Infineum Lawsuit

Lisa J. Mellencamp
Enron North America Corp.
1400 Smith St.
Houston, TX 77002
Tel: (713) 853-7986
Fax: (713) 646-3393
----- Forwarded by Lisa Mellencamp/HOU/ECT on 07/19/2000 11:15 AM -----

Richard Lydecker@ENRON
07/19/2000 10:58 AM

To: W David Duran/HOU/ECT@ECT
cc: Lisa Mellencamp/HOU/ECT@ECT
Subject: Infineum Lawsuit

Quick summary of where we stand:

Richard Sanders will be legal coordinator from Enron side in connection with
this litigation. Leboeuf Lamb will be our outside litigation counsel.

Our legal team has concluded that Infineum does not have the right to take
steam in excess of their contractual maximums. The loss of revenue (about
$1.5 million annually) is clearly an adverse impact to our Linden plant which
relieves even any ambiguous obligation to offer "excess" steam above the
maximum to Infineum.

The initial strategy is to prepare a 12 B 6 (whatever that is) motion to
dismiss which presents the contractual relationships to the court and argues
that there is no reasonable interpretation of the contract and intent of the
parties that would support Infineum's allegations that we have an absolute
obligation to offer Infineum any steam in excess of the contractual maximum.
This motion could be 2-3 months pending.

If the motion is granted, this particular lawsuit is quashed.

If the motion is denied, we start spending real money re disclosure,
depositions, counter-claims etc. At that point we would probably take a very
aggressive position vis-a-vis claims for damages against Infineum to raise
the stakes for them and put real dollar risk exposure back to them for
continuing the lawsuit.

Again, this suit is a cynical attempt to gain leverage in negotiations to
supply energy to Infineum from Linden 6. In the meeting at which our guys
were informed by Infineum that the litigation would be initiated it was clear
that if we gave them a big enough break on electricity price, the lawsuit
would go away. To me that seems pretty close to, if not actually, abuse of
process.

Will keep you informed. Let me know if there are any specific questions.
Dick.