Message-ID: <13681681.1075845906334.JavaMail.evans@thyme> Date: Thu, 24 May 2001 02:26:00 -0700 (PDT) From: greg.krause@enron.com To: kay.mann@enron.com Subject: SDEC: Certosa Holdings Option Agreement Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Greg Krause X-To: Kay Mann X-cc: X-bcc: X-Folder: \Kay_Mann_June2001_3\Notes Folders\Notes inbox X-Origin: MANN-K X-FileName: kmann.nsf Does the first option need to expire or can we terminate prior to expiration and concurrent with execution of a new option agreement? I got a call from the owner of Certosa Holdings pleading for help on reimbursement of those legal fees. If we are going to pay a flat fee and renegotiate this agreement, I think we need to do so quickly. Regardless, I need to tell them something soon. They are getting desparate. I've a call in to Taffy Milligan. AEW's assistant to locate the Shutts & Bowen invoice. I understand we have engaged Shutts & Bowen in Tallahassee to review some property tax issue. Cound this be an avenue to avoid this on balance sheet hard cost thang? -----Original Message----- From: Mann, Kay Sent: Thursday, May 24, 2001 7:43 AM To: Krause, Greg Subject: RE: AEW's backup Unless the first option expires (and the original premium is expensed), you add the original payment to the renewal premium to determine the percentage. If we can't beat the percentage game, we can have the land on the balance sheet and that won't put the entire project on it. Don't ask me to splain that, because I can't. If the land is going to be on the balance sheet, you would think that it would be better to have $1.3 on than $4.2. However, one thing I don't know (haven't asked) is what the environmental restrictions are with our financing vehicle. I don't know if the land has to be clean before it can go into the vehicle. I can ask. If it is required to be clean, then you may be back to the $4.2 anyway. Kay PS. Feel like Alice in Wonderland yet? From: Greg Krause/ENRON@enronXgate on 05/23/2001 07:14 PM To: Kay Mann/Corp/Enron@Enron cc: Kathleen Carnahan/ENRON@enronXgate Subject: RE: AEW's backup Yes we do want to renew the option through September of next year and we will need to persuade them to lower the option premium. Her is a thought: the land fill closure cost is approximately $2.9 million. Could we create a new option agreement that states that the strike price is $4.2 million ($1.3 the original strike price plus the cost of land fill closure cost) so we could pay an option premium of up to $210,000 (5% of $4.2 million). At closing, we reduce the purchase price by the costs yet to be incurred in the closing the land fill. Since Certosa Holdings will not start the closure until they are assured that we will exercise the option if even then, the net cost to us would drop back to the original strike price. Could we get this past the accountants? Only the memorandum of option was recorded. -----Original Message----- From: Mann, Kay Sent: Wednesday, May 23, 2001 4:40 PM To: Krause, Greg Cc: Carnahan, Kathleen Subject: RE: AEW's backup I've skimmed it. I see that the option expires August 9th. Are we planning to renew it? If so maybe we can renew early and fix what we can to preserve some optionality (no pun intended) and cover the fee issue. Might take too long to address the immediate issue. I don't see anyway we can get around the balance sheet issue unless we let the option expire and then reoption, but in that case the option payment would have to be smaller (acct says an option of 5% creates a problem as it would be considered a down payment). Just fyi. Kathleen, was the option recorded, or just a memo of option, or neither? I'm just wondering what is public info. Herman is out of the office today, but I can discuss the fee issue to get his vote. More to come... ckm From: Greg Krause/ENRON@enronXgate on 05/23/2001 02:19 PM To: Kay Mann/Corp/Enron@Enron cc: Subject: RE: AEW's backup I think the invoice was for between $20,000 and $30,000, but I can't remember. AEW has the invoice. This probably will not be the final as we will need to work with them in discussions with DERM on delaying the landfill closure and in moving jurisdiction of the project from CZAB to the County Commissioners. I think Shutts & Bowen (who may get stiffed by their client if this deal blows up) and Certosa Holdings would be open to any suggestions and we need to renegotiate the option anyway. Shall I call and suggest this this flat fee for retooling the option agreement to them or shall we do it together? I,m not sure I could explain to them acequately the idiosyncrasies of our accounting requirements. -----Original Message----- From: Mann, Kay Sent: Wednesday, May 23, 2001 2:00 PM To: Krause, Greg Subject: RE: AEW's backup How much is it and should this be the final amount? One thought I have is that maybe we can retool the option agreement so that we pay them a flat fee, which is enough to cover the expenditures. Don't know if this works, but it is one thought. What do you think? Kay From: Greg Krause/ENRON@enronXgate on 05/23/2001 01:50 PM To: Kay Mann/Corp/Enron@Enron cc: Subject: RE: AEW's backup One more thing on the SDEC project: According to the option agreement we executed last October, we agreed to reimburse Certosa Holdings for actual third party costs that they incurred in support of our necessary applications, submittals and in seeking local approval. Several weeks ago, we recieved an invoice from Shutts & Bowen, attorney for Certosa Holdings requesting reimbursement pursuant to the contract. I forwarded this invoice on th Ann Elizabeth not necessarily to pay for but to review considering this whole soft cost hard cost discussion. I recieved another call this morning from Shutts & Bowen asking about the invoice. What should I do? -----Original Message----- From: Mann, Kay Sent: Wednesday, May 23, 2001 11:03 AM To: Krause, Greg Subject: RE: AEW's backup Greg, You can call me on whatever you have, including Midway, SDEC and Medley Dunn. If I have a problem getting to something, I'll find help. Kay From: Greg Krause/ENRON@enronXgate on 05/23/2001 10:50 AM To: Kay Mann/Corp/Enron@Enron cc: Subject: RE: AEW's backup Kay, Ann Elizabeth did not provide a designated hitter for the South Dade Energy Center (Dade Development Company LLC is Optionee, Certosa Holdings is Optionor) nor did she provide one for tne Medley Dunn project. I have been told that the Dunns are considering backing off their ultimatums that they gave Ann Elizabeth and I regarding taxes to the town and assumption of enviromental liability. Who do I talk to about the Dunn contract while Ann Elizabeth is out? -----Original Message----- From: White, Ann Elizabeth Sent: Tuesday, May 22, 2001 10:33 PM To: gkrause@enron.com; Krimsky, Steven; Ben Jacoby/HOU/ECT@ENRON; Carnahan, Kathleen Cc: Milligan, Taffy Subject: AEW's backup Kay Mann is the designated hitter for the Pompano and Deerfied projects while I'm on vacation. I've given her a down load of the status of Greg and Steve's projects. Chris Boehler at A&K will be the designated hitter for Midway. I'm not going to check my voice mail while I'm gone but, if necessary, here are the contact numbers while I'm gone. Walter and Marlena Schilling 011-49-8218-89351 schilling.jun@freenet.de Monika and Bernhard Steinacher 011-49-8232-8932 m.steinacher@schwabmuenchen.de If you call, Walter and Bernhard and Bernhard's daughter, Susanne, speak very good English. Monika's isn't bad. Marlena may get flustered and hang up on you. Best of luck at Deerfield and hope to see Pompano on track when I get back in the office on June 11th. Kay is planning on going to Florida on June 12 for the moratorium hearing and the rezoning hearing.