Message-ID: <12286381.1075858855147.JavaMail.evans@thyme> Date: Fri, 26 Oct 2001 08:18:11 -0700 (PDT) From: brent.hendry@enron.com To: kimberly.donohue@saccapital.com, daniel.patalano@srz.com Subject: FW: Revised Loss Definition.DOC Cc: caroline.abramo@enron.com, paul.radous@enron.com, stephanie.panus@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: caroline.abramo@enron.com, paul.radous@enron.com, stephanie.panus@enron.com X-From: Hendry, Brent X-To: 'kimberly.donohue@saccapital.com', 'daniel.patalano@srz.com' X-cc: Abramo, Caroline , Radous, Paul , Panus, Stephanie X-bcc: X-Folder: \SPANUS (Non-Privileged)\Panus, Stephanie\Deleted Items X-Origin: Panus-S X-FileName: SPANUS (Non-Privileged).pst Kim and Dan, In an effort to come to closure on the one final issue I propose the follow= ing language. =20 "(e)=09Payments on Early Termination. For the purpose of Section 6(e): (i= ) Market Quotation shall apply to natural gas and crude oil Transactions wi= th a remaining term at the time of the Early Termination of less than one y= ear and Loss will apply to all other Transactions, and (ii) the Second Meth= od will apply." I believe that this provision would cover the vast majority of SAC's trades= with Enron which are the types of trades which Enron considers most liquid= . This also addresses our concern of not having to obtain quotations on il= liquid positions. We would be willing to modify the Loss definition as set= forth below (as proposed in my last email) which also addresses some of yo= ur concerns with the standard version of the Loss definition (while recogni= zing that it does not address all your concerns). We believe this to be a = fair compromise that attempts to address the concerns of both parties. Ple= ase review the proposal and let me know if we can send a final blacklined c= opy of the agreement for your review. Regards, Brent=20 =20 "The definition of Loss shall be amended and restated in its entirety as fo= llows:=20 "Loss" means, with respect to this Agreement or one or more Terminated Tran= sactions, as the case may be, and a party, the Termination Currency Equival= ent of an amount that party reasonably determines in good faith and in a co= mmercially reasonable manner its total losses and costs (or gain, in which = case expressed as a negative number), without duplication, in connection wi= th this Agreement or that Terminated Transaction or group of Terminated Tra= nsactions, as the case may be, including any cost of funding or, at the ele= ction of such party but without duplication, loss or cost incurred as a res= ult of its terminating, liquidating, obtaining or reestablishing any hedge = or related trading position (or any gain resulting from any of them). to = be equal to the actual replacement cost to that party in entering into a re= placement transaction. Loss does not include any loss of bargain, cost of = funding or, loss or cost incurred as a result of its terminating, liquidati= ng, obtaining or reestablishing any hedge or related trading positions. Fu= rthermore, Loss does not include loss of bargain, or a party's legal fees = and out-of-pocket expenses referred to under Section 11. A party will dete= rmine its Loss as of the relevant Early Termination Date, or, if that is no= t reasonably practicable, as of the earliest date thereafter as is reasonab= ly practicable. A party may (but need not) determine its Loss by reference= to quotations of relevant rates or prices from one or more leading dealers= in the relevant market."