I had a brief conversation this morning with John Suttle (Credit) and it 
looks like he's going to insist on the CSA.  We are going to talk tomorrow 
and go through the whole agreement to get the rest of his comments.  While we 
have documentation for transactions entered into prior to execution of a 
master agreement, the extent of their revisions makes me very uneasy.  Many 
of these points are very serious and if they can not agree we will have 
trouble coming to agreement even on the short form documents.  It would be 
helpful if they could explain the changes rather than just sending us a 
mark-up.

Following are my points responsive to their revisions:

Part 1 (a)  The addition of our affiliates has the affect of expanding the 
possible defaults too broadly and we cannot agree to these changes (for 
example, this would mean that if any Enron affiliate went into bankruptcy 
this agreement would be in default).

(g)  This provision provides additional flexibility without any credit risk 
to the other party.  It should remain in place unless IBJ can articulate a 
reason to remove it.

Part 3 The language inserted is much to vague.  Our original version spells 
out exactly what is expected of the parties.  If the documents we listed are 
not acceptable, IBJ should tell us now what would be acceptable and if we 
agree we will put it in the agreement.

Part 4 (f)  By deleting the word "not" in this provision, IBJ is saying that 
payments due to each other with respect to the same transaction will not net 
(i.e. if we are paying fixed and they are paying floating, we each have to 
make the full payment to the other rather than netting the two amounts to one 
payment).  This is not acceptable.

(h) If IBJ will use their NY branch as agent, we should use Enron Corp or ENA.

Part 5 (a) Our suggested language allows the purchaser of an option to 
receive payments due even though technically in default under another 
provision of the agreement.  Our position is that if there are no other 
possible payment requirements due from the purchaser, the option should be 
honored.

(c)  The section we delete requires that the market makers be in the same 
city.  For many markets in which we participate, it is very difficult, if not 
impossible, to find multiple market makers in the same city. 

(e)  The change to 10 business days is much too long.  This means we can not 
have certainty as to the terms of the transaction for two weeks!  We can go 
as high as three days if necessary but even that is beyond common market 
practice.

(g)  Their changes remove the ability to set off against obligations owed to 
multiple Enron companies if they default and only allows set-off with each 
IBJ branch as a separate entity.  This may not be an issue if we will never 
trade or otherwise transact with them in any other Enron company and if we 
will never do business with any other branch of IBJ.  We usually don't like 
to restrict ourselves that way.

(i)  We absolutely insist on the confidentiality of our transactions.  If 
there is some revision to this section they would like we can discuss it but 
wholesale deletion is out of the question.

(j)  As with Part 1 (g) this section adds flexibility to both parties while 
maintaining flexibility within the corporate family.  Given the frequency 
with which Enron moves businesses around within the family, this section is 
important to us.

(k)  This section results from an experience we had with a counterparty that 
went into bankruptcy (and therefore default) while they were in the money.  
We disputed the amount owed and under the terms of the agreement (without our 
revision) we would have owed them interest at their cost of funds - a rather 
high rate given their status as a bankrupt.  We feel the non-default rate is 
more appropriate.

(m)  I can't imagine why they wouldn't want this section included - it 
protects us both.

(n)  You know more about this than I.

Part 6  These are all important issues for us and we can discuss them 
individually if they object for some articulated reason.  If these provisions 
are not included here they will need to be included in each confirmation (a 
significant burden for our back office systems which are not set up for it) 
and we need to know now if they object to any of them.

Other revisions that they have made are acceptable unless Credit objects.  I 
hope this is helpful and sorry to have run on so long.  I'm happy to discuss 
any of these issues at greater length if you want.  It sounds to me like 
IBJ's expectations regarding execution of documents are a bit high given the 
volume and nature of their comments.






	John Viverito@ENRON
	09/05/2000 09:06 PM
		
		 To: Tom Bruce-Jones/LON/ECT@ECT
		 cc: Jonathan.Whitehead@enron.com@ECT, Kevin Cordesman/HOU/ECT@ECT, Steven 
Kleege/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

Tom-

As far as the progress on the ISDA documentation, I am awaiting feedback from 
both legal and credit in Houston.  

Could you provide me with the details of the proposed transaction(s).  I note 
that I have copied Mark Taylor on this correspondence, as I will need to get 
his input regarding our most efficient going forward strategy.

Thanks,

John



	Tom Bruce-Jones@ECT
	09/05/2000 09:36 AM
		
		 To: John Viverito/Corp/Enron@ENRON
		 cc: Jonathan.Whitehead@enron.com, Steven Kleege/HOU/ECT@ECT, Kevin 
Cordesman/HOU/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

John
I have just had IBJ on the phone again asking for a progress report on the 
ISDA docs.  Have we managed to move this forward, bearing in mind Labour Day, 
since he is very keen to commence trading on Monday next.  He suggested that 
he would be comfortable in trading prior to the implementation of the docs 
for these initial trades as per Jonathon's previous comments in past mails.  
Are we comfortable doing this if we cannot resolve the issues on the docs?

