Assignment Issue

I would like to consider some counterparty-specific agreement to solve this
problem. What do you think of a side agreement among both KN entities and
Enron which specifies that a user ID and password have been issued to both of
KN's legal entities jointly and severally and that transactions for certain
products (e.g. all financial products) entered into under that user ID and
password will be deemed executed by KN Trading (their financial trading
entity) and all others will be deemed executed by KN Marketing (their
physical entity)? Do you see any problems here? Issues re: joint & several
liability under the ETA but not the Transactions?

Let me know if you need further clarification of the problem.

I haven't run this by Louise yet - she may raise system or commercial
objections.

Mark
---------------------- Forwarded by Mark Taylor/HOU/ECT on 12/16/99 07:58 PM
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From: Bob Shults 12/16/99 10:28 AM

To: Mark Taylor/HOU/ECT@ECT, David Forster, Louise Kitchen
cc: Debbie R Brackett/HOU/ECT@ECT
Subject: Assignment Issue

We continue to struggle with the issue of counterparties trading under the
wrong name.

KN Trading typically does financial trades, KN Marketing typically does
physical trading. We issued seperate ID's to accomadate this however they
have traded physical this am with KN Trading. I discussed this with KN
(Shawn Magovern) and he expressed great frustration with the idea of running
seperate machines or web sessions. Shawn asked us to consider what options
might be available downstream. His comment was that they will just have to
turn the system off and that brokers understand their business and apply the
company name appropriately. I explained to Shawn that he can control the
access of his traders and avoid issues in the future however it does require
them to transact under the appropriate ID.

Can we develop some form of agreement that would allow us to "automatically"
assign transaction according to some strict guidelines (I know this is like a
Power of Attorney)? Can we look at systematic enhancements in the future
which would allow for contractual arrangements based on the product?

I would like to get back with Shawn if we can suggest any other options.