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Enron Mail |
Lisa and I reviewed the captioned for purchase by E-NEXT GENERATION LLC,
which is the special purpose vehicle established to finance North American power project asset acquisition and development. Most of these comments have general applicablity to all equipment or service contracts destined for the facility, so you can use these as a starting point for future purchase contract drafting. For that reason I have also cc'd Kay and Sheila. 1. The Purchaser should be E-NEXT GENERATION LLC and its Affiliates, successors and assigns - the address should be c/o Wilmington Trust Company, Rodney Square North, 1100 Market Street, Wilmington DE 19890-0001. Attention: Corporate Trust Adminstration. Maybe the place to include the expanded definition of Purchaser is in Section 1.80. The reason we should include Affiliates, successors and assigns is because of the need to get the equipment into the project company if the project enters "Phase II" under the finance documents. Generally a project will be in "Phase II" contemporaneously with the signing of the EPC contract. 2. Agent's address is 1400 Smith, Houston, Tx. 3. Section 1.16 - I think the concept of the "Combined Contract Price" is probably not needed - haven't you decided that the Services Contract will not be financed through E-NEXT GENERATION ? 4. Delivery Points -- Tax should confirm that there are no adverse tax consequences to taking delivery of equipment imported from Belgium, whether DDU or DDP. 5. The definitions of "Facility" (Section 1.31) and "Site" (Section 1.92) should work so that the bank does not get a lien on the King Plant or its land. Maybe we could have two definitions for each - one with respect to the technical requirements of the equipment and one we use for the "repowering" assets only. 6. There should be no "Owner" in the contract. Generally, the word "Purchaser" should replace "Owner." This change should not be made globally, because sometimes the word occurs with "Purchaser" - see definition of "Vendor." In most of those cases, "Agent" should be added when "Owner" is removed. 7. For the Transportation Deduct Option - Section 1.116 - the tax department should pass on whether title passing on delivery outside the U.S. will cause adverse tax consequences. Ditto Section 3.2.2 - "Delivery to Optional Delivery Point." 8. Article II should be titled "Responsibilities of Purchaser and Agent" - ditto in the title to 2.1. In (f) through (i) of 2.1, should add "or Agent" after "Purchaser." Although the Section 23 "Relationship of the Parties" provision sets forth the agency relationship between the Purchaser and Agent, it can't hurt to clarify it here, too. 9. Remove Section 2.2. Assignment provisions will be in Article XXII. 10. Section 3.8 ©(4) uses "Indemnify" as a defined term - didn't see a definition; Section 3.9 uses the defined term "Work," which I did not find, either (may be comprehended in "Scope of Work"). 11. In Article IV - the Representation and Warranties should come from the Agent, if possible, and not from the Purchaser. 12. For cancellation charges in Section 5.3 - should include a schedule in Exhibit I with firm $$ amounts. Also - what is PNTP in the context of PNTP +1 month? 13. In Section 5.4.4 are the "adjustments" are contemplated on a suspension recission negotiated before the recission is effective? 14. In Section 6.1.3 if we are requiring an L/C from them on NTP, probably should have a credit quality requirement. Let's discuss. Also in the second to last sentence of that section, need to insert "by" before "the reduction" and replace the "of" after "reduction" with "in." 15. In Section 6.4.3., there is a proviso that the Seller pays the Take Over LDs if Seller does not dispute the amount. If the amount is disputed, does it move to arbitration? Should they pay them and then dispute amounts per Section 26.3? Ditto 6.4.4. 16. Section 6.7.2 - Address should be for ENA as Agent for E-NEXT GENERATION LLC, 1400 Smith, Houston, 77002. 17. Is a Preliminary Notice to Proceed required? See Section 7.2.3. 18. The Quality plan in Section 9.3 discusses "ISO 9001, 1994" and any conflict between the two. Are there some words missing? 19. Article XX is great - no Purchaser indemnities!! 20. Article XXII - Assignment - see attached. This form was highly negotiated with GE - no other vendor has seen it. For the special purpose entity structure, we need at least to have the ability of the Lenders to "foreclose" on the units. Section 22.2(z) contemplates the transfer of a project of which the subject units are a part. There is a credit quality rating of BBB- requirement as well as others. I recommend we use the attached as a template to discuss internally what your counterparty would take - to make it as easy as possible to sell the project. I would not offer it up as-is - it is a starting point to talk to them about what they need. 21. In Section 25.1 - Notices - Add ENA as Agent - ditto 25.3. Bart - thanks so much for your help. Give me a call to discuss.
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