Just so you know what may be coming, I have spent roughly half of my time in 
the office over the last six weeks negotiating these sorts of requests.  It 
is very time consuming.  My comments below in red.

Best of luck and feel free to call with any issues.

Mark




Louise Kitchen
01/17/2000 02:25 PM
To: Mark Taylor/HOU/ECT@ECT
cc: Justin Boyd/LON/ECT@ECT, David Forster/LON/ECT@ECT 
Subject: Eastern - Summary of their Response to PA/ETA

Please deal with this for me - but my initial thoughts are that we cannot 
address the majority of these.

Thanks

---------------------- Forwarded by Louise Kitchen/LON/ECT on 01/17/2000 
08:22 PM ---------------------------


David Forster
01/14/2000 06:43 PM
To: Louise Kitchen/LON/ECT@ECT
cc:  

Subject: Eastern - Summary of their Response to PA/ETA

I'm running out of time - can you handle?

Thanks,

Dave
---------------------- Forwarded by David Forster/LON/ECT on 14/01/2000 18:41 
---------------------------


Justin Boyd
14/01/2000 11:36
To: David Forster/LON/ECT@ECT
cc: Edmund Cooper/LON/ECT@ECT 

Subject: Eastern - Summary of their Response to PA/ETA

PA

They wish to amend the PA such that:

Enron warrants that their use of the passwords and the Website does not cause 
them to breach any third party rights Does this mean that Enron's use does 
not violate third party rights or Eastern's?  This doesn't really make sense 
to me:  if it is Enron's use then that's our problem and I don't see 
Eastern's concern and if it is Eastern's use that should be their problem, 
not ours - how will we know what arrangements they have in place with third 
parties?  No one else has raised this issue - is this something that is 
particularly of concern in the UK?
they only notify us of unauthorised disclosure or use of passwords upon their 
learning of the same. When they notify us is not an issue - as long as they 
understand that they will be liable for anything that happens with their 
passwords - whether authorized or not.
they can withdraw or amend information provided to Enron from time to time  
What is there in the PA that would prevent them from telling us about changed 
information?

ETA

They do not want to be bound by future terms and conditions imposed by Enron 
(see 1(iii))  This language refers to a variety of language on the site - 
including things like the submission screen, the Mater User's abilities to 
restrict sub-user id's, the long descriptions, etc.  It is simply not 
possible to create a list of every single item on the website that controls 
how the site is used and contracts are created.  This is one they will just 
have to live with.  They have to give their traders the credit to read what 
they are doing and if they don't like it they can stop trading.   
They wish to restrict our use of information to Enron Group companies (see 
last sentence of 2(b))  I think 2(b) already limits our use of the 
information to "Enron" which is defined pretty much as Enron and its 
affiliates.  Are they asking for more than that?  You can point them to 
section 5 which severely limits what we can do with confidential information. 
They feel unable to make the statement in the first sentence of 2(d), since 
they trade through various group company agents on behalf of a BV principal 
EOL is not set up to allow one entity to trade on behalf of another.  How 
would we ever know who our counterparty really was?  If they want to trade 
for several counterparties, they need to fill out a separate PA (and 
separately click on the ETA) for each legal entity.  They should subsequently 
restrict the sub-user id's for each of those entities to trade only the 
products appropriate to that entity.
To establish a tangible audit trail and for verification, they wish to be 
able to verify our paper confirms (see 3(e))  We have agreed that we will 
continue to furnish confirmations where we have a master agreement in place 
that calls for us to send confirms.  I've had a number of counterparties ask 
for this and have explained that even when there is not a master in place, in 
most cases we intend to continue to send confirms.  In fact, it is our 
intention (and the instructions you and I have received from Louise in no 
uncertain terms) that the trading should look as close as possible to its 
current form.  That includes contractual terms and the sending of confirms.  
Having said all that, the commercial people look forward with fondness to a 
time when confirms will become electronic and therefore this language was put 
in the ETA.  I would be surprised if, should we ever reach such a time, we 
would refuse to send confirms to those counterparties stuck in the dark ages 
of "blue ink on dead trees."  Given the frequency with which this on comes 
up, I wonder if future versions of the ETA should omit the offending 
language.
They wish to restructure the indemnity entirely (see 4), such that each party 
is liable for losses suffered by the other due to its own wilful 
default/negligence/omission.  This strikes me as a non-starter.  The best we 
can do is to exclude damage we suffer by reason of our own gross negligence, 
fraud or willful misconduct.  If they want to be without risk, they can 
continue to use the phone.
They wish to have the right to terminate the ETA (see 6(a)), and wish that 
electronic notices be deemed sent when the sender receives notice from the 
system of delivery or failed delivery (see 6(e)).  They can stop trading at 
any time and do not need to terminate the agreement.  We have agreed on rare 
occasions that we will deactivate their password if we receive written notice 
from them requesting deactivation.  I have suggested that they might feel 
more comfortable giving the Mater User ID and password to someone in their 
control group so that they don't have to worry about the trader leaving and 
taking the important password along.  The Master User can always turn off a 
sub-user immediately.  I'm uncomfortable with the delivery issue since I 
usually don't get "notice from the system of delivery" when I send an 
e-mail.  Even if return receipts were always used, I don't know that they 
always work and I wouldn't want the counterparty to be able to prevent our 
giving notice simply by refusing to open our e-mails.  Certainly no one would 
successfully assert that an e-mail notice was effective unless properly 
addressed.  On the other hand, to be practical, if the issue is critical, we 
will not be relying on an e-mail notification in any event and I can 
understand their concern that someone might be on holiday when the e-mail is 
received - not as big an issue with a fax or letter that can be easily opened 
by someone else.

Some of these are more important than others, but there are some key points.  
Please let me know what you think - thanks

In some cases you just have to wait these guys out.  I know the traders are 
anxious to get people online and trading, but remember that the same is true 
on the other side.  Luckily for us, Louise is willing to back us up on this 
and tell our counterparties to just sit back and watch the rest of the world 
get the good prices if they don't like our agreements.  In several cases, 
counterparties who have called with difficult legal departments like this 
ultimately just went ahead and clicked on the thing to start trading.

Justin