SGSI litigation threat: our response

Bob---- are you now in charge of EBS---put another way are "You da Man"
----- Forwarded by Richard B Sanders/HOU/ECT on 09/28/2000 05:51 PM -----

Kenton Erwin@ENRON COMMUNICATIONS
09/28/2000 11:50 AM

To: Eric Merten/Enron Communications@Enron Communications
cc: Laura Beneville/Enron Communications@Enron Communications, Richard B
Sanders/HOU/ECT@ECT
Subject: SGSI litigation threat: our response

Eric, here is my response to the paragraph (in SGSI's letter concerning the
money due for SGSI's work on the GeoQual web map project) which is underlined
on page 3 and which takes the position that if we did not have a written
Statement of Work in place, then SGSI owns all the work it did for us and we
must cease use of it. You and Laura might want to use this paragraph in your
response to all his other business-related arguments. (I might add, for the
record and as a point for the future, that we can easily get into this kind
of trouble when we don't take care to obtain signed Statements of Work before
the work starts.)

Here it is:

Mr. Schlosser, your letter states that the ePower Locator, GeoQual, Hamachi,
and Mountain Top applications are SGSI's intellectual property because the
parties do not have an executed Statement of Work. This argument is
incorrect. Both parties are bound by the fully executed professional
services contract, which clearly states in Article 17 that all material
developed by Consultant (SGSI) "shall become the property of Company (EBS)
when prepared." Because the work, whether or not covered in a written
Statement of Work, was requested by EBS and performed by SGSI (subject to
EBS' concerns about such performance), the work is clearly covered by the
Professional Services Contract, and the foregoing statement of ownership
applies. Accordingly, EBS respectfully refuses your requests concerning such
work.

Eric and Laura, I would be happy to look at the balance of the letter, once
you've written it. You have my permission to go hard on these folks, if
their work was poor and there was no EBS authorization for them to run up
such high charges.

Kenton