Blue Dog CO #2 rev 6a

Jeff and Kay:

I have addressed Kays comments with regard to CO 2:

1. RE: Section 2.6 and Jeff's comment to end Warranty on March 11, 2004.
Under the Contract, the Primary Warranty period has a sunset date of 36
months after completion of delivery of each Unit. If I knew for certain that
March 11, 2001 that the Unit would be in storage, I would have no problem
acknowledging that the sunset date would be March 11, 2004. If we establish
the storage facility as the Delivery Point, then the Contract language takes
us to the same point, and I do not have to hold my breath while the train
moves the CT to the storage facility. In addition, I want to keep the
Primary Warranty Period the same for all the parts of the Unit 1, so the
final delivery to storage should start the clock running for the purposes of
the Installation Period, deemed Acceptance, and the 36 months sunset date in
Contract Section 14.1.1, as I have now drafted C.O. 2, Section 2.6.

2. RE: Section 2.11 and Kay's comment that except for the cosmetic
deterioration we address in C.O. 2, Section 2.4, it seems the language could
be interpreted that I am letting GE off the hook for all liability when risk
of damage and loss passes per this section. I have added clarifying language
to say that GE does not shed its liability accrued while Unit 1 was under its
control just because risk of damage and loss passes to someone else for
transportation to the Site.

Kay and Jeff: Please let me know if I have properly represented the issues
and provided satisfactory corrections.

BB