Re: contract issue

Steve's new idea is to send a letter to Mark asking him to document/explain
exactly what his role was in getting this deal. Comments? Not sure I care
one way or the other, but after I see how it looks in writing, I'll have a
better idea of whether this is how we should approach it.

Multi-tasking heavily today. I'll send you a draft of our PNM answer to
Dynegy protest by close of business.

From: Drew Fossum 05/01/2000 01:23 PM

To: Susan Scott/ET&S/Enron@ENRON
cc:

Subject: Re: contract issue

Ugh. I just got this today and think I understand the problem. Let me know
how Steve's conversation with Baldwin goes. Thanks. DF

From: Susan Scott 04/25/2000 10:05 AM

To: Drew Fossum@ENRON
cc:

Subject: contract issue

Drew, I wanted you to be aware of a potential dispute with regard to our
consultant, Mark Baldwin of IGS. Our consulting agreement with IGS (which
has now terminated) provided for a flat fee, plus an incentive fee calculated
using the net present value of any contract "identified by IGS" and entered
into during the term of the consulting agreement. During the term of the
agreement, TW entered into its Gallup Expansion agreement with Southern. IGS
is now claiming it brought in the deal and so is entitled to an incentive
fee. While it is undisputed that Mark discussed the deal with Southern,
Southern was also on Lorraine's list of shippers to contact for Gallup
Expansion capacity. Also, the capacity was posted for all to see. So, while
Mark can certainly claim he "identified" the deal, he was not alone in doing
so.

Steve is going to call Mark in response to his letter (after he talks to
Lorraine to verify facts). Our thinking is that if we offer IGS some money
they will be happy. We would really like to preserve what has been a good
working relationship with this consultant. On the other hand, I think we
could probably take the position that they are not entitled to any incentive
fee. However, since the contract is silent as to whether IGS has to be the
only party bringing in the deal in order to qualify for the incentive fee,
this position is not as strong as I'd like it to be, and IGS might sue TW.
The amount in dispute could be as much as $200,000, depending on what rate we
use in calculating net present value.

If you have any problem with our offering to pay part of the incentive fee to
IGS, let me know. I think it will be very important for Steve not to admit
that Mark helped in any way in getting the deal -- just in case they do
decide to take us to court.