Message-ID: <19897181.1075845749847.JavaMail.evans@thyme>
Date: Thu, 30 Nov 2000 07:59:00 -0800 (PST)
From: stuart.zisman@enron.com
To: kay.mann@enron.com
Subject: Coral Transaction
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ATTORNEY-CLIENT PRIVILEGED - DO NOT PRODUCE

Kay,

Thanks again for helping me out.  I wanted to pass on a few things that were 
discussed immediately prior to the execution of the LOI just so that nothing 
is lost in the changing of the guards.

1)  John Keffer asked ENA to determine whether the equity interest held by 
ENA in the SPV must be a voting interest.  The concern here was that the LLC 
Agreement was structured to have the 20% owner hold a non-voting member 
interest and John wanted to be certain that this satisfied the terms of the 
GE LM6000 contract;

2)  The LOI talks about the "minimal representations" that ENA will be 
required to give to Coral in connection with the disposition of the 80% 
member interest to the Acquisition Entity.  I spoke with Jim Shepherd 
(internal counsel to Coral - who by the way was a colleague/friend of mine 
when I was employed at Coral) and assured him that ENA would be willing to 
provide the necessary reps to give Coral comfort that we hadn't done anything 
with the SPV (i.e. incur liabilities or convey other interests in the SPV);

3)  Jim Shepherd and I also spoke about expressly incorporating the 
confidentiality provisions of the LOI into the final deal documentation.  I 
wanted to be certain that Coral could not discuss deal terms with anyone else 
(for fear that the deal structure becomes known in the market place);

4)  On the matter of taxes, Don Whaley (of Coral) expressly agreed with Ben 
Jacoby that all ad valorem taxes and other taxes associated with ownership 
(and the sale/transfer) of the units would be borne by Coral.  This comment 
about the ad valorem taxes (which aren't expressly stated in the LOI) is 
particularly important because (as you know) we anticipate a $250,000 tax on 
each turbine that is delivered prior to year end.  I believe that Ben wants 
to execute a letter agreement with GE (similar to the one that was executed 
for the first 14 units) pursuant to which we accept title/delivery in 
consideration of a $300,000 waiver of cancellation fees.  I have reservations 
about this because ENA will effectively be making an additional 300k per unit 
by stuffing a $250,000 obligation to Coral.  Doesn't really pass the smell 
test in my book.

5)  One final item, this deal has not been DASHed and a legal risk memo has 
not been prepared.  I would think that the biggest legal risk in this 
transaction is the risk of discovery of the true deal structure by GE.  I 
prepared a legal risk memo that highlighted this risk when I did the original 
deal with Air Liquide and am happy to share that with you if you so desire.

Again, many thanks.

Stuart