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Enron Mail |
<<0071988 RESO Enron.doc<<
Dan: First, I've attached the proposed resolution which authorizes the City Manager to execute the Enfolio agreement. More importantly, I need to inform you that our senior management has reviewed the referenced contract; I have been asked to present additional changes to the agreement for Enron's consideration and to raise questions about certain of its terms and conditions. Let me start from page 1, top to bottom, and proceed to the end of the exhibits. 1. There is the word "DRAFT" above the title of the Enfolio agreement which should be deleted. 2. The introductory paragraph, line 5, should not contain the words "1st of January, 2001." It should be left blank, until the parties have signed the contract. Otherwise, the City will be in breach as of the date it signs the contract, because Article 2, section 2.1 requires the City to proffer the to-be-approved-by-Council resolution as of 1/1/01. 3. Article 2, Section 2.4, line 2. The City (Customer) wants Enron (Company) to confirm every recorded telephonic Transaction, as defined. Therefore, the City requests the word "may" should be changed to "shall." 4. Article 3, Sections 3.1 and 3.2, first sentence: Buyer's Requested Quantity refers to the DCQ or MaxDQ. Seller's failure to Schedule the Buyer's Requested Quantity shall constitute a Seller's Deficiency Default. How does a Maximum Daily Delivery Point Quantity fit into a Seller's Deficiency Default if the Buyer's Requested Quantity does not include a Maximum Daily Delivery Point Quantity? What is the reason for the omission? 5. Article 4, Section 4.1, lines 15 and 23: Line 23 refers to "reasonable attorneys' fees" yet line 15 refers to "attorneys' fees." To be internally consistent, line 15 should say "reasonable attorneys' fees." 6. Section 4.1, right hand column, lines 3-4. A statement showing the determination of the Termination Payment will be prepared. It's unclear whether the City is entitled to review and challenge the determination before a dispute is referred to arbitration. The City should be entitled to receive a copy of the determination and to question it before it is obligated to pay the Termination Payment. Please clarify, or permit the City to exercise these rights. 7. Section 4.2(iv) specifies that a Triggering Event will exist if a bankruptcy petition is undismissed within 30 days. Is this (under bankruptcy laws) the minimum period of time within which one may seek dismissal of a bankruptcy petition? Please refer to the 11 USC section that backs up this provision, or change to 60 days. 8. Section 4.2(v) and (vi): Please change "30 days" to "5 days." The City is concerned with the number of days that Enron may be permitted to fail to Schedule before a Triggering Event is triggered by Enron. 9. Section 4.2(ix): this language discusses a default by Enron Corp. (ENA's parent?), but no mention is made of ENA's default in this regard? Please explain. 10. Section 4.5, line 4: Is "a Company" supposed to refer to "the Company" ? 11. Article 5. The City is uncomfortable with the force majeure provision as drafted. It states that the parties must perform even if a FM event (earthquake) would prevent either or both parties from performing with the 60-day period stated therein. There is no such limitation under California law in the absence of a contract provision to the contrary. 12. Article 7, Section 7.2: Could Enron translate the last sentence? We don't understand it. 13. Appendix "1": Act: Please explain why Section 3 is referred to? 14. Appendix "1", Claims, line 4: Please add "reasonable" before "attorneys' fees. 15. Appendix "1", GAAP: This should read: "GAAP means generally accepted accounting principles, consistently applied, with respect to Company, and governmental generally accepted accounting principles, consistently applied, with respect to Customer." 16. Appendix "1", Interest Rate: Please delete "two percent over". The City has a AAA bond rating, therefore, the City believes the 2% over prime should not apply to it. 17. Appendix "1", Material Adverse Change: What does Enron believe the City's Net Worth to be? The $400 million threshold is mentioned. Also, what is ENA's bond rating? Is "BBB-" an investment grade rating? 18. Representations and Warranties: Because we have agreed that the opinion of counsel will not be required, the reps and warranties are being deleted. But the "Representations and Warranties" is nevertheless included in the agreement. Item (i) should be deleted, because the City has not undertaken a court search as is our custom and practice whenever we issue an opinion. We would like to delete "and (vii) it is not ... Party." 19. Operational Flow Orders, line 8: Please add "reasonable" before "attorneys' fees." 20. Financial Matters, line 8: What is meant by "to the extent it has a legal right of access thereto and/or ...etc." 21. Arbitration, Disputes to be Arbitrated. We do not as a matter of legal policy agree to arbitration, but we will mediate disputes. Is Enron amenable to mediation? This process is less formal and less costly in my opinion. 22. Authority for Transactions. Staff would like the Agreement to include a list of employees for Company and Customer who are authorized to trade on behalf of their employers. Could a statement be added to this section to this effect? Then, we could attach the list(s) as an Exhibit C. Thank you so much for considering these issues. There are others which I hope to receive from staff next week and which I will forward to you for response. Look forward to hearing from you soon. I will be out of town after today until Wednesday, March 7. Sincerely, Grant Kolling -----Original Message----- From: Dan.J.Hyvl@enron.com [mailto:Dan.J.Hyvl@enron.com] Sent: Tuesday, February 27, 2001 6:16 AM To: grant_kolling@city.palo-alto.ca.us Cc: Kim.Ward@enron.com Subject: Re: Enfolio Master Firm Purchase/Sale Agreement << File: 2001-002ctr.doc << (See attached file: 2001-002ctr.doc) Grant, I have incorporated the language you provided to me in the attached document. I have been informed by the Corporate Secretary's office that they will issue a Certificate of Incumbency showing that the person executing the contract for ENA is authorized to execute contracts for ENA. No other party signs as to form or terms, however, the officer executing for ENA will require that the deal person and I initial on the line next to his signature. I have reviewed the proposed draft resolution. ENA will accept the enacted resolution and will not require that the City Attorney issue an opinion. If the attached contract is acceptable, please print off 2 originals, have them approved, signed and forward to me for ENA's approval and signature. Once the contract is fully executed, I will return one fully executed original to you for the City's file. - 0071988 RESO Enron.doc
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