Carol St. Clair
EB 4539
713-853-3989 (phone)
713-646-8537 (fax)
281-382-1943 (cell phone)
8774545506 (pager)
281-890-8862 (home fax)
carol.st.clair@enron.com

 -----Original Message-----
From: 	Aronowitz, Alan  
Sent:	Wednesday, November  7, 2001 2:05 PM
To:	Cook, Mary; St. Clair, Carol
Subject:	FW: Enron Email (Goldman Sachs/J Aron)


FYI.

Simon is with Linklaters in London and reviewed the draft Agreement (Goldman Sachs/J Aron) from English law perspective.

Alan
 -----Original Message-----
From: 	"Firth, Simon N" <simon.firth@Linklaters.com>@ENRON  
Sent:	Wednesday, November 07, 2001 12:18 PM
To:	Saxena, Rahul; Firth, Simon N
Cc:	Aronowitz, Alan; Cooper, Edmund; Simons, Paul; Evans, Mark (London Legal)
Subject:	RE: Enron Email (Goldman Sachs/J Aron)

You asked me to consider whether there would be any advantage to Enron in
entering into this agreement, given the limitations we discussed yesterday.

My conclusion is that the agreement would assist Enron in the event of a
default by a member of the Goldman Sachs group and there is nothing, as a
matter of English law at least, that would make it imprudent to enter into
the agreement.

The reason why I think the agreement assists Enron is that, absent a winding
up of a counterparty under English law, the courts will generally uphold
contractual set-off arrangements. There are obvious advantages to having an
arrangement under which if one member of the Goldman Sachs group experiences
credit problems, Enron can close out all its positions at the same time and
set them off against each other. It is true that if one of the
counterparties is subject to English law winding up proceedings the set-off
will not be effective (because only "mutual" obligations can be set off
against each other and this requires two parties which are acting in the
same capacity). However, this should not affect its validity vis a vis other
counterparties and, in particular, will not affect the enforceability of the
netting provisions under the individual master agreements. Mutuality is not
required (outside a winding up) where the set-off is based on contract. The
fact that a counterparty is in administration would not prevent the set-off
from being upheld, whether as regards that counterparty or any of the
others.

I have obviously just focussed on English law. One point I note, however, is
that Section 2(c) states that any automatic termination provision in the
underlying master agreements is inapplicable. This is not a concern as a
matter of English law because automatic early termination is not required
for the netting arrangements to be enforceable. However, the position is
different in certain other jurisdictions (Germany, for example). The risk is
that this provision will affect the underlying netting arrangements as
regards counterparties incorporated in those jurisdictions.

As Paul pointed out yesterday, the fact that the multilateral netting
arrangements would not be enforceable on an insolvency means that you cannot
regard them as creating a net position for regulatory capital purposes
(although this does not affect the recognition of the netting under each
underlying agreement).

I hope this is helpful. If you would like detailed points on the agreement,
please let me know.


-----Original Message-----
From: Saxena, Rahul [mailto:rahul.saxena@enron.com]
Sent: 06 November 2001 18:46
To: simon.firth@linklaters.com
Cc: Aronowitz, Alan; Cooper, Edmund; Simons, Paul; Evans, Mark (London
Legal)
Subject: FW: Enron Email (Goldman Sachs/J Aron)


Simon, as discussed, here is the NY law Master Collateral netting agmt
- it is at the bottom, if you can't open please call me on 020 7783 5470
and I'll fax to you - thanks Rahul

>  -----Original Message-----
> From: 	Aronowitz, Alan
> Sent:	06 November 2001 16:28
> To:	Saxena, Rahul
> Subject:	FW: Enron Email (Goldman Sachs/J Aron)
>
> Please call me to discuss to so we can work on this together since
> there are UK and US transactions involved. I can be reached at
> 713-853-3214. Thanks.
>
> Alan
>
>  -----Original Message-----
> From: 	Heard, Marie
> Sent:	Tuesday, November 06, 2001 10:11 AM
> To:	Aronowitz, Alan
> Cc:	Cook, Mary
> Subject:	FW: Enron Email
>
> Alan:
>
> Mary asked if you could handle the master netting agreement with
> Goldman Sachs.  Jay Williams in Credit is researching GS and will
> provide me with a list of entities and documents.  I will pull copies
> of the documents and give to you.
>
> Thanks!
>
> Marie
>
>  -----Original Message-----
> From: 	"Bunkin, Steven" <steven.bunkin@gs.com>@ENRON
> Sent:	Monday, November 05, 2001 5:07 PM
> To:	St. Clair, Carol; Heard, Marie
> Cc:	Brogan, Michael E
> Subject:	FW: Enron Email
>
> Dear Carol and Marie:
>
> Following our conversation with Marie and voice mail to Carol, we are
> attaching a version of the Master Netting Agreement that has been
> revised to
> reflect our comments and marked to show changes.  As we indicated, we
> are
> interested in pursuing implementing the agreement.  However, we are
> concerned that the cross-affiliate netting provision may not be
> enforceable.
> This concern has resulted in two important changes that are reflected
> in the
> attached markup:  (i) we have changed the severability clause to
> provide
> that the agreement would survive even if Section 3 is not enforceable
> and
> (ii) we have removed the collateral provisions that are predicated on
> the
> operation of cross-affiliate netting.
>
> Please contact me at the number below, or my colleague Mike Brogan
> (212 357
> 3204), with any questions or comments.
>
> Best regards, Steve Bunkin
>
>
> >  <<ENRON Master Netting  Security Agreement.doc>>
> >
> ___________________________________________________
> Steven M. Bunkin
> Vice President & Associate General Counsel
> Goldman, Sachs & Co.
> One New York Plaza, 37th Floor
> New York, New York  10004
> phone: 212-902-0952
> fax: 212-428-3675
> ____________________________________________________
>
>
>
>  - ENRON Master Netting  Security Agreement.doc <<ENRON Master Netting
> Security Agreement.doc>>


**********************************************************************
This e-mail is the property of Enron Corp. and/or its relevant affiliate and
may contain confidential and privileged material for the sole use of the
intended recipient (s). Any review, use, distribution or disclosure by
others is strictly prohibited. If you are not the intended recipient (or
authorized to receive for the recipient), please contact the sender or reply
to Enron Corp. at enron.messaging.administration@enron.com and delete all
copies of the message. This e-mail (and any attachments hereto) are not
intended to be an offer (or an acceptance) and do not create or evidence a
binding and enforceable contract between Enron Corp. (or any of its
affiliates) and the intended recipient or any other party, and may not be
relied on by anyone as the basis of a contract by estoppel or otherwise.
Thank you.
**********************************************************************


____________________________________________________________

This message is confidential. It may also be privileged or
otherwise protected by work product immunity or other legal
rules. If you have received it by mistake please let us know
by reply and then delete it from your system; you should not
copy the message or disclose its contents to anyone.
____________________________________________________________