Richard, 

Today I attended the deposition of Bruce Karsh, President and Principal of 
Oaktree Capital Management.? Dan Lefler, representing SDI, took the lead and 
asked questions regarding why Karsh chooses to invest in certain companies,? 
and why he chose to invest in NSM.? Karsh did not mention Enron or ECT, and 
he stated that the reason he invested in NSM was two fold -- first, he knew 
SDI was involved and second, he knew Busse was involved and both would bring 
great experience to the project.? 

Karsh was asked about the terms of the settlement agreement with Enron.? I 
objected.? Karsh did not answer the question.? It was left open as to whether 
we would produce the settlement agreement.? We will not produce the 
settlement agreement and will oppose any attempt by Oaktree to voluntarily 
produce the agreement.? 

Please call me at (213) 892-4556if you have any questions.? 

Sabina Bhalla 

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