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General Terms and Conditions I don't see where the buyer has much financial leverage for performance/warranty issues.
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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.
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There is no financial leverage for Final Acceptance or the warranty period.
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Also, usually provisional or final acceptance requires that GE provide the operating manuals.
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The assignment language (8) is somewhat narrow.
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I don't know the deal, so I don't know how it fits.
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It can help to have language which allows for free assignment after provisional acceptance or payment in full, whichever occurs first.
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Also, the contract can allow for a substitute guaranty as payment security, in lieu of the buyer guaranty.
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Again, I don't know the deal so this may be fine as is.
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The contract incorporates GE's proposal as a part of the contract, but does not give an order of precedence.
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I haven't seen the proposal or any other technical exhibits, but sometimes these can be very self-serving.
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Therefore, you can potentially lose ground with what is in the exhibit.
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Warranty.
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The language is a bit confusing to me, especially the interplay of the 1st and 2nd paragraph.
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Also, the "outs" they have are very broad.
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It is better if there outs are limited to installation/operation/maintenance not in accoredance with their written instructions (alternatively, industry practice).
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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.
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A statement that they must provide a service engineer within 3 days or so might help.
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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.
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Excusable Delay.
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(15) I would delete "indirectly" from the 3rd line.
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Provisional Acceptance.
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I don't understand the phrase "only to the extent and proportional share".
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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?
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Litigation.
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The dispute resolution (mediation then litigation) is not consistent with the usual arbitration route we request.
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I didn't take a hard look at LD's, since I assumed these are settled.
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13.6 Enron typically gets more precise language than this.
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For instance, I would delete or clarify the phrase "including that due to environment or operation", as being vague.
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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.
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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.
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14.1 The last line should include the words "strict liability" after "negligence".
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GE ususally gives us indemnity for any hazardous substance they introduce.
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This is a quick look.
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If you need more detailed information (and you think there's time to negotiate further), I can look at it in more detail.
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Kay
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Per your voice mail.
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Kay
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Does this mean the LV Co Gen deal has fallen apart, or are there some new LM's in our future?
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Makes sense to me.
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Dick, Thanks for your reply.
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I have since been assured that we will build on what has happened thus far, which is a huge relief to me.
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If we see forward progress tomorrow we will be all smiles.
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Again, thanks for your reply.
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Kay
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One thing to put on the list (which may be there all ready) is that we want our officers/directors to effectively resign at closing.
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Another detail (and note who is getting this email): I've had three instances recently where agreements have been forwarded to the counterparty prior to legal review.
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As much as I hate to suggest this, it may be best to have the drafts forwarded to Enron Legal before the commercial team receives the docs.
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Kay
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Has Herman seen this or the 1st amendment?
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Please let me talk to Ben.
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Thanks, Kay
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Just use a regular CA (yes, I changed my mind), describe as a power generation transaction (no equipment reference).
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Thanks,
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I don't think we need the language, especially since the guarantees won't apply to retrofitting the plant later.
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Ben Jacoby is having an offsite Friday at the Hyatt for the East Development group to discuss 2001.
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He has asked me (and I think Roger) to sit in. I'm planning on attending.
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I'm sure either or both of you are welcome, although it won't be a problem if you don't attend.
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Kay
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What fun.
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I know T. Mueller is on holiday.
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I suspect he would want AI and St. Paul to agree in writing that this doesn't prejudice any rights/constitute a waiver, etc. You may have considered this already, but payment to /request for payment to EEPC may trigger the responsibility to pay VAT.
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Good luck, and keep me posted.
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Kay
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Here's a first stab at the LOI.
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I just guessed on the attachment.
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I have a couple of questions: Any thought as to how we get/split money (other than the obvious up side for us)?
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Do we want to work toward a "Project Development Agreement" which will set forth the basis for how we develop projects on a project-by-project basis?
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Or do you envision a different next step?
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Talk to you soon, Kay
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Please call Lee Johnson and tell him that one of our development lawyers, Roger Balog, would like 2 tickets for Friday.
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I hear Ben wants a ticket for Thursday, but I assume he communicated that to Lee.
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Thank him for me, but I have my closing dinner tomorrow, and no sitter Friday.
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Thanks, Kay
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Do you mean LITERALLY across the street?
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Yikes.
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That's making it tough to ignore.
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Steak doesn't really appeal to me.
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Maybe a Ciro's salad?
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Lee just called, and he is here, so if you haven't called him yet, please don't.
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Kay
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Hi there, Lee doesn't remember getting a fax from me yesterday.
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Did you get a confirmation back?
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It was the same fax that was sent to Pete Thompson.
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Thanks, Kay
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I'll forward the email and you can print and fax.
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No big deal.
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Thank you.
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Gregg, I think I'm in good shape and can look at what John sent tonight.
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Ed, just stand by and I'll holler if I need anything.
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Thanks, Kay
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Brian, I didn't get the revised draft.
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Kay
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ok.
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I thought it was a lot to ask.
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Here's a revised draft of the agreement with Peoples.
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Kay
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Here 'tis:
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Hi there, I'm forwarding a draft EPC contract for your review.
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This form of contract assumes that the equipment will be procurred by the Owner, with the understanding that we have not resolved the issue of the timing of the procurement of the equipment, and how it will be procurred.
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