Pete,

These comments are from our Finance group.  These are FYI at this time; 
further discussions to follow.

Kay
---------------------- Forwarded by Kay Mann/Corp/Enron on 02/20/2001 09:10 
AM ---------------------------
From: Lisa Bills/ENRON@enronXgate on 02/19/2001 02:18 PM
To: Sheila Tweed/HOU/ECT@ECT
cc: Kay Mann/Corp/Enron@Enron, Roseann Engeldorf/ENRON@enronXgate, Catherine 
Clark/ENRON@enronXgate, Scott Dieball/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, 
Joseph Deffner/ENRON@enronXgate, Ben Jacoby/HOU/ECT@ECT, Jake 
Thomas/HOU/ECT@ECT 

Subject: Draft GE Turbine Agreement Comments

Sheila,
I have reviewed the template GE turbine contract you sent last week from A&K 
as an initial draft for our review.

1. If this is the template, I would like to understand how the "ENA as agent 
for E-Next" language is going to be inserted and what exactly the language 
will say.  With respect to the Agreement in Principle for the turbine for the 
Longview project, the contract states that this template along with Pastoria 
Assignment and Assumption language and override letters will be the basis for 
the final turbine purchase agreeement.  Given that the Pastoria turbine 
contracts had the financing vehicle on the contract as purchaser, with ENA as 
its agent, I'm unclear how the circulated template contract is supposed to 
read for the Longview project and every other turbine purchase contract which 
is being financed by E-Next Generation LLC.

I have noted in the template contract sections which need to be "agentized", 
including the preamble where the question is asked if ENA will always be the 
purchaser - no is the answer for Longview and probably most of the contracts 
ENA wants to enter into with GE.  I will not make those comments here until I 
receive your response to the above.

2. First Recital:  Given that the Facility is defined for a specific project, 
I didn't read anywhere that ENA has the flexibility to use this turbine in 
other projects if it so chooses.  Please advise where I can find this 
flexibility to change venue language.

3. Second Recital:  Where is "GTG" defined?

4. "Owner":  Will this definition always be required that it's not in 
brackets, i.e., that Purchaser and Owner are different parties?

5. Please change definition positions for 1.74 and 1.75 as they are not in 
alphabetical order currently.

6. Cleanup in 6.1.1:  Delete "the" after "of" and before "each" in the 
lead-in.

7. 10.3.2:  In "(f)", change "(e)" to "(g)".
  In "(j)", I don't understand why we would accept it.  If the Purchaser and 
Owner are the same party, I read this subsection to say that GE does not ower 
Takeover LDs - how could this be?  Please advise.

8. 10.15 and certain places thereafter:  Is "TDI" supposed to be a defined 
term?

9. 15.2.1:  In the third sentence, do we want to use the defined term "Import 
Duties"?

10. 17.3(b)(ii):  Why are the licenses, authorizations etc in the second half 
of the subsection to be assignable only to Purchaser (to the extent 
assignable) and not to "Purchaser, or to any person designated by Purchaser 
without any right to compensation not otherwise provided for herein" as the 
lead-in to the subsection states for certain other items to be assigned?

11. Article XIX:  Has David Marshall reviewed this section from both an Enron 
as purchaser and Enron as agent for E-Next perspective?

12. 22.2:  I thought in all our negotiations with GE, that the language we 
used when we assigned the turbine purchase agreements from WestLB to E-Next 
was to be the basis for this contract.  The recent request for Rose to 
provide such language to the team again only reinforces my thought.  Why is 
the old language which does not allow for flexibility in financing methods 
(lenders don't have flexibility to "cash-in" their collateral if Purchaser 
defaults) and has GE listing what reasonable consent is still in this draft?

 Isn't the last paragraph in this section somewhat duplicative with 2.2 but 
more restrictive in stating when a replacement guarantee is required?  Can't 
it be deleted?

13. 27.1:  I realize Limitation of Liability is still being negotiated with 
GE but I don't understand why we would allow them to be liable for less than 
100% of the Purchase Amount especially since they are holding us liable for 
100% of the Purchase Amount.  As with the EPC Contract, the lenders will have 
concern and may not be willing to finance the turbines if GE's LOL is less 
than 100%.
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