Call w/ John Schroeder of GE

This could become interesting if it holds up.

Kay
---------------------- Forwarded by Kay Mann/Corp/Enron on 01/03/2001 02:11
PM ---------------------------

Ben F Jacoby@ECT
01/03/2001 01:53 PM
Sent by: Ben Jacoby@ECT
To: Janet R Dietrich/HOU/ECT@ECT, Christopher F Calger/PDX/ECT@ECT, Ozzie
Pagan/HOU/ECT@ECT, Mike J Miller/HOU/ECT@ECT
cc: Sheila Tweed/HOU/ECT@ECT, Kay Mann/Corp/Enron@Enron

Subject: Call w/ John Schroeder of GE

I talked with John a few minutes ago. Here's the gist of the conversation:

1. Miller was promised the 4 7FAs based on his discussions with John
concerning Enron's interest. GE is wavering a bit on this now, however,
because other sales reps within GE have complained that we were given first
crack. John characterized our current position as "the front of the line
without a pass".

2. Ultimately (and obviously), Dell Williamson will decide to whom these
turbines are allocated.

3. John said we should have a proposed letter agreement on the turbines this
afternoon. He emphasized that they do not yet have the requisite GE internal
approvals. Nonetheless, the major terms included in the Letter Agreement
would be as follows:
- Form of turbine purchase contract would be the GenPower 7FA turbine
purchase agreement, modified to include standard Enron provisions negotiated
between Sheila Tweed et. al. concerning assignment, indemnities, etc.;
- the turbine purchase contract would need to be executed by the end of
January;
- 5% of the purchase amount would need to be paid upon execution of the
Letter Agreement, with an additional 5% due at the end of the month. The
balance of payments in the turbine purchase agreement would be paid in equal
monthly instalments for each turbine through the respective turbine's
delivery date (last day of each of March, April, May, and June);
- we would be required to negotiate with GE in good faith on an LTSA, water
system and STG (if needed). This would not be an exclusive, nor would we be
subject to payment adders to the extent our good faith negotiations do not
result in a definitive agreement.
- the Letter Agreement will not be drafted as an option (even though it will
essentially operate as one), but instead will be a letter agreement for the
purchase of turbines. Unfortunately, the semantics of this are both important
to us and GE, but I believe it will be extremely difficult to do anything
other than the form and semantics that GE wants (as we are competing with
other buyers who do not have the same balance sheet constraints as us). As
such, we may want to consider an interim OBS vehicle such as LJM if the
looseness of the contract presents challenges for the TurboPark banks.

Lastly, given the somewhat tenuous nature of our queue position on the
turbines, John strongly suggested that Delainey be immediately briefed, and
that he call Dell as soon as possible based on the information John provided
me in our conversation described above. He also suggested that we indicate to
Dell that we have firm sites (Florida and Longview) for the units. John told
me that this latter point is important to GE as they are becoming fatigued by
their other customers who have slues of turbines and not enough sites to
accommodate them.

Let me know if you have any other questions. FYI, I put in a call to Lisa
Bills on this deal, but have still not heard back from her.

Regards,

Ben