RE: Settlement agreement

Hi Ann,

Thank you for your response. I wanted to propose some different language for your consideration:

WHEREAS, the Gleason Project sustained damage to its exhaust stacks and alleged that Siemens Westinghouse was responsible for such damage because (i) of its failure to, among other things, provide drawings with adequate directions for the welding of those stacks and (ii) excessive vibrations at the Gleason Plant were a contributing factor to such damage. As a result, Enron presented a breach of warranty claim to Siemens Westinghouse, in May of 2001, under the Contract in the amount of Four Hundred Nine Thousand, Six Hundred Sixty-Six Dollars ($409,666.00) for repair work performed on two of the stacks ("Warranty Issue").

I hope this gets us there.

Thanks,

Kay

-----Original Message-----
From: Davis Ann E [mailto:Ann.Davis@swpc.siemens.com]
Sent: Thursday, October 04, 2001 8:05 AM
To: Mann, Kay
Subject: RE: Settlement agreement

Kay:

We are in receipt of Enron's proposed changes to the Settlement Agreement
and Release on the Gleason Project. Unfortunately, it appears that the
intent of the Settlement Agreement has strayed away from initial discussions
between our respective business representatives. In past discussions with
Enron regarding its claim for costs associated with reconstruction of the
Gleason CT exhaust stacks, Enron tied its local low frequency noise concerns
to the stack reconstruction issue. Although the causes for reconstruction
of the stacks were beyond SWPC responsibilities, SWPC agreed that in the
interest of continued customer relations, we would be willing to make a
business policy concession to Enron on the reconstruction costs in exchange
for indemnification on future stack and noise issues.

The latest revisions to the Settlement Agreement deletes any references to
the noise issues in the warranty definition, thereby eliminating any
coverage for indemnification for future claims which may arise on that issue
from the Settlement Agreement. This elimination substantially erodes the
value of Enron's indemnification, and the settlement overall. As modified,
the deal is no longer palatable to SWPC, and it is in our best interest not
to enter into the Agreement as proposed by Enron. Should Enron be willing
to re-insert the language struck from the third WHEREAS paragraph, SWPC
would be willing to sign on to the deal.

Please contact me directly if you wish to discuss this further. SWPC would
like to resolve all outstanding issues with Enron, but we will not make
payment on a claim for an issue which we believe we bear no responsibility
unless such payment is part of a more global settlement.

Regards,

Ann Davis
Counsel
Siemens Westinghouse Power Corporation
4400 Alafaya Trail, MC Q2-480
Orlando, FL 32826
direct: (407) 736-2017
fax: (407) 736-5034

-----Original Message-----
From: Mann, Kay [mailto:Kay.Mann@enron.com]
Sent: Monday, October 01, 2001 5:57 PM
To: ann.davis@swpc.siemens.com
Subject: Settlement agreement

Hi Ann,

I'm attaching a redline with just a couple of changes to the draft you
sent. Hopefully, we can wrap this up.

Thanks,

Kay

<<EnrGleasonStackSettle 10-1redline against 10-1.doc<<

ps, here's the clean copy:

<<EnrGleasonStackSettle 10-1.doc<<

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