RE:

Its the week-end so I am finally doing my emails.

I forgot to thank Leslie for doing these - so thanks Leslie it was appreciated.

-----Original Message-----
From: Hansen, Leslie
Sent: Thursday, January 03, 2002 2:09 PM
To: Kitchen, Louise; Forster, David; Carter, Carl; Taylor, Mark E (Legal)
Subject:

Attached please find the proposed Electronic Trading Agreement and Password Application for Netco. I have included a clean copy of each document as well as a red-lined copy marked against the version sent to Mark Taylor by Dave and Carl.

You will note that I have made a number of changes to the original EOL documents.

1. The Password Application.

The Password Application contains no substantive changes. I advise that we retain the original description of the website as a platform for the "purchase and sale of products and instruments based on energy products or other commodities (including derivative products)". The description is sufficiently broad to cover any potential expansion beyond the original gas and power products, as well as third party product offerings. After a brief discussion regarding the auction platform with Louise, I revised the PA to reinsert references to the auction.

2. The Electronic Trading Agreement.

There are numerous revisions and additions to the ETA. I outline below a few of the key changes requiring your consideration:

a. I added a sentence at the end of Section 1 to make clear that in the event the ETA conflicted with any other agreement between the parties, including any terms posted on the Website, the ETA controls.

b. I added a new Section 2(h) to address Counterparty content posted on any public area of the Website. To the extent that we anticipate such a capability in the future, it may be a good idea to include such a provision. If we do include this section, do we want to limit our license of the content to use on the Website and related materials, as proposed here? If you do not want to include such a limitation, we can add the word "worldwide" to the first sentence before the word "royalty-free" and delete the balance of the final sentence after the phrase "not distorted by displaying only a part)".

c. I revised Section 3(e) to clarify that Netco is not required to send written confirmations of on-line transactions and to provide that electronic records are admissible as evidence of the transaction. The last sentence of the section is intended to make clear that to the extent the master agreement requires a written confirmation, such master agreement controls, provided that the failure to send a confirmation will not invalidate the transaction.

d. I added a new Section 4 to address transactions posted by unaffiliated third parties. (This issue was already covered in the last paragraph of the original PA.)

e. I revised Section 5(a) to clarify that Netco is not liable for any direct damages and to expressly cap its damages to amounts paid by Counterparty for accessing the Website.

f. I revised Section 5(b) and © in response to issues raised by many counterparties when I negotiated EOL ETA issues.

g. Section 6(a) has been revised to expressly provide that Confidential Information excludes counterparty identifying information, as well as transactional or biographical information in statistical form. Please let me know if you disagree with the scope of this exclusion. If you don't want to exclude counterpary identifying information, we can merely delete the phrase "the identification of Counterpartt as a user of the Website and shall also exclude". I added a 1-year term following expiration of the ETA to the confidentiality obligation in Section 6(d), reasoning that most of the confidential information protected by this Section belongs to the Counterparty, not Netco, and thus desiring some cut off point for our obligation to maintain confidentiality.

A number of our counterparties enter into transaction by and through service companies or agents. I have prepared a revised Password Application, side letter to the ETA, and Consent and Acknowledgment form to be utilized by such counterparties and attach these documents below for your review and reference as well.

Please give me a call with any questions or comments.

Regards,

Leslie
(713) 853-6121 (o)
(713) 256-0572 (cell)
(713) 528-5215 (home)