sETTLEMENT ,
 Richard and Bill:

Damage figures with prejudgment interest thru 3/31/01 are:

          Farallon            $21.8 million
          Oaktree            $13.2 million
          Legg Mason       $4.9 million

Farallon's damages are 62% of the total damages in Hennigan's case.

If the case were to settle for the total that Hennigan seeks, $29.3 million=
,
Farallon would get $18.2 million, and Oaktree would get $11.1 million.

If Enron were to contribute $1.25 million to an overall settlement as
suggested, we would be paying about 7% of Farallon's damages.

If everyone but us were to settle for the suggested retail price (assuming
that Hennigan would do such a deal), Farallon's remaining damages would be
$4.4 million.

The ratio of Farallon's damages to Legg Mason's is 4.4:1.

     *********

I think our goal should be to settle Farallon for $1,000,000 and Legg Mason
for $200,000, and I think that should be achievable.

I would offer the other defendants a contribution from Enron of $750,00
(pointing out to the defendants that this is a substantial increase over ou=
r
opening offer to Hennigan of $450,000.)  I would stick on $750,00 quite a
while, saying that we are very reluctant to pay any seven figure number, tr=
y
to get defendants to think that their biggest challenge is to get us to $1
million, then finally give in to that figure.

We have bargaining power.  Any defendant who wants to settle has to have us=
 in
it's group; therefore we can hold out for a smaller share.

If we so settle, we need mutual releases of all NSM-related claims among al=
l
settling defendants.

If the settling group is less than all defendants, the settlement must be
conditioned on obtaining a good faith settlement order.

Good luck.

Steve
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                                           =
                                                           ................=
................................

ALSCHULER GROSSMAN STEIN & KAHAN LLP
ATTORNEYS AT LAW
www.agsk.com

2049 Century Park East
Thirty-Ninth Floor
Los Angeles, CA 90067-3213
Tel 310-277-1226
Fax 310-552-6077

This transmission is intended only for the use
of the addressee and may contain information
that is privileged, confidential and exempt from
disclosure under applicable law. If you are not
the intended recipient, or the employee or agent
responsible for delivering the message to the
intended recipient, you are hereby notified that
any dissemination, distribution or copying of
this communication is strictly prohibited.

If you have received this communication
in error, please notify us immediately
via e-mail at postmaster@agsk.com or
by telephone at 310-277-1226. Thank you.

...............................................
b..sanders@enron.com