Cheryl: Can you please forward a copy of the ECI resolution(s) (or consent) which was used to establish the Bear account and Securites Loan Agreement? We need to determine all products authorized for ECI trading. Also, copies of Enron Credit Limited authorizations would be useful. Thanks for your help.
Answer: Enron Credit Inc. ("ECI")
Anne, I have reviewed the P&S Agreement for Triple Lutz. From my perspective, it generally looks fine. I have a few comments, and invite Pat Mackin to add any he may have, in particular based on his review of Section 4.14. In Section 4.7(c)(iv), there is a reference to any contract obligations. I believe this would include employment contracts, which do not appear to be identified specifically on any schedule unless the annual amount exceeds $250K. We may want to clarify that the disclosures are consistent with the provisions of Section 4.13(iii). Section 4.8 provides that we will not enter into any employee benefits not required by law. However, given that closing is pushed out so far in the future, we may want the flexibility to provide incentive bonuses for key personnel to stay with the company through closing. This may be done with the Buyer's consent, but we may be tying our hands. Section 6.2(e) contains a similar restriction on making payments to officers/directors. In addition, Section 4.8 states that we won't enter into or amend any employment contracts. We do not renew employment contracts at a single time, and the contracts of key personnel may expire. Do we want to tie our hands and be prohibited from amending/extending the agreements? Section 6.2(l) also prohibits the modification/amendment of contracts with employees. In Section 4.10, the wording "(other than Environmental Laws)" suggests that we are not in compliance with environmental laws. Rephrasing that sentence to refer to the provision of the Agreement may be preferable. In Section 4.11(d), we promise that we haven't provided any gift of any kind to customers. I don't think we can say that, given that we regularly host client development outings (e.g. Rodeo BBQ tickets, golf tourneys, etc.) and provide Enron goodies to people all the time. Perhaps a limitation on de minimus gifts would be more accurate. Also, a reference to our Code of Ethics may work here. In Section 4.13(a)(iii), does the $250K threshhold include only cash value, or does it include equity grants that vest over time? A reference to "cash" payments would clarify, given that people here are compensated by stock options/restricted stock that vest over time. In Section 4.14(d), I am not sure whether this transaction accelerates vesting -- Pat, do you know?
Answer: Comments to P&S Agreement -- Triple Lutz
Per Louie Soldano, I called Dave Sinclair (GPG ROW) about whether we have any ability to negotiate a favorable right of way deal with the BNSF railroad. In Dave's experience, that is a nonstarter. Apparently, a bunch of utilities, including us through Dave, have even formed a coalition to try to figure out how to get the railroads to be more cooperative. If the RR owns its ROW outright (which many of the old railroads do out west) we might be able to condemn an easement by getting a FERC certificate. In other words, the RR would be treated just like any other landowner. If we did that, Dave thinks BNSF would treat it as a declaration of war. Since our lines cross or parallel BNSF right of way all over the place from Topock to Duluth, that would be foolish. I swore Sinclair to secrecy and told him what part of the world I was interested in and he thought we could probably stitch together private ROW without too much pain. If the RR option doesn't pan out, we may want to suggest to Tino and Dennis that our ROW people can handle this. Assuming we can't come up with some magic contact with the RR, I propose that, at the appropriate time, we tell Dennis and Tino that the last 7 or 8 miles of ROW should be flagged as a potential problem that Enron can help resolve once we decide to go forward. Other than the BNSF issue, I don't think we have any specific "to dos" or any specific comeback date to Dennis and Tino. So what do you guys think should happen next? DF
Answer: BNSF
Kate: A few points about the last draft of the Agreement: (1) Par. 1(a): the transfer and assumption is effective as of March 16, 2001 and not as of the Collateral Return (2) Par. 1(d): the parties have already agreed to use one set of spreadsheets (3) Par. 3: the ML&Co. guaranties are not being released because there are existing deals in place. The guaranties will only be released as to the transferred Transactions (4) Par. 6: conform language to side letters
Answer:
Transfer and Assumption Agreement ("Agreement")