============= Page 1 of 398 ============= BOARD OF DIRECTORS MEETING DECEMBER 14, 1999 E0004388366 CONFIDENTIAL EXH002-02010 GOVERNMENT EXHIBIT 553 Crim. No. H-04-25 (S-2) ============= Page 2 of 398 ============= r- (0 M 00 0 M 'IT O O U W EXH002-02011 ============= Page 3 of 398 ============= R. A. Belfer V N. P. Blake, Jr. U~ R. C. Chan J. H. Duncan J. H. Foy / W. L. Gramm K. L. Harrison / . R. K. Jaedicke ' f C. A. LeMaistre K. L. Lay, Chairman R.P. Mark-Jusbasche ~~ J. Mendelsohn / J. J. Meyer P.V. Ferraz Pereira F. Savage V J. K. Skilling '/ J. A. Urquhart ' J. Wakeham H. S. Winokur, Jr. V` AGENDA MEETING OF THE BOARD OF DIRECTORS ENRON CORP. 8:00 A.M., December 14, 1999 Boardroom, Enron Building Houston, Texas EXECUTIVE SESSION: 1. Approve minutes of meetings of the Board of Directors held on September 17 and October 11-12,1999-Mr. Lay 2. Report on Executive Committee meeting held on October 20, 1999 and Approve minutes of Executive Committee meetings held on September 3, 14, and 24, 1999 - Mr. Duncan 3. Report on Compensation and Management Development Committee meeting held on December 13, 1999 - Dr. LeMaistre i~~ ?' t,(a) Compensation and Management Development Committee Agenda included for information purposes only v(b) Approve amendment to the 1991 Stock Plan to provide clarification of grant limits as a result of the Company's stock split and change references to "Management Committee" to "Executive Committee" of the Company t,(c Approve amendment to the 1994 Stock Plan to provide clarification of grant limits as a result of the Company's stock split 4. Report on Audit and Compliance Committee meeting held on December 13, 1999 - Dr. Jaedicke Audit and Compliance Committee Agenda included for information purposes only E0004388368 =XH002-02012 ============= Page 4 of 398 ============= 5. Report on Joint Audit and Compliance and Finance Committee Meeting held on December 13, 1999 - Mr. Winokur Joint Audit and Compliance and Finance Committee Agenda included for information purposes only 6. Report on Finance Committee Meeting held on December 13, 1999 - Mr. Winokur (a) Finance Committee Agenda included for information purposes only / (b) Approve Revision of Cash Management Policy ' ~Eฃ.'. R .pRJ (c) Approve Enron Caribbean/Middle East Project Dolphin Note: Appoval of the Operating Plan Financing, as recommended by the Finance ! Committee, will occur after the presentation of the Operating Plan (See agenda item 12) (d) Approve Turbine Purchases (e) Approve Enron North America Project EEX (f) Approve Revision to Risk Management Policy .' (g) Approve Subsidiary Preferred Stock Financing (h) Approve Bahia Las Minas (Panama) Sell Down (i) Merchant and Strategic Transactions approved by the Office of the Chairman since the last Board meeting included for information purposes only 7. Report o 1n Year 2000 Oversight Committee meeting held on December 13, 1999 - Mr. Causey Year 2000 Oversight Committee Agenda included for information purposes only 8. Financial and earnings report - Mr. Causey 9. Stock Performance Report - Mr. Koenig 10. Other business to be considered in executive session - Mr. Lay C r.' , ; E0004388369 =XH002-02013 ============= Page 5 of 398 ============= OPEN SESSION: 11. 1999 Performance against Objectives - Mr. Sutton 12. Presentation and Approval of the 2000 Operating Plan - Mr. Skilling Approve Operating Plan Financing - Mr. Winokur 13. Special Reports/Updates: (a) ResCo Presentation and Approve Private Placement Transaction - Mr. Pai (b) Florida Pipeline Expansion - Messrs. Horton - ~.~ . (c) Global Recruiting and Retention - Ms. Olson (d) eCommerce and EnronOnline - Mr. McConnell and Ms. Kitchen 14. Legal report - Mr. Derrick 15. General corporate matters: (a) Approve date, time, and place of the 2000 Annual Meeting of Shareholders and record date to establish shareholders entitled to vote at such meeting - Mr. Lay (b) Approve 2000 Board meeting dates - Mr. Lay (c) Approve the declaration of dividend on the S..i~'u i f- -tin C'cnveztihle Preferred Stock - Mr. Skilling (d) Approve election of corporate officer - Mr. Skilling (e) Approve designation of Section 16 officers as "Executive Officers" - Mr. Derrick 16. Othr Business 17. Adjournment I I C) THE NEXT REGULAR MEETING OF THE BOARD WILL BE HELD ON FEBRUