We can not agree to even present to senior management the increase in advance rate to 50% from 30% on the utility billed AR.   The changes in the Eligible Accounts language has to do with the aggregation of the NewPower AR from it's customers, which the utility purchases.   Thus the many customer receivables are replaced by one large utility receivable.   I would appreciate legal comments with this and elsewhere.

As I had send in my e-mail message to Todd Hermanson last Saturday, and repeated again on the telephone on Wednesday, these terms have not been approved in accordance with Enron Corp's Transaction Approval Process.   Any communication should clearly state this.



-----Original Message-----
From: Marc.Manly@NewPower.com [mailto:Marc.Manly@NewPower.com]
Sent: Friday, October 12, 2001 6:07 PM
To: Eickenroht, Robert; Mellencamp, Lisa
Cc: david.burns@bakerbotts.com; Tribolet, Michael; Bradford, William S.;
Nettelton, Marcus; elizabeth.guffy@bakerbotts.com;
joseph.cialone@bakerbotts.com; wesley.shields@bakerbotts.com
Subject: Amendment to Master Credit Agreement


Lisa and Robert:

I attach a revised (new draft from NewPower) version of the Amendment and
General Security Agreement, together with a blacklined version of this
redraft against the last document we received from you.  Our changes, which
we have not had the opportunity to discuss directly with you, include the
following:  a revision of the security interest from a general lien to a
lien on all receivables and inventory only, and an increase in the October
cap from $20 to $25 million (which I understand were agreed between Cronin
and Tribolet); a revision in the definition of Eligible Accounts to reflect
receivables purchase arrangements with certain utilities (which I
understand was agreed between Hermanson and Tribolet); a proposed revision
in the advance factor for utility billed receivables from 30% to 50% (which
has not been agreed but is our proposed fix to give us comfort that the
Eligible Accounts get us up to the $25 million and $40 million limits) and
certain other changes to correct typos or to clarify certain points as to
which I believe we are in agreement.  Notably, this draft contains no
provisions that would protect NewPower against the risk of losing surety
collateral, or the risk of commodity price declines that would require the
posting of additional collateral.  As to the latter risk, my clients and
yours have been exploring swaps and other arrangements that we may employ
to mitigate that risk.

I also attach copies of proposed resolutions for the Business Review
Committee and the Board of Directors in connection with these documents.

On the assumption that these documents are acceptable, we have scheduled a
meeting of the Business Review Committee for this upcoming Tuesday
afternoon (we could not get a quorum any time today or Monday) and assuming
a positive recommendation by  the BRC, immediately thereafter we would
schedule a telephone Board Meeting for all necessary approvals, at which
point the documents could be executed and an 8-K disclosure filed.

                                              Marc E. Manly

(See attached file: 2ndamend-NPW-101201-clean.doc)(See attached file:
2ndamend-NPW-101201-blk.doc)(See attached file:
secagmt-NPW-101201-clean.doc)(See attached file:
secagmt-NPW-101201-blk.doc)(See attached file: BRC Report.doc)(See attached
file: BRC resolutions.doc)