Here are my observations:

I agree with Rusty re: the put option complicating things for us.  Second, 
there has to be an absolute end to this agreement at some point. If we want 
to have an automatic extension by commencing construction, there still needs 
to be a date certain after which we can go forward without them no matter 
what.  In other words, if we want to add the language Rusty suggested, it 
should be limited to x months after the expiration of the option agreement.  
We'll need to run this back through Accounting.

I really don't like the inclusion of the language in paragraph 5. If we add 
the language requested in paragraph 5, we need to run this agreement back 
through Accounting, and we may need to add some other additional language.  

I don't know if Rusty and Fred think we may need a zoning change for this 
parcel.

Kay

  




Rusty Stevens
09/14/2000 04:45 PM
To: karen.way@piperrudnick.com, Kay Mann/Corp/Enron@Enron
cc: Fred Mitro/HOU/ECT@ECT 

Subject: Fehr Option Agreement

I am in receipt of the Fehr's comments to our option agreement.  In reviewing 
them, I have the following comments:

The paragraph (2) change that says they can compel us to buy their land upon 
a Triggering Event occurring is not going to work, because this is a put 
option on their part which hurts our hard cost avoidance issues.  We 
carefully reworded previous put option language to avoid this.    Also, how 
can we be bound to a deal when the agreement has expired ?  I think we would 
need to say that "if we decide to build the plant after the option period 
expires, then that would serve to extend the term of this agreement, however, 
if the option agreement expires unexercised for a one year period then we 
won't be bound to the deal.  

If the provisions of his comment (5) are indeed parallel to another similar 
paragraph in the document I don't have a problem with it, but "specific 
performance" scares me in general.  Your (collective) call.


Lets wrap this one up fast.  I want to resolve it soon so I can use it as 
leverage with Ledford and not have him influence them.  He picked a good to 
go on vacation, but is back in on Monday.  I also told the Fehr's that if we 
could do this before the 15th I would go for $185,000 vs. $175,000.  Since we 
were about five days longer than promised, I can justify the delay to end of 
next week, but I don't want them to think I was just blowing smoke on the 
extra $10,000.


Fred :  Refresh my memory on who I need to go to for the option payment check 
?