RE: Summary of discussion with Gerald

I agree with your summary.

-----Original Message-----
From: =09Owen, David =20
Sent:=09Friday, November 16, 2001 5:33 PM
To:=09Josey, Scott
Cc:=09Melendrez, Jesus; Nemec, Gerald; 'kckrisa@apex2000.net'
Subject:=09Summary of discussion with Gerald=20

Scott,

I talked to Gerald after our telecon as you requested ----- here's the summ=
ary:

I repeated to Gerald my reply when you asked my opinion regarding the best =
way to approach Clark. To reiterate for clarity, I suggest that Scott tell=
Clark we are not satisfied with BCCK's management of activities related to=
field construction and construction management activities. If you (Scott)=
feel it is appropriate or necessary to offer details, the general reasons =
are: (1) Poor communication leading to schedule delays and/or cost increase=
s; (2) A very casual (and consequently unacceptable) approach to improving=
the overall project schedule as necessary to achieve a 15 December 2001 in=
-service date; and, (3) Unilateral decision-making by BCCK without the cons=
ent of all Crescendo partners having the same effect as (1) above. As a re=
sult, Scott and Ken mutually agree and have directed Dave to take a lead ro=
le in completing all construction, testing, commissioning, start-up and rel=
ated activities. It is important to stress to Clark, that, while Dave and =
his delegates have primary authority and responsibility for completing thes=
e activities, it will not be done at the exclusion of BCCK. To the contrar=
y, Crescendo requests and expects BCCK's full and open participation. =20

Though the contract does not explicitly address this action, Gerald agreed =
that since Enron wears the vast majority of all types of risk in this proje=
ct, it is reasonable for us (Enron) to take action in order to protect our =
interests. In addition, Ken Krisa agrees with the need and reasons for mak=
ing this move, establishing strong support (though not, perhaps, unanimous)=
at the Crescendo LLC level. Because the contract does not provide specifi=
cally for this action, our options -- in increasing order of severity with =
regard to impact upon BCCK and the potential for unpleasant reactions by sa=
me -- are:

Most Productive, Least Destructive to Project and Relationships:

1. Take the direct approach to Clark as I described above.

Plan B:

2. Submit a change order under the appropriate section of the Contract cha=
nging BCCK's scope of work and informing them of the change in management p=
hilosophy and leadership.

Desperation Tactic:

3. Declare the agreement in default due to non-performance and take over a=
ll activities contemplated by the agreement.

(Gerald --- How did I do???)

Dave