Subject: RE: Master Repurchase Agreement with Enron North America Corp.
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Tue, 31 Oct 2000 11:33:00 -0800 (PST)

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: [email-masked] [SMTP:[email-masked]]
> Sent: Tuesday, October 31, 2000 6:22 PM
> To: [email-masked]
> Cc: [email-masked]
> 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
>
>
>