Message-ID: <16364521.1075842919151.JavaMail.evans@thyme> Date: Mon, 13 Nov 2000 07:10:00 -0800 (PST) From: rbaird@velaw.com To: james.derrick@enron.com, 2ecom@velaw.com Subject: i2 Technologies Cc: mbackus@velaw.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: mbackus@velaw.com X-From: "Baird, Bob" X-To: "Derrick, James (Enron)" , "HARRIS STEPHANIE J (E-mail)" X-cc: "Backus, Marcia" X-bcc: X-Folder: \James_Derrick_Dec2000_June2001_1\Notes Folders\Discussion threads X-Origin: DERRICK-J X-FileName: jderric.nsf Jim: Here are our comments on the i2 Technologies insurance policy. This is a combination of my comments and Marcia Backus' comments, and in fact Marcia gets the vast bulk of the credit (I found out that she has considerable experience in this area). (1) This is a claims made policy. Apparently they are all this way. Ken should get a contractual commitment from the Company to renew the coverage upon its expiration or obtain new coverage that covers claims made after expiration of the policy but relating to periods when Ken served on the board. (2) We didn't attempt to determine whether the amounts of coverage are adequate in light of the company's business or whether the carriers are solid; I suspect Jim Bouillion has far more expertise on those issues than we do. (3) See item E on page 23 of 26. It appears that the effect of the language is that the $150,000 deductible applies if there's any case where the Company is required or permitted by law to indemnify Ken but for some reason (other than insolvency) it does not indemnify Ken. This appears to be a provision designed by the insurance company to ensure that the Company doesn't say to Ken "Hey, you'll be fine and we'll come out ahead if you agree that we won't indemnify you; you can just collect from the insurance company with no deductible, and we'll be better off because if we indemnify you we'll have a deductible." This provision may make sense from an insurance policy standpoint, but Ken ought to make sure he has a contractual commitment from the Company to indemnify him to the fullest extent permitted by law. (4) Please note exclusion 19 on page 22 of 26. This provision is designed to protect the insurance company by preventing the company from making money by suing a director and then letting the director collect from the insurance company. Again, this points up that Ken needs a contractual commitment from the Company to indemnify him to the fullest extent permitted by law. (5) The application for the policy is part of the policy, which apparently means that if there was something wrong with the application the policy itself may be void, not only against the Company that applied for the policy but also against innocent insureds such as Ken. (6) The policy confers on the parent company the authority to cancel the policy on behalf of the beneficiaries at any time. Ken should get a contractual commitment from the Company not to cancel the policy without obtaining substitute coverage that is at least as good. (7) The policy provides insurance for employees as well as officers and directors, which dilutes the coverage somewhat. Generally, this appears to us to be an ok policy. I would be very interested in knowing whether Jim Bouillion disagrees with that assessment. Robert S. Baird Vinson & Elkins L.L.P. One American Center 600 Congress Austin, Texas 78701 Telephone: (512)495-8451 When calling from Houston (713)758-2414 Fax: (512)236-3210 Email: rbaird@velaw.com Home telephone (512)347-8066 Car phone: (512)627-8065 Home fax: (512)347-8065 Pager: 1-888-487-2651 ++++++CONFIDENTIALITY NOTICE+++++ The information in this email may be confidential and/or privileged. This email is intended to be reviewed by only the individual or organization named above. If you are not the intended recipient or an authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this email and its attachments, if any, or the information contained herein is prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system. Thank You