Jeff:

This is the detail you aksed for. I'll bring you the paperwork monday, assuming our stock price is still a positive number. 

Dan



-----Original Message-----
From: Kravas, Christopher <chris.kravas@ENRON.com>
To: Reck, Daniel <Daniel.Reck@ENRON.com>
CC: Kravas, Christopher <chris.kravas@ENRON.com>
Sent: Fri Nov 23 11:50:31 2001
Subject: Enron Stock held in escrow

Dan - below is a brief outline of the numbers on my Enron stock currently held in a Citibank escrow account.  There is probably more here than you need, so feel free to make changes or let me know how you want me to redraft.
 
 
Background Info:
 
-At Webmodal/Enron merger closing (March 2, 2001), I was paid $1.3 million cash and $2.0 million in Enron Stock or a total of approximately $3.3 million for my Webmodal shares.
 
-The $2 million Enron stock was purchased at an average price of $70 (approx 28,570 shares).  Specifically, cash was wired to a brokerage account set up by me; used to purchase Enron shares on the open market (I was given, like 10 days to do this per the merger agreement); and then the shares were transferred to a Citibank escrow account.
 
-The Webmodal/Enron merger agreement required me to do an 83b election (for personal income taxes) on all of the consideration ($3.3 million in cash and stock) that I received for my Webmodal shares.  This made the $2.0 million (march '01 value of stock held in escrow), as well as the $1.3 million cash, taxable as 2001 income.  The 83b election was intended to reinforce the reality that the $3.3 was being paid as consideration for the sale of my Webmodal shares to Enron and was not wage income, even though the release of $2.0 of the $3.3 million was tied (through the escrow agreement) to my ongoing employment at Enron for the 3 years following the merger.
 
-Per the escrow agreement between myself and Enron, 1/3 of the stock is released to me on March 2 of '02; another 1/3 on March 2 of '03; and the final 1/3 on March 2 of '04.  Also per the escrow agreement, all of the stock is immediately released to me if my employment at Enron is involuntarily terminated by Enron.  Finally, any stock remaining in escrow would be returned to Enron in the event that I elect to voluntarily terminate my employment with Enron prior to March 2 of '04 (some exceptions to this if my contract isn't renewed or if my job materially changes, etc.)
 
Current Conundrum:
 
-The market value of the approximately 28,571 shares held in escrow is $143,000 at $5 per share ($257,000 at $9 per share).
 
-If the price had held at $70 per share (what I paid back in March for the shares held in escrow), I would have received stock worth approximately $677,000 in March of '02.  This was presumably Enron's intent at the time of the merger.
 
-If I resign before the end of the '01 tax year, I would forfeit the shares held in escrow but benefit from a $400,000 personal income tax savings as a result of realizing an '01 loss (through forfeiture) on ENE shares with a tax basis of $2.0 million.  In other words, the rather large tax bill that I created in March when I took an 83b election on all of the consideration (cash and stock) received for my Webmodal shares would be substantially reduced.  Ironically, the $400,000 value that I could realize upon immediate resignation is over two times the value of the shares scheduled to be released over the next three years.
 
-Enron's release of the 28,500 shares held in escrow to me before 12-30-01 would allow me to produce substantially the same tax benefit (from selling the shares before year end '01) and would allow me to realize a value that is at least in the same neighborhood as the year 1 intended consideration at the time of the merger.