Sorry if I'm a little late in the day.  I feel into marathon meeting mode 
today.

Here are my observations of the GE contract.  I tried to confine it to 
significant issues since it appears to me that the negotiations are far along.

General Terms and Conditions
I don't see where the buyer has much financial leverage for 
performance/warranty issues.  Final payment is made at shipment, with the 
Buyer having the benefit of a 10% retention bond; however, the retention bond 
expires at Provisional Acceptance.  There is no financial leverage for Final 
Acceptance or the warranty period.  Also, usually provisional or final 
acceptance requires that GE provide the operating manuals.

The assignment language (8) is somewhat narrow.  I don't know the deal, so I 
don't know how it fits. It can help to have language which allows for free 
assignment after provisional acceptance or payment in full, whichever occurs 
first.  Also, the contract can allow for a substitute guaranty as payment 
security, in lieu of the buyer guaranty.  Again, I don't know the deal so 
this may be fine as is.

The contract incorporates GE's proposal as a  part of the contract, but does 
not give an order of precedence.  I haven't seen the proposal or any other 
technical exhibits, but sometimes these can be very self-serving.  Therefore, 
you can potentially lose ground with what is in the exhibit.

Warranty.  The language is a bit confusing to me, especially the interplay of 
the 1st and 2nd paragraph.  Also, the "outs" they have are very broad.  It is 
better if there outs are limited to installation/operation/maintenance not in 
accoredance with their written instructions (alternatively, industry 
practice).  Also, they have an out if repairs are performed without their 
permission, but there's no time line or urgency for their response to a 
warranty claim.  A statement that they must provide a service engineer within 
3 days or so might help.  I also suggest being clear that 1.2 applies to 
warranty obligations, but their obligation to respond quickly to warranty 
problems need to be explicit.

Excusable Delay. (15) I would delete "indirectly" from the 3rd line.

Provisional Acceptance. I don't understand the phrase "only to the extent and 
proportional share".  Does this mean that GE may not be liable for the full 
LD's, or that the buyer has to prove  a right to collect LD's?

Litigation. The dispute resolution (mediation then  litigation) is not 
consistent with the usual arbitration route we request.

I didn't take a hard look at LD's, since I assumed these are settled.

13.6 Enron typically gets more precise language than this.  For instance, I 
would delete or clarify the phrase "including that due to environment or 
operation", as being vague.  13.6 (i)The phrase "proper storage, 
installation, operation and maintenance" should be as defined by GE's written 
instructions, or at least based on industry standards. 13.6 (ii) could 
conceivably allow them to drag their feet on a repair, then not allow us to 
get someone else to do the work.

14.1  The last line should include the words "strict liability" after 
"negligence". GE ususally gives us indemnity for any hazardous substance they 
introduce.

This is a quick look.  If you need more detailed information (and you think 
there's time to negotiate further), I can look at it in more detail.

Kay




"Bob Licato" <Bob.Licato@enron.com> on 07/12/2000 03:46:26 PM
To: kay.mann@enron.com
cc: "Lisa Mellencamp" <Lisa.Mellencamp@enron.com> 

Subject: RE: GE Turbine Purchase Contract - Linden 7 site





---------------------- Forwarded by Bob Licato/ECP/HOU/ECT on 07/12/2000 03:21
PM ---------------------------


Bob Licato
07/12/2000 02:31 PM

To:   Lisa Mellencamp/HOU/ECT@ECT, kaymann@enron.com
cc:   Chuck Tobias/ECP/HOU/ECT, Cliff Evans/ECP/HOU/ECT
Subject:  RE: GE Turbine Purchase Contract - Linden 7 site

I spoke to Jon Stroble of El Paso today and he as agreed to delay signing this
agreement until next week.   We need to get him any comments by close of
business on Monday, July 17.    Can you please review and get me comments 
ASAP.
thanks and sorry for the short notice.
---------------------- Forwarded by Bob Licato/ECP/HOU/ECT on 07/12/2000 02:15
PM ---------------------------


 (Embedded     Enron Capital & Trade Resources Corp.
 image moved
 to file:      From:  "Stroble, Jon"
 pic17929.pcx) <StrobleJ@EPEnergy.com>
               07/10/2000 11:58 AM






To:   "'cgoode@ssd.com'" <cgoode@ssd.com>
cc:   "Abramson, Shelly" <AbramsonS@EPEnergy.com>, "Kidd, Andrew"
      <KiddA@EPEnergy.com>, "'chuck.tobias@enron.com'" 
<chuck.tobias@enron.com>,
      "'bob.licato@enron.com'" <bob.licato@enron.com>
Subject:  RE: GE Turbine Purchase Contract - Linden 7 site


Cory,

Please see comments in attached file.  I changed the date to July 14th
assuming we can sign on this date.

 <<agree_6_13_00.doc>>    <<TsCs_6_28_00.doc>>      <<pricing_06_23_00.xls>>

I'm hoping you can rewrite these files incorporating these comments as well
as Shelly's comment below and Mike Neuman's comment from his 6/28 email
copied below.

Parent Guarantee-We feel the dollar amount for the parent guarantee should
be raised from $33Mill to $37mill to allow us some room in case of change
orders.  In any event, the Contract Price is approximately $35mill.

Thanks,
Jon

          -----Original Message-----
          From:     Abramson, Shelly
          Sent:     Friday, July 07, 2000 4:58 PM
          To:  'cgoode@ssd.com'; Kidd, Andrew; Stroble, Jon
          Subject:  FW: GE Turbine Purchase Contract - Linden 7
site

          As per my previous e-mail.

          -----Original Message-----
          From:     Abramson, Shelly
          Sent:     Thursday, June 15, 2000 3:28 PM
          To:  Stroble, Jon; Kidd, Andrew; 'cgoode@ssd.com'; Baker,
Bob
          Cc:  Brown, Stephen
          Subject:  GE Turbine Purchase Contract - Linden 7 site

          Jon and I met with East Coast Power this morning to discuss
the contribution by El Paso of the GE Turbine for the Linden 7 Site.  The
assignment clause in the GE Terms and Conditions currently permits the
assignment by the buyer to an affiliate without GE's consent. The word
affiliate is not defined but we should be able to take the position, as a
49% equity owner in East Coast Power, that it is an El Paso affiliate.  I
would recommend that to clarify, we include the following clause after the
word affiliate in the Assignment Section: (including but not limited to East
Coast Power L.L.C.).  Andrew, Bob and Coralyn, pls advise if you would like
to take a different approach. I also expect that we will have a credit issue
when the Contract is assigned to ECP as GE is now, I believe, getting an El
Paso Energy Corp. Guaranty. According to Bob Licato at ECP, GE accepted an
ECP assignment without an Enron guaranty on Linden 6 due in part to the
presence of GECC as a lender/equity participant in ECP. We can discuss this
with GE when we inform them of the planned assignment to ECP.  Finally, I
would advise that when we get GE to sign a letter accepting the assignment,
we confirm that the GE warranties flow to ECP.


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(See attached file: agree_6_13_00.doc)
(See attached file: TsCs_6_28_00.doc)
(See attached file: pricing_06_23_00.xls)




 - pic17929.pcx
 - agree_6_13_00.doc
 - TsCs_6_28_00.doc
 - pricing_06_23_00.xls