Richard, This summary will bring you current.  Carl

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Date: Thu, 17 May 2001 18:33:51 -0400
From: "DANIEL  WHITLEY" <DWHITLEY@LLGM.COM>
To: "CARL EKLUND" <CEKLUND@LLGM.COM>,	"JOHN KLAUBERG" <JKLAUBER@LLGM.COM>,	"ROBERT NELSON" <JRNELSON@LLGM.COM>
Subject: CalPX May 17 hearing results and summary
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I appeared at the hearing this morning; I haven't communicated to Richard Sanders.  The retention bonuses were approved, and the court entered the stipulation turning over litigation to the participants committee.  I was able to successfully withdraw our opposition to the retention bonus.  As an aside, Joe Eisenberg never did sign the stipulation; he orally agreed to it at the hearing.

One note - The court stepped back from its earlier statement that participant's are creditors of the estate like any other.  Judge Smith said her earlier statement was re a specific issue, and that participants might not be treated like ordinary creditors for all purposes, she hadn't fully considered that issue.  This was in response to the creditors committee argument that only the participants benefitted from the costs of the non-BR litigation, and trade creditors shouldn't bear those costs.  J. Smith didn't agree or disagree, but my reading of her comments is she was leaving that issue for another day, when the first fee app comes in.

Here's the significant details, sorry its lengthy but I wanted to be thorough:

1.  The Perot motion - the court granted the motion to reject the Perot contract; Perot withdrew its objection, as did the creditors committee, subject to the following additional terms:  Perot agreed to subordinate some of its claims to trade creditor's claims (not participant's).  This did not appear to affect Enron or participants much, if at all; Marc Cohen had agreed to this.

2.  Status report - nothing we didn't already know.  Next status report hearing is 11/15 at 10:30 am.

3.  Stipulation re Commandeering Litigation - SCE and Puget both withdrew their objections, as did the creditors committee.  This was approved, subject to the following (these aren't all going to be placed in an order - some were just comments agreed to by various parties ):

   a.  the participants committee agreed that its duty was to maximize recovery to the estate and participants (of course, we agree, or at least I thought we did)

   b.  the participants committee agreed that it will not take action (litigation) re the AIG bond for 30 days (I know there is significant activity going on to resolve this issue)

   c.  re potential conflicts of interest, no disposition of litigation is possible without approval of the court, after opportunity for objections (nothing more than is required by law anyway), and if an actual conflict arises, the committee will not pursue that litigation but instead defer to the CalPX estate;

   d.  the committe will provide copies of all pleadings to Puget;

   e.  re costs of such litigation, all fee applications are subject to court approval and objections, and according to the stipulation all costs will be paid first from any recoveries from this litigation

4.  Retention/Stay bonus - approved, subject to Sladoje taking only $425k (down from $492k), and Miller taking only 100% of base salary, down from 105%.

That was all.  Regards,  Dan