FYI
----- Forwarded by Shari Stack/HOU/ECT on 10/19/00 01:03 PM -----

	Christian Yoder
	10/19/00 12:50 PM
		 
		 To: Tracy Ngo/PDX/ECT@ECT, Shari Stack/HOU/ECT@ECT, Steve C Hall/PDX/ECT@ECT
		 cc: 
		 Subject: Cal PX indmentity agreement

The CalPX "Credit Redisign" situation is an irritating mess that I am trying 
to help straighten out.  Here is a summary of what is going on.  Please keep 
this summary around and read it every time you get a question from a confused 
individual  and feel free to forward it to whomever out there is confused 
about things.

The CalPX  has a Surety bond with a big Surety entity.  The gist of the thing 
is that If the PX ever gets into a situation where one of the players on its 
exchange defaults, it can pick up the phone and call the  Surety and the 
Surety will rush money to the PX withing 5 minutes, no questions asked.   
Before the Surety agreed to do this bond with the PX they insisted that all 
of the players that do business with the PX (called principals) sign 
indemnity agreements with it.  The indemnity agreements basically say that if 
the Surety ever has to pay a penny to the PX,, it can immediately call the 
Principal and the principal will rush a penny to the Surety within 5.1 
minutes.  The indemnity agreement says that the Principal must pay the Surety 
upon demand for the share of the loss that it caused.  It also says a bunch 
of stuff that makes it very clear that we might also have to pay money in 
situations that are not our fault too.  It is a risky, bad agreement to sign 
and in the first round of this stuff with the PX a year or so ago we did not 
sign any indemnity agreement.  What happened instead was that Enron Corp 
stepped in and saved the day.  It just so happens that Enron Corp. already 
had a preexisting Indemnity Agreement with the Surety covering various 
exposures at the 20,000 foot corporate level.  I was able to get the Enron 
Corp bond people to talk to the Surety and the result was a two sentence 
letter from the PX saying we were okay to trade.  We did not have to sign the 
indemnity agreement.  I did not negotiate any of the terms  between Corp and 
the PX on this. 

That is the history.  Now we come to the PX's new "Credit Redisign."   The PX 
is anxious that it is not covered well enough.  So, out they come with 
exactly the same set of documents demanding that everybody sign another 
indemnity agreement.  Like a trained dog, I have just been trying to do the 
same thing I did last time.  I have called Corp and tried to get them to make 
the issue go away the same way they did last time.  Unfortunately there are 
different people involved now and I have not been very aggressive about 
telling the story and getting eveybody to work together.  I am now back from 
a nice littel vacation and promise to push the thing through Corp. as best I 
can.  I have already left two voice mails and will faithfully and doggedly 
try to take care of this.  ----cgy