not appear in the document. A very short re-cap: 1. Since you requested we specifically mention Phil's continued involvement, we've added language to the "Additional Termination Events" that allows for an acceptable replacement manager. This would provide Enro= n an out and also allow Phil to sell the company without all positions going into immediate termination. I think it gives you the flexibility you require while still giving us a little room. 2. We agreed to all the new tax reps you inserted 3. We've deleted reference to providing W8-ECI - this is not applicable for us. We will provide the W8-BEN 4. We had previously agreed that audited annual financials would be available within 150 days versus 120 as in the document. 5. Regarding request for legal opinion. In the past, we've provided copies of our constituent docs. showing we're allowed to enter into these types of trades. This has always been sufficient in the past. We estimate the cost for an off-shore legal opinion to be around $5,000. 6. We generally accepted the changed wording in Eligibility, but deleted the reference to Commercial Entity - we are not a Commercial Entity that uses the underlying product of the trade - like a utility company or a refiner. 7. We need to make the ERISA change previously requested. As written it does not allow even $1.00 of ERISA assets - and we do have these. 8. As requested, we've added Phil's name as the Manager 9. Regarding the Annex, we've accepted the Initial Amount required, but need to discuss the Minimum Transfer Amounts and Rounding - as written, if we (or you), owe $10, we (or you) must wire $100,000. This seems both administratively burdensome and somewhat silly - especially in light of the fact that for your part, you will always be holding at least $100,000 of ou= r cash. 10. Regarding the Enron guarantee - thanks for making some of the changes. I see that the guarantee remains limited to $2 mio., which is something we can live with and will just keep it in mind as we book trades. Let me know your thoughts, Virginia M. Loebel <<ENRON ISDA 3.DOC<< -----Original Message----- From: Caroline.Abramo@enron.com [SMTP:Caroline.Abramo@enron.com] Sent: Friday, March 23, 2001 10:30 AM To: vloebel@willowbridge.com Subject: Union Spring V- give me a call at your convenience 212 702 3910 Thank you for your comments. I am attaching a revised blackline copy of the Schedule to the ISDA Master and Paragraph 13 to the Credit Support Annex for your review. Many of your comments were incorporated either wholly or partially or otherwise modified as a suggested compromise. Please let me know if you have any other comments or questions. Please call me if you would like an explanation of why Paragraph 6(h) of the Schedule is included. (See attached file: 073a ctr (Union Spring - Hedge Fund).doc) Regards, Brent Hendry Senior Counsel Enron Wholesale Services 1400 Smith Street Houston, Texas 77002 Phone: 713 853 7124 Fax: 713 646 3490 << File: 073a ctr (Union Spring - Hedge Fund).doc << - ENRON ISDA 3.DOC << File: ENRON ISDA 3.DOC <<=20
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