Message-ID: <21774704.1075860044076.JavaMail.evans@thyme>
Date: Tue, 22 Feb 2000 05:24:00 -0800 (PST)
From: vicki.sharp@enron.com
To: mark.taylor@enron.com
Subject: Re: EnronOnline Credit Derivatives - Reference Entities
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you should be hearing from Jim Keller (AOL) and Mike SMith (Lucent)


To: Michael Moran@ENRON, Kristina Mordaunt/Enron Communications@Enron=20
Communications, Vicki Sharp/HOU/EES@EES, Rob=20
Walls/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Mark E Haedicke/HOU/ECT@ECT=20
Subject: EnronOnline Credit Derivatives - Reference Entities

Enron North America and Enron Europe will offer credit derivatives through=
=20
the EnronOnline website in the near future.  These products will provide fo=
r=20
regularly scheduled payments by the purchaser and a payment by the seller i=
n=20
the event of the bankruptcy of a specified =01&Reference Entity.=018 =20

For a number of reasons, including those identified below, Enron maintains =
a=20
=01&Restricted List=018 in connection with its credit derivatives business,=
 which=20
will list those entities that may not be included in the list of Reference=
=20
Entities or that have been deleted from the list of Reference Entities.  Th=
is=20
list is designed to comply with legal requirements, to deal with potential=
=20
conflicts of interest that might result because of our diverse activities,=
=20
and to prevent the appearance of impropriety in connection with Enron=01,s=
=20
credit derivatives trading activities.  The credit derivatives Restricted=
=20
List is designed for other purposes as well.  For example, a company may be=
=20
placed on the Restricted List if Enron is not able to assume any further=20
credit exposure to that company or believes that market conditions do not=
=20
warrant the trading of Credit Derivatives on such Reference Entity.

A company ordinarily will be placed on the credit derivatives Restricted=20
List, either before or after it has become a Reference Entity on which cred=
it=20
derivatives are traded, in the following circumstances:

when Enron is actively engaged in effecting a material transaction with=20
respect to such company that has not been publicly announced;

when Enron has an applicable standstill agreement or other confidentiality=
=20
agreement in place with such company;

when Enron has a legal duty to keep such company's information confidential=
=20
and such company has not expressly consented to being a Reference Entity fo=
r=20
purposes of the trading of credit derivatives (such a legal duty may be a=
=20
fiduciary duty but may not rise to that level);

when some part of Enron acquires material, nonpublic information about a=20
company or its securities in the course of its business activities;

when Enron has reached or exceeded its credit limits with respect to such=
=20
company.

The purpose of this memorandum is to alert you to this new business and to=
=20
request your assistance in evaluating proposed Reference Entities prior to=
=20
the trading of credit derivatives based on such companies.  Below is a list=
=20
of proposed Reference Entities.  Please take a few minutes to look at this=
=20
list and then let me know if you are aware of any reason such companies=20
should placed on the credit derivatives Restricted List.  If you have any=
=20
questions, please contact me at (713)853-7459 or Paul Simons in the London=
=20
office at 44-20-7783-6566.

Cinergy Corp.
Duke Energy Corporation
Dynegy Inc.=20
El Paso Energy Corporation
PG & E Corporation
Southern Company Inc, The

AOL
Lucent Technology
Nortel
Qwest Communications