Message-ID: <7677533.1075842667980.JavaMail.evans@thyme>
Date: Mon, 9 Aug 1999 02:31:00 -0700 (PDT)
From: gerald.nemec@enron.com
To: lynn.bellinghausen@enron.com
Subject: Re: Construction Agreement
Mime-Version: 1.0
Content-Type: text/plain; charset=ANSI_X3.4-1968
Content-Transfer-Encoding: quoted-printable
X-From: Gerald Nemec
X-To: Lynn Bellinghausen
X-cc: 
X-bcc: 
X-Folder: \Gerald_Nemec_Dec2000_June2001_1\Notes Folders\Sent
X-Origin: NEMEC-G
X-FileName: gnemec.nsf

Attached are David's comments.  The gathering facilities that Independent=
=20
will be constructing (in their individual corporate capacity) are valued at=
=20
approximately $750,000.


---------------------- Forwarded by Gerald Nemec/HOU/ECT on 08/09/99 09:29 =
AM=20
---------------------------
  =20
=09Enron Capital Management
=09
=09From:  David Marshall                           08/06/99 09:47 AM
=09

To: Gerald Nemec/HOU/ECT@ECT
cc: =20
Subject: Re: Construction Agreement =20

Gerald,

I've reviewed the facilities construction agreement "FCA"and the Exhibit F =
to=20
the LLC agreement that you provided.  Suggest that we simply incorporate th=
e=20
Exhibit F requirements into the FCA by reference, and add an additional=20
requirement that Independent procure Builders All Risk insurance coverage i=
n=20
an amount sufficent to cover the full replacement cost of the 'work' and it=
s=20
components while intrasit to the jobsite, in temporary offsite storage and=
=20
while awaitng installation at the site.  Additionally, if the project is=20
finaced, lenders may require insurance coverage for scheduled p & i payment=
s=20
if the proejct suffers a delay in start-up as a result of a physical damage=
=20
loss.  In the absence of a lender mandate, the purchase of DSU coverage=20
becomes a commercial decision.  Suggest the following  sample wording:


A.  Builders Risk Insurance

Naming Owner, Contractor, Lenders, (the =01&Project Counterparties=018) as =
Insureds=20
and providing coverage for physical loss of or damage to property intended=
=20
for incorporation into the Work:

i) While at the jobsite awaiting installation, during testing and=20
commissioning and at all times prior to Final Completion (use appropriate=
=20
term as is  consistent with the EPC document)=20
ii) While intransit to the jobsite.
iii) While in temporary offsite storage

Subject to limits of liability as follows:

i) Equal to the full insurable vale of the EPC Contract, $                 =
  =20
              .
ii) Adequate to cover the exposure or $10,000,000 per conveyance, whichever=
=20
is greater.
iii) Adequate to cover the exposure or $15,000,000 per occurrence, whicheve=
r=20
is greater.

B.   Delay in Start Up Insurance

In an amount sufficient to cover x months fixed operating expenses and debt=
=20
service obligations.  Such coverage to apply in the event of the occurrence=
=20
of a physical damage loss covered under the Builders Risk policy.

Additional Requirements=20

Coverages A and B herein shall apply as primary insurance for the Work and=
=20
shall be without any rights of contrbution from any similar insurance whihc=
=20
may be maintained by the parties hereto.=20

In the event that any insurance (including limits and deductibles thereof)=
=20
hereby required to be maintained under this Insurance Coverage section A or=
=20
B, shall not be available at commercially reasonable terms because of the=
=20
refurbished nature of any equipment to be incorporated at the Facility,=20
(Project Counterparties) shall not unreasonably withhold its agreement to=
=20
waive such requirement, provided that Independent shall first request any=
=20
such waiver in writing.