Kay,

I have reviewed the proposed change with our management, and we may be able
to close this out.  For clarification purposes, please review the attached
document, in which I have incorporated your changes as proposed on 10/9/01.
The changes were made to the version you sent back to Siemens Westinghouse
on 10/01/01.  If we both agree that this version is accurate, please advise
and we will begin the execution process on our end.

I look forward to hearing from you.

Ann

-----Original Message-----
From: Mann, Kay [mailto:Kay.Mann@enron.com]
Sent: Tuesday, October 09, 2001 11:19 AM
To: Davis Ann E
Subject: RE: Settlement agreement


Hi Ann,

Thank you for your response. I wanted to propose some different language
for your consideration:

WHEREAS, the Gleason Project sustained damage to its exhaust stacks and
alleged that Siemens Westinghouse was responsible for such damage
because (i) of its failure to, among other things, provide drawings with
adequate directions for the welding of those stacks and (ii) excessive
vibrations at the Gleason Plant were a contributing factor to such
damage.  As a result, Enron presented a breach of warranty claim to
Siemens Westinghouse, in May of 2001, under the Contract in the amount
of Four Hundred Nine Thousand, Six Hundred Sixty-Six Dollars
($409,666.00) for repair work performed on two of the stacks ("Warranty
Issue").

I hope this gets us there.  

Thanks,

Kay

-----Original Message-----
From: Davis Ann E [mailto:Ann.Davis@swpc.siemens.com]
Sent: Thursday, October 04, 2001 8:05 AM
To: Mann, Kay
Subject: RE: Settlement agreement



Kay:

We are in receipt of Enron's proposed changes to the Settlement
Agreement
and Release on the Gleason Project.  Unfortunately, it appears that the
intent of the Settlement Agreement has strayed away from initial
discussions
between our respective business representatives.   In past discussions
with
Enron regarding its claim for costs associated with reconstruction of
the
Gleason CT exhaust stacks, Enron tied its local low frequency noise
concerns
to the stack reconstruction issue.  Although the causes for
reconstruction
of the stacks were beyond SWPC responsibilities, SWPC agreed that in the
interest of continued customer relations, we would be willing to make a
business policy concession to Enron on the reconstruction costs in
exchange
for indemnification on future stack and noise issues. 

The latest revisions to the Settlement Agreement deletes any references
to
the noise issues in the warranty definition, thereby eliminating any
coverage for indemnification for future claims which may arise on that
issue
from the Settlement Agreement.  This elimination substantially erodes
the
value of Enron's indemnification, and the settlement overall.  As
modified,
the deal is no longer palatable to SWPC, and it is in our best interest
not
to enter into the Agreement as proposed by Enron.  Should Enron be
willing
to re-insert the language struck from the third WHEREAS paragraph, SWPC
would be willing to sign on to the deal.

Please contact me directly if you wish to discuss this further.  SWPC
would
like to resolve all outstanding issues with Enron, but we will not make
payment on a claim for an issue which we believe we bear no
responsibility
unless such payment is part of a more global settlement.


Regards, 

Ann Davis
Counsel
Siemens Westinghouse Power Corporation
4400 Alafaya Trail, MC Q2-480
Orlando, FL  32826
direct: (407) 736-2017
fax: (407) 736-5034

-----Original Message-----
From: Mann, Kay [mailto:Kay.Mann@enron.com]
Sent: Monday, October 01, 2001 5:57 PM
To: ann.davis@swpc.siemens.com
Subject: Settlement agreement


Hi Ann,

I'm attaching a redline with just a couple of changes to the draft you
sent.  Hopefully, we can wrap this up.

Thanks,

Kay

 <<EnrGleasonStackSettle 10-1redline against 10-1.doc>> 

ps, here's the clean copy:

 <<EnrGleasonStackSettle 10-1.doc>> 


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