They are also very keen to see the draft confirms for the proposed trade 
(Steve, I have just heard from Rob in the vid conf that the proposed volumes 
may prove difficult to take on the books??).  Please advise as to our 
capability so that I can convey this to him in the morning.

Best regards
Tom




From: John Viverito@ENRON on 01/09/2000 02:48 CDT
To: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp>
cc: hirohide.yabuki@ibjbank.co.jp, Jonathan.Whitehead@enron.com, 
kazunobu.maeda@ibjbank.co.jp, teruyo.suzuki@ibjbank.co.jp, 
Tom.Bruce-Jones@enron.com 

Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT  

Dear Mr. Konishi-

Thank you for your comments.  We will attempt to respond to you prior to the 
holiday in the US, but if we are unable to do so, we will respond shortly 
thereafter.

Best regards,

John Viverito



	"Yamato Konishi" <yamato.konishi@ibjbank.co.jp>
	09/01/2000 02:31 AM
		 
		 To: <John.Viverito@enron.com>
		 cc: <Jonathan.Whitehead@enron.com>, "Tom Bruce-Jones" 
<Tom.Bruce-Jones@enron.com>, "teruyo.suzuki" <teruyo.suzuki@ibjbank.co.jp>, 
"Maeda san" <kazunobu.maeda@ibjbank.co.jp>, "hirohide.yabuki" 
<hirohide.yabuki@ibjbank.co.jp>
		 Subject: Fw: IBJ ISDA MASTER AGREEMENT


Dear Mr.Viverito

Attached Word file is ISDA draft amended by our legal desk.
(please take the amended points as our comment on your draft)
Please check it all and kindly reply ASAP.
(CSA is not acceptable as I mentioned you before, and we'll check your
LETTER OF CREDIT after
the schedule is almost agreed)

In your draft, we cannot understand the meaning of "EDGAR" on page4,
so please show us what it is.

We are very hoping to conclude this process rapidly.
So, I very much appreciate it if you could send back your comment before
Holiday in U.S.(4th Sep)
(it's ok if only the rough prospects of concluding ISDA)

Best regards,
Konishi IBJ Tokyo
81-3-3214-1008
----- Original Message -----
From: "Teruyo Suzuki" <teruyo.suzuki@ibjbank.co.jp>
To: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp>
Sent: Friday, September 01, 2000 3:58 PM
Subject: Re: IBJ ISDA MASTER AGREEMENT


> ISDA DraftI_X"?,d`-t,?,?,?,?,?_B-?-O
> ----- Original Message -----
> From: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp>
> To: <John.Viverito@enron.com>
> Cc: <Jonathan.Whitehead@enron.com>; "Tom Bruce-Jones"
> <Tom.Bruce-Jones@enron.com>; "teruyo.suzuki"
<teruyo.suzuki@ibjbank.co.jp>;
> "Maeda san" <kazunobu.maeda@ibjbank.co.jp>
> Sent: Wednesday, August 30, 2000 9:59 PM
> Subject: Re: IBJ ISDA MASTER AGREEMENT
>
>
> > Dear Mr.Viverito
> >
> > Thank you very much.
> > Now we start checking your draft and maybe we can return comment on this
> > Friday.
> >
> > Please be advised following points at this time.
> > 1)Part 6 on the schedule is needed to be deleted.
> >   We think that it's enough if the terms in Part 6 are referred in the
> > individual confirmation.
> > 2)ISDA Credit support annex is not acceptable
> >   Unfortunately, we don't have internal system for concluding CSA with
> > non-financial entity.
> >
> > Please keep support us for concluding ISDA ASAP for our business in near
> > future.
> > If any question, please feel free to contact me.
> >
> > Best regards,
> > Konishi /IBJ Tokyo 81-3-3214-1008
> > ----- Original Message -----
> > From: <John.Viverito@enron.com>
> > To: <yamato.konishi@ibjbank.co.jp>
> > Cc: <Jonathan.Whitehead@enron.com>
> > Sent: Wednesday, August 30, 2000 5:31 PM
> > Subject: IBJ ISDA MASTER AGREEMENT
> >
> >
> > > Dear Mr. Konishi,
> > >
> > > Attached hereto, is the draft ISDA documentation, for your review.
> > > Included are the Schedule, the Credit Support Annex and the Enron
Corp.
> > > Guaranty.
> > >
> > > I apologize for the delay in the preparation and distribution of these
> > > documents.
> > >
> > > We look forward to receiving your comments.
> > >
> > > Best regards,
> > >
> > > John Viverito
> > >
> > >
> > > (See attached file: IBJ Schedule 30.08.00.doc)(See attached file: IBJ
> CSA
> > > 30.08.00.doc)(See attached file: IBJ EC guarantee 30.08.00.doc)
> >
> >
>

 - IBJ Schedule 31.08.00.doc