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Enron Mail |
Brian,
I didn't get the revised draft. Kay From: Brian D Barto@ENRON_DEVELOPMENT on 02/07/2001 04:43 PM To: Kay Mann/Corp/Enron@Enron cc: Subject: BlueDog Change Order #2, Rev 6 Kay: I have edited the draft you sent me and placed GE's comments in a different color so you can see their comments next to yours. Risk Management (Paul Parrish) is OK with the 100% coverage. The original deal was that they would be off the hook for cosmetic damage incurred by GE's storage, so to put them back on the hook was a bit of a retrade. Otherwise I think their comments (other than the approval of the assignment comment) are in order. Is this draft acceptable to you? BB ----- Forwarded by Brian D Barto/ENRON_DEVELOPMENT on 02/07/2001 04:37 PM ----- jeffrey.darst@ps.ge.com 02/07/2001 02:20 PM To: bbarto@enron.com cc: chasecl@pssch.ps.ge.com Subject: BlueDog Change Order #2, Rev 5 Brian, The following are our comments to the subject change order. If you like, we can set up a time to discuss these comments. As I mentioned on the phone, many of the comments directed at Part 1, Item 1 are due to the fact I do not have a signed copy of Consent to Assignment. I am searching for a copy at this end, but if you have ready access, a copy would be appreciated. Part I 1. The base contract defines the party GE is contracting with as the "Purchaser". LJM2is the Purchaser under the base contract. I understand assignment of the contract by LJM2 to E-Next is under consideration and was supposed to have occurred in December. I do not have a copy of the Consent signed by GE or any other signed documents indicating that the assignment has taken place. Assuming the assignment has taken place, according to the unsigned documentation I have, Enron North America Corp. should be replaced as the contracting party in paragraph 1 by E-Next Generation LLC as the party that is contracting with GE and is the Purchaser. As I understand the draft Consent agreement, Enron North America is supposed to be the Agent for E-Next and is not the Purchaser. This is consistent with the cover page of the draft CO No. 2. Revision 5 to the Change Order does not quite succeed in making the correction. It should say "... between General Electric Company ("Seller") and E-Next Generation LLC ("Purchaser") dated May 31, 2000 (the "Agreement"), Purchaser, acting through its Agent, Enron North America Corp., hereby amends ...". However, CO No. 2 with this correction to paragraph 1 should not be signed by GE until GE has agreed to the assignment to E-Next. Otherwise, the signed CO. No. 2 could, by itself, be construed as consent by GE to the assignment. 2.1 Delete the added language that begins with the words "on or prior to the Guaranteed Unit Shipment Date(s)...". Because Unit No. 1 is going to storage and the customer controls when it is released from storage and when it gets to the jobsite, the risk of late delivery originally assigned by the contract to GE has shifted to the customer. This is recognized in section 5.5.2 of the contract which states that if GE is directed to ship to storage, for the purpose of assessing LDs and final payment, GE's delivery obligation is deemed fulfilled. The original guaranteed delivery dates are no longer relevant. If the Unit 1 equipment is close enough to being ready for delivery that it must be shipped to storage because the customer cannot take possession of it, it does not matter if we ship to storage before or after the contract delivery dates. 2.2 The comment to 2.1 applies to this paragraph also. Further, there is no guaranteed delivery date for non-Major Components as long as delivery of that equipment does not impede the continuous progress of installation. 2.4 Delete the words "unless caused by Seller or its Subcontractor" at the end of this paragraph. Otherwise, the paragraph first takes a responsibility away from GE and then re-imposes it. As I understand it, there is a significant possibility that some cosmetic deterioration to external surfaces will occur to the equipment while it is in storage. This is a function of the storage conditions and GE is responsible for those conditions. 2.6 Delete in its entirety the second sentence which reads "Passage of title and warranty obligations of Seller with respect to the Unit 1 Equipment remain unchanged under the Agreement". Article 5.5.2 makes it clear that Purchaser's direction to place equipment into storage causes title to pass and delivery for the purposes of LDs and final payment to occur even though Purchaser has not taken physical possession of the stored equipment. 5.5.2 also indicates that all expenses incurred by Seller as the result of placing equipment into storage shall be payable by Purchaser. These expenses include any extension of the Primary Warranty Period that results from storage. The deleted sentence should be replaced by: "The parties agree that the Primary Warranty Period for Unit 1 Equipment placed into storage shall be determined in accordance with Article 14.1.1 of the Agreement except that the Primary Warranty Period shall end for the gas turbine and generator no later than March 11, 2004 and for the balance of the Unit 1 Equipment on March 31, 2004 unless extended by mutual agreement." 2.10 We will insure the equipment to 100% of its purchase price. The policy in place will have a $300,000 deductible, for which GE will be responsible. 2.11 Seller's responsibility for both damage and loss, not just loss, should pass to Purchaser. The rest of the changes are acceptable. Regards, Jeff
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