Re: ISDA Master -ECTRIC- Morgan Stanley

Paul:

It seems to me these types of transactions (at least new ones) could be
covered by an ISDA with some creative confirm work on our part. It's
certainly not necessary for us to wait for ISDA to get its act together (it
may be quite a wait) - we can come up wit our own definitions. The financial
power trades might be something of a stretch but we have never had the
question fully reviewed. I guess this is another matter to keep in mind as
the power pool is restructured: to the extent we have any influence over the
resulting structure, it would be nice if it fit easily into a standard
financial trading structure.

Just random thoughts.

Mark

Paul Simons
11/03/98 12:52 PM
To: Paul Waine/LON/ECT@ECT
cc: Shari Stack/HOU/ECT@ECT, Marie Heard/HOU/ECT@ECT, Edmund
Cooper/LON/ECT@ECT, Mark - ECT Legal Taylor/HOU/ECT@ECT, Lee
Munden/LON/ECT@ECT, Tomas Valnek/LON/ECT@ECT
Subject: Re: ISDA Master -ECTRIC- Morgan Stanley

Paul

Let's get the ISDA in place and then bring in deal types (b) and © if and
when possible.

ISDA have been on the verge of amending the Commodity Definitions since I
arrived at Enron!

I'll leave it to Shari to respond to your points of detail. Thanks.

Paul

Paul Waine
03/11/98 17:34
To: Shari Stack/HOU/ECT@ECT
cc: Paul Simons/LON/ECT@ECT, Marie Heard/HOU/ECT@ECT, Edmund
Cooper/LON/ECT@ECT, Mark - ECT Legal Taylor/HOU/ECT@ECT, Lee
Munden/LON/ECT@ECT, Tomas Valnek/LON/ECT@ECT
Subject: Re: ISDA Master -ECTRIC- Morgan Stanley

Shari, a new question arises re this master. ECTRIC trades following
commodity derivatives with MS: (a) oil swaps (priced in USD), (b) UK
electricity - "EFA" elec. forward agreement (priced in GBP) and © Nordic
power (priced in norwegian kroner). Are all these commodities covered by the
master - at present the latter 2 are probably not covered by an ISDA
commodity definition, although I understand A&O plan to work on these
definitions with interested parties in UK/Europe. How does the ISDA deal with
FX differences - I guess there is a standard approach - GBP and NOK converted
to USD at spot rate for collateral purposes.

Regards

Paul

Shari Stack
28/10/98 19:11
To: Paul Waine/LON/ECT@ECT
cc: Paul Simons/LON/ECT@ECT, Marie Heard/HOU/ECT@ECT, Edmund
Cooper/LON/ECT@ECT, Mark - ECT Legal Taylor/HOU/ECT@ECT
Subject: ISDA Master -ECTRIC- Morgan Stanley

I was forwarded a copy of your email to Marie Heard and Paul Simons dated
10/19/98. In response to your queries:

1. Date of the Agreement: Notes in our file state that "Francesca" in London
advised that the earliest outstanding trade between the 2 counterparts is
Nov. 4 '93. From a legal perspective, it does no harm to leave the date as is
since all it means is that the Agreement is effective as of that day.

2. "Transferable Letter of Credit": ECT's standard is to have "transferable"
L/C's in order to be consistent with the "transfer" language included in our
Master Agreements. The rationale is that if ECT wanted to transfer its
rights/obligations under the Agreement to an Affiliate, we would want the L/C
to be transferable as well. Put another way - having a non-transferable L/C
would be at cross purposes with having a transferable Agreement.

Also, we in Houston were not aware that ECTRIC does not normally use
"transferable" L/C's. Perhaps this should be made clear to whomever does
ECTRIC's documentation in the future.

In any case, can you pls let me know whether you are happy for "transferable"
to remain in or whether I should go back to MS and ask for it to be
deleted.

3. Name of Guaranteed Party: Agree to change; Marie will have a new first
page of the Guarantee prepared and forwarded to you.

4. Guarantee from MS: The normal procedure is for them to send us their
signed Guarantee when they return our execution copies. The form, though, has
already been agreed and Marie will send you a copy for your information.

5. Collateral: I have discussed this with Paul Simons. As I understand it,
you have concerns whether in the event of the insolvency of MS, ECTRIC could
redeem cash or US T-Bills in order to fulfil MS's obligations to ECTRIC. Mark
Taylor feels that ECTRIC would have an enforceable security interest in cash
even though it may be held in London. Regarding the T-Bills, Paul mentioned
that there is to be a meeting on this and other matters in the next few
weeks.

In order for us to go ahead and finalise the Agreement, I would be happy to
go back to MS and ask that US T-Bills be deleted as a form of Eligible
Collateral.

Pls let me know with regard to points 2 & 5 as soon as possible.

Kind regards,

Shari Stack