Message-ID: <27698620.1075846660499.JavaMail.evans@thyme>
Date: Tue, 25 Apr 2000 03:05:00 -0700 (PDT)
From: susan.scott@enron.com
Subject: contract issue
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X-From: Susan Scott
X-To: Drew Fossum@ENRON
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Drew, I wanted you to be aware of a potential dispute with regard to our 
consultant, Mark Baldwin of IGS.  Our consulting agreement with IGS (which 
has now terminated) provided for a flat fee, plus an incentive fee calculated 
using the net present value of any contract "identified by IGS" and entered 
into during the term of the consulting agreement.  During the term of the 
agreement, TW entered into its Gallup Expansion agreement with Southern.  IGS 
is now claiming it brought in the deal and so is entitled to an incentive 
fee.  While it is undisputed that Mark discussed the deal with Southern, 
Southern was also on Lorraine's list of shippers to contact for Gallup 
Expansion capacity.  Also, the capacity was posted for all to see.  So, while 
Mark can certainly claim he "identified" the deal, he was not alone in doing 
so. 

Steve is going to call Mark in response to his letter (after he talks to 
Lorraine to verify facts).  Our thinking is that if we offer IGS some money 
they will be happy.  We would really like to preserve what has been a good 
working relationship with this consultant.   On the other hand, I think we 
could probably take the position that they are not entitled to any incentive 
fee.  However, since the contract is silent as to whether IGS has to be the 
only party bringing in the deal in order to qualify for the incentive fee, 
this position is not as strong as I'd like it to be, and IGS might sue TW.  
The amount in dispute could be as much as $200,000, depending on what rate we 
use in calculating net present value.

If you have any problem with our offering to pay part of the incentive fee to 
IGS, let me know.  I think it will be very important for Steve not to admit 
that Mark helped in any way in getting the deal -- just in case they do 
decide to take us to court.