IN: This is an email
Dear Mr. Catanzariti: My name is Michelle Hoogendam Cash, Assistant General Counsel-Enron North America Corp. I was referred to you by David Minns in the Enron Australia office. I am attaching a copy of our Employment Agreement Form for your review in light of Australian law. Please review this form and provide me with any comments that you may have. Thank you for your assistance in this matter. If you have any questions, please give me a call at (713) 853-6401.

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OUT: Employment Agreement
QUESTION: A follow up to your questions on the accounting for the above: HPL - when Gosset began marking the position 9, our balance sheet gave your book the $33 Million annuity that we held as the difference between the $2.34 (original swap price with B of A) and the market price at the time of the bammel unwind. He obviously needed this amount to keep your book whole when he began marking it. Included in the $33 was the original $1.2 bid\offer spread. On October 1, when Jeff pulled the total marked value off of schedule C and recognized the income, he recognized the bid\offer spread as well. All Accounting looks clean! Pan Nat - The day 1 booking of the arbitration changes resulted in a $18 MM loss that we booked to the office of the chair. Since that time I am told that all of the related resid positions that you now hold are marked everyday and taken into income. Again accounting looks fine. The only two items that remain in the "Wes Colwell" accrual book are the (1) mark of the Napoleonville pad gas and the related hedge (scheduled to begin the withdrawls 8) and (2) the hedge of the financial obligation to fill the Enron 1 cavern with financial gas. You locked in the capital contribution for about $20 million with the hedge. The hedge began liquidating in September and we began paying Bridgeline. The payments take place for 4 months. Call me with any questions
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ANS: HPL and Pan Nat accounting
Rod: There are 2 open issues on Dresdner Bank: 1. Netting - they are saying that operationally they cannot net across product lines. Are you okay with this? 2. Calculation Agent - they want to be the Calculation Agent. Since we have no CSA with them, this means that they would be doing all of the calculations required under each transaction that we enter into with them. Specifically, the CA does the following: - calculates the Floating Price and the Floating Amount, Fixed Amount or Cash Settlement Amount payable - gives notice of Settlement and Payment Dates - determines whether a Market Disruption Event has occurred Also, my notes indicate that we agreed to increase the Guaranty cap to $25,000,000 from $15,000,000. Is that okay with you? They had initially requested no cap. On Reliant Energy Services, Inc., you were going to think about the following credit issues: 1. Specified Transaction - they want to include physical energy deals. You were going to think about this and whether we needed a cap. They wanted to amend the definition of Specified Indebtedness to deal with this, but I think you and I felt taht it should be dealt with in the definition of Specified Transaction. 2. Cross Default threshold - is 3% of equity okay? 3. On Credit Event Upon Merger, they want to define "materially weaker" as either (1) being below investment grade by either S&P or Moody's or (2) being failed to be rated by either S&P or Moody's. 4. On setoff, they did not have the "affiliate" language. 5. In the CSA, they want the collateral that is posted to secure both financial deals and physical gas and power deals entered into between ENA and Reliant Energy Services, Inc. 6. In the collateral threshold, they have proposed a matrix of S&P and Moody's ratings, with the threshold amount being the lower of the 2 ratings. AA-/Aa3 and above $20,000,000 A-/A3 to A+/A1 $15,000,000 BBB/Baa2 to BBB+/Baa1 $10,000,000 BBB-/Baa3 $5,000,000 Also, they have defined MAC to be going below BBB- by S&P or below Baa3 by Moody's or a failure to be rated by either S&P or Moody's. 7. In the LC provisions, they have different cure periods for each of the types of Letter of Credit Defaults that can occur. Here is a summary of the events and the time periods for transferring substitute colateral: - If issuer's credit rating is downgraded - 1 business Day after written demand by the Secured Party - if issuer fails to comply with its obligations under the LC or disaffirms or rejects the LC - 1 Business day after the pledgor receives notice of dishonor - if LC fails to be in full force and effect or issuer declares bankruptcy - 3 Business Days after written demand by Secured Party In our form, we require substitute collateral to be posted within 2 Business Days of the occurrence of the above events, except for a downgrade where the time period is 5 Business Days On SG Interests, you were going to talk to them about certain credit issues. Please let me know when you can where you stand on the above. Thanks. Carol
Q: What is a potential subject line for this email?
answer: Dresdner Bank, Reliant, SG Interests
Stevens- I just spoke to Stacy Dickson and she confirmed that the contract was mailed out a week ago. She will e-mail it to Molly and mail it again regular mail. Sorry for the delay. Susan
Answer: Destin contract
Here is an email: Status report of integration testing from Wednesday, Jan. 23rd - (16 gas/ power types of transactions to test) Overall, there were no infrastructure or major application issues. Unlike the prior testing, we've included many more gas transaction types and testing with all non-essential Netco data removed (aka baseline for Netco go-live). In today's test, we had numerous data setup related issues that resulted in downtime (ie EOL- Dynegy information, TGP address information, bad credit counterparty/ contracts, or database issues with data sync/ replication). These were mainly attributed to the massive cleanup/ removal of data not needed. The remaining issues open are being addressed Wednesday night. Given the deferred 12:00pm to 2:00pm start time and data setup/ sync issues, we were unable to complete downstream processes (mainly Settlements, confirmations, SAP). Continuation of testing into Thursday We are requesting the testers with tasks remaining to complete the script execution Thursday (morning shift and afternoon shifts given UBS offsite meetings). We will try to balance the testing activities given some will be out in the morning, and some in the afternoon. The bridgeline will be active from 9 - 5 for communication/ status. RECAP of where testing left off for Netco and EOL entry.
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A: Status report of integration testing from Wednesday, Jan. 23rd ; and Thursday's continuation..
QUESTION: See attached items (clean and redline), including a general flow chart. Tax: I am providing you a copy as a heads up in respect of consideration of Canada tax issues. Stephen, these issues were previously developed when we closed the PGE master. Can you provide to me a short memo describing the resolution of the issues (my recollection is that resolution resulted in a post agreement tax letter agreement to be devised by you and tax counsel at Blakes.) Accounting: Information purposes. Joel: Financing issues. Others: Please review and comment on what is hopefully close to a final draft. Thank you everyone.
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ANS:
Draft of Master Netting Agreement Form