In re ICTS

PRIVILEGED AND CONFIDENTIAL: ATTORNEY-CLIENT COMMUNICATION, ATTORNEY WORK
PRODUCT

Nicole and Bob:

I have had some preliminary legal research done on whether Enron Metals has
a pre-litigation duty to contest the various allegedly unpaid bills received
from the various ICTS-related carriers, in order to preserve its legal
defenses if litigation is filed by one or more of those carriers. It does
appear that in order to preserve its right to contest these bills in a later
legal proceeding, Enron Metals should send a notice in writing to each of the
carriers who have sent it unpaid bills, simply stating that Enron Metals
contests them. This should be done such that the carrier receives the notice
of contest within 180 days after MG Metals has received the unpaid bill.
Telefax appears to be a legally sufficient means of communicating this
notice.

However, this is not the end of the strategy consideration. It also appears
from our preliminary legal research that Enron Metals may in fact be
secondarily liable for the unpaid bills, even if Enron Metals already paid in
full in advance to ICTS, its shipping agent. This may apply even if ICTS
mistakenly failed to request sufficient payment from Enron Metals to begin
with; i.e, a situation where ICTS thought it could get a carrier to transport
a load for $100, and asked for and received $100 in payment from Enron
Metals, but had to agree to pay $150 to get the load transported. Last, I
believe Bob mentioned that there are in fact unpaid carrier's bills for which
Enron Metals has not paid ICTS at all, given the realistic fear that once
ICTS has Enron Metals' money, that money may not get repaid to the carrier.

In other words, assuming that the bills are in fact factually accurate, were
timely billed, and were accurately calculated using the applicable tariff
rates (all of which may be important potential defenses that I have not
investigated), then Enron Metals may not have any legal defenses, and sending
the 180 day notice to the carriers may ultimately do nothing to help Enron
Metals if the carrier elects to file some legal action. Worse, if Enron
Metals has not already sent out such letters, doing so now may attract
attention by these carriers, who otherwise may have back-burnered these
claims. On the other hand, sending such letters may (and I repeat, may)
deter some of the carriers, if the carriers are aware of substantial problems
with their bills.

I will have my secretary, Deborah Shahmoradi, call each of you to arrange for
a telephone conference for tomorrow or Monday to discuss this.

Britt

P.S.--Richard, this is just FYI; you don't need to be in on the telephone
conference.