Pls see email from IBJ with my comments in red.  I look forward to receiving 
your respective input where indicted.
Thanks heaps to both of you.

Jane McBride

I am also attaching my memorandum to them.

 

----- Forwarded by Jane McBride/AP/Enron on 11/09/2000 03:34 PM -----

	"Teruyo Suzuki" <teruyo.suzuki@ibjbank.co.jp>
	11/08/2000 08:49 PM
		 
		 To: <Jane.McBride@enron.com>
		 cc: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp>
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

Dear Jane,
Reviewing your comments, our current position is as follows.

Part 1

(b) US$50,000,000

Basically our company_fs guideline for the Threshold Amount is US$1,000,000
but it seems very small for significant customers and we can change it to
US$10,000,000.   As this amount is usually agreed in the Master Agreement
with major commercial banks, we hope this is acceptable to you, too.

John - is there any way we can accept this?  I think it is going to be 
difficult to get them to agree so, if you still can't accept it, is there any 
way you can agree to the 10 million limit if at the same time something else 
is changed?

(g)  As for (1), we would like to add _gthe obligations of such resulting,
surviving, or transferee entity hereunder are guaranteed by Enron Corp._h in 
5th line
after _gEnron Corp._h  IBJ could accept to continue the Transactions with
the counterparty when it merges with the other company and becomes
materially weaker if the surviving company is guaranteed by Enron Corp.

Sara - Do you think we can accept this? We would not be agreeing necessarily 
to give a corporate guarantee, but instead would have the option of putting 
one in place to avoid a default.  If the concept is OK on your side, I think 
we should add "hereunder" as indicted above or something to restrict the 
obligations which need to be guaranteed.

Sara, I would also like to add a ")" after "party" at the end of line 4 of 
paragraph (g) of Part 1 of the Schedule.  OK?
 
Regarding (2), please delete it because it refers to Credit Support Annex
which we are not going to enter into for the time being

Sara - the question is whether we just delete the language or replace it with 
something else.  The second option would be better and given the discretion Y 
would have in this situation IBJ should not object provided the drafting 
works. Do you have any ideas of anything which would work within the 
framework of the rest of the schedule and the master?  The final sentence 
should go anyway I guess. 

John - I guess you may need to consider above with Sara.

(h) Agreed.


(k) Agreed.


Part 3

Regarding further document for certification, we can include the following
language.
_gAny certificate or document reasonably requested by the other party
evidencing or certifying that the execution, delivery and performance of
this Agreement by the party requested has been duly authorized_h

I think this sounds OK.

As for annual report, we will revert to you.

John - As you can see from my memo, as a starting point, I have asked them to 
tell us what they have available re financials and will revert when I hear 
back from them to see what you think.

Part 4
(a)  Agreed.

(f) Even if there are 20 Transactions between us which settle on the same
day, our operation can not net the payment of the same currency.  Our system
does not allow the payment netting of more than one Transaction.

John - They want to delete "not" from this provision.  I think we need to 
assume that they are telling us the truth and that they just can't do it.  
The question is then, do we delete "not" or do we delete the entire paragraph 
(f) from Part 4 of the schedule.  Pls let me know what you want to 
do.'         

(h)  New York Branch address

 1251 Avenue of The Americas, New York, NY 10020, U.S.A.

Part 5

(a) When an option buyer who fully paid the premium goes bankrupt, we
believe it will be more practicable that the other party (option seller)
terminate a transaction according to Section 6(a) and pay the amount payable
under Section 6(e), if any, to the option buyer.  If option seller does not
terminate the transaction, it sounds unnatural that the option seller pay
the remaining payment  on each payment date to the receiver of the
defaulting party (option buyer). _@We do not usually include the safety net
provision for a technical default.  Even if payment default due to
operational error, there is ample (three days) grace period for nonpayment
party after receiving the notice of non-payment by the other party.

Sara - what do you think, how flexible do you think we can be on this?  

(e) Agreed.

(g)  I understand the benefit that non-defaulting party could setoff its
Affiliate_fs obligation against defaulting party_fs obligation.    But in
Japan only setoff between the parties who entered into the Agreement is
allowed.   If you know the case that in any country an applicable law
permits to setoff the amount owed by the non-defaulting party_fs Affiliate
against the amount owed by the defaulting party, please let us know.

Sara - any comments?  I am checking whether what they saying about Japanese 
law is true.


(h)   As we should also obtain our Credit Department_fs approval of credit
line for the transferee before agreeing the transfer, we would like to
insert the following words at the end of a new Section 7(c).

_gAnd provided, further, that the transferring party has notified
non-transferring party of the proposed transfer and the non-transferring
party has not objected to the proposed transfer within 20 days of such
notification, it being understood that the sole grounds for objection shall
be the non-transferring party_fs good faith belief that the proposed
transfer would give rise to an adverse tax, regulatory or, legal or internal
credit policy consequences or material credit concerns to the
non-transferring party, or that necessary internal credit approval has not
been granted_h

Sara - As noted in my memo to them, I had thought we may be willing to add to 
the end of this paragraph "and provided that the transfer does not cause any 
adverse tax consequences for the other party in relation to which the 
transferring party is not willing to indemnify the other party."  They have 
asked us to go far further than this now and I am not sure that we should be 
willing to agree to anything after "legal" in line 6 given that the guarantee 
provision should give their credit department comfort.
 
Part 6

We can accept (a), (b) and (e) but cannot agree with (c),(d),(f),(g) and
(h).

Sara - your thoughts?   

If you have any question or uncertainty about the above items, please let
me know.

Thank you for your assistance in this matter.


Teruyo Suzuki
Industrial Bank of Japan
813-3214-3872
813-5200-7427