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Enron Mail |
Commodity Derivatives Mark Taylor, Assistant General Counsel Enron Capital & Trade Resources Corp. I. Documentation Issues A. Cross-defaults "Specified Transactions" Keep physical and financial trading separate or tie together? B. Calculation of termination amounts Market Quotation or Loss? C. Adequate Assurance provisions D. Credit considerations Recent price volatility - dramatic swings in exposure E. Documents to be delivered Resolutions may tell you more than you need to know Authorized trader lists are a two edged sword F. Dispute resolution mechanisms Waiver of jury trial, arbitration? G. Confidentiality H. Market Disruption Events De Minimis Trading? Tax disruption? Trading limitation - definition I. Market Disruption Fallbacks Get Commercial Input! Postponement Fallback Reference Price Negotiated Fallback (specify period to negotiate) Dealer quotations No-fault termination? II. Counterparty Issues A. Issues 1. Authority of signer 2. Power of Counterparty 3. Bankruptcy B. Counterparty Types 1. Governmental and Quasi-Governmental Entities a) Municipalities b) Municipally owned utilities c) Crown corporations (Canada) 2. Regulated Entities a) Utilities C. Solutions 1. Documentation Additional representations and warranties "Incipient Illegality" Automatic early termination? 2. Due diligence 3. Legal opinions, advice of local counsel 4. Resolutions, officers' certificates III. International Trading A. Choosing Local Counsel B. Local Law Issues 1. Capacity & authority 2. Credit support matters 3. Exchange controls 4. Licenses 5. Choice of law, enforcement of judgements & arbitral awards 6. Sovereign immunity 7. Gaming statutes 8. Marketing restrictions 9. Tax matters a) Withholding b) Value-added c) Stamp d) Turnover 10. Insolvency - netting 11. Oral contracts 12. Setoff 13. Usury
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