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Enron Mail |
Edmund:
Thanks for your voice mail and sorry for the delay, just a couple of questions and minor points ont eh GTC - In paragraph 1, the usual practice in North America would be for the executed confirmation to control over other evidence. Since online credit derivatives are not traded under our existing master agreements, we need to make clear to the Credit Group that these positions should not be included when they determine their rights to call for collateral under the masters. I'm not familiar with the fraud limitation towards the end of Section 6. Is this particular to credit derivatives? With respect to the third paragraph of Section 9, we need to be aware that these GTC's can be accepted by any EOL user while the ETA must be accepted by the Mater User. It is not entirely clear that all sub-users will have the authority to amend the ETA. Is the purpose of the second sentence to "deactivate" master agreements that might otherwise control the transaction? If so, in other circumstances where we needed to force the GTC to override a master, we have taken additional steps to notify the affected counterparties. (I can't remember if we required that the counterparty execute a side letter or if we just notified them that acceptance of the GTC would acknowledge that the master did not control.) I'm sure you guys have spent untold hours on the definition of Bankruptcy Event, but I do want to point out that under US bankruptcy law it is impossible to have an involuntary bankruptcy dismissed within 30 days. If we actually want the poor unsuspecting Reference Entity to have a chance to have the case dismissed, 90 days might do it (I am told that the various periods for notices and responses prior to the date a hearing may be held add up to more than 60 days). I'm uncomfortable with the use of the term "Month." What would the Effective Date be for a transaction entered into on December 30? You could argue that it is either the last day of February or the first or second day of March. The ambiguity could be resolved by using a number of days and a business day convention. This is probably an issue for all of our derivatives - should we apply a different interest rate to non-US$ payments? It is Mark Haedicke's relatively unwavering policy that US. derivatives trading agreements be subject to arbitration. We rarely submit to the jurisdiction of NY courts unless the counterparty is incorporated outside the US. Unless you have received a special dispensation from Mark, there is some straightforward arbitration language in the ENA financial GTC. Our other derivatives agreements contain confidentiality provisions - have we decided not to include one here for a particular reason? Again. sorry for the delay. I will be here all week and happy to discuss any of these points. Mark Edmund Cooper 02/15/2000 10:29 AM To: "Brown, Gavin" <Gavin.Brown@SlaughterandMay.com< cc: Paul Simons/LON/ECT@ECT, Sanjevwks@SlaughterandMay.com, Mark Dilworth/LON/ECT@ECT, Mark Taylor/HOU/ECT@ECT, David Forster/LON/ECT@ECT, Bryan Seyfried/LON/ECT@ECT Subject: Re: EnronOnline - Credit Product Documentation Dear Gavin, Thanks for the latest drafts of the GTCs. I have spoken with Paul about the comments on the GTCs from Tax in Houston, and I have also spoken with Tax in London, and there are a few small changes to the tax provisions of the GTC which London Tax feel appropriate. I have marked-up the proposed amendments and have also made a few other small tidy-up changes as well. I have made the changes to the US GTC (with collateral) and these changes should be reflected in all the other GTCs EXCEPT that the amended references to "the United States" in Section 11(B) should remain as references to "the United Kingdom" in the non-US and non-Canadian GTCs. Please let me know if this is unclear. Unless you have any comments on these revisions, please could you prepare amended versions of the GTCs in anticipation of any final changes from local counsel. Many thanks, Edmund.
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