Sara,

When you are ready to talk some more about the agreement, please give me a
call.  Thanks.

--Andy

Andrew V. Waskow
Vice President and Counsel
Merrill Lynch & Co., Inc.
4 World Financial Center, Floor 12
New York, NY  10080
Phone: 212-449-5828
Fax: 212-449-0265
awaskow@exchange.ml.com


> -----Original Message-----
> From: Sara.Shackleton@enron.com [SMTP:Sara.Shackleton@enron.com]
> Sent: Wednesday, November 01, 2000 9:37 AM
> To: AWaskow@exchange.ml.com
> Subject: RE: Master Repurchase Agreement with Enron North America
> Corp.
>
>
> Andy:
>
> I am reviewing your comments and will have an answer shortly.  I thought,
> however, that you should know that the limitation of liability provision
> is
> non-negotiable from Enron's viewpoint.  If this is problematic, please
> advise and we can halt further discussion.  Thanks.  Sara
>
>
>
>
>                     "Waskow, Andrew
>
>                     (OGC)"                 To:
> "'Sara.Shackleton@enron.com'" <Sara.Shackleton@enron.com>
>                     <AWaskow@exchan        cc:     "Shin, Regina (OGC)"
> <Rshin@exchange.ml.com>
>                     ge.ml.com>             Subject:     RE: Master
> Repurchase Agreement with Enron North America
>                                            Corp.
>
>                     10/31/2000
>
>                     06:33 PM
>
>
>
>
>
>
>
>
>
> Sara:
>
> Thanks for the additional information and the recommended changes, each of
> which we accept.
>
> In order to accommodate the deletion of 9(b), we recommend revising your
> number 6 to read as follows:
>
> 6.   Substitution
>
>      (a) Paragraph 9(b) is hereby deleted in its entirety.
>
>      (b) Seller shall not retain custody of any Purchased Securities
> under any Transaction governed by this Agreement.
>
> NOTICES:  Your suggested language regarding notices is potentially
> problematic.  Under the Paragraph 13 of the MRA, notices may made orally,
> "to be confirmed promptly in writing....", and confirmation of delivery is
> not expressly relevant.  The unquestionable ability to make oral margin
> calls pursuant to Paragraph 4 is vital in fast-moving market conditions,
> and
> was expressly included in the standard agreement to avoid any doubt as to
> their validity.  In the default context (Paragraph 11), proof of delivery
> of
> written notice is of no concern because the exercise of a party's rights
> under that Paragraph is not contingent upon delivery of notice.  Notice
> must
> be given "as promptly as practicable."  We believe that the proposed
> language could cause confusion or uncertainty regarding the validity of
> oral
> margin calls and would conflict with the operative provisions of Paragraph
> 11.  We therefore request deletion of your number 8.
>
> NON-ASSIGNABILITY:  As we discussed earlier today, we have a general
> aversion to assignments of repurchase transactions due to our regulatory
> obligations as a broker-dealers.  For that reason, we must be free to
> withhold consent to assignment with confidence that such withholding will
> not be challenged as "unreasonable."  We therefore request deletion of
> your
> number 9.
>
> We are still reviewing your proposals regarding SETOFF and LIMITED
> LIABILITY.  I will also have to review Section 5-1401 of the NYGOL before
> commenting on that.
>
> I look forward to the prompt completion of our negotiations.  Thanks again
> for the information and recommendations.
>
> Best regards,
> Andy Waskow
>
> > -----Original Message-----
> > From:   Sara.Shackleton@enron.com [SMTP:Sara.Shackleton@enron.com]
> > Sent:   Tuesday, October 31, 2000 6:22 PM
> > To:     awaskow@exchange.ml.com
> > Cc:     Ellen.Su@enron.com
> > Subject:     Master Repurchase Agreement with Enron North America Corp.
> >
> > Andy:
> >
> > In the spirit of "full disclosure", I thought I would let you know what
> > ENA
> > has agreed to on the ISDA side with various Merrill entities.
> > ENA has ISDA's with Merrill Lynch International Bank (8/25/95), Merrill
> > Lynch Capital Services Inc. (12/2/92) and Merrill Lynch International
> > (8/25/95).
> > There is no arbitration provision in any of these agreements; there is
> > merely silence as to jurisdiction (ENA began negotiating arbitration
> > around
> > 1997).  All of these agreements contain our standard limitation of
> > liability language (in boldface) and all permit some type of assignment
> to
> > an affiliate (in general, without negative tax impact or with sufficient
> > credit support).  All of the agreements provide for setoff (including
> > affiliates of non-defaulting parties) and all contain confidentiality
> > provisions.
> >
> > I would therefore propose the following changes to Annex I:
> >
> > change the margin deadline time to 10:00 a.m. (NY time)
> > delete Par 9(b) - and you can send your additional no custody required
> > language
> > delete the arbitration provision in its entirety
> >
> > I hope that you can resond to the remaining issues tomorrow morning so
> > that
> > we can finalize docs by the afternoon.  Thanks for your assistance.
> >
> > Sara
> >
> >
> >
>
>
>
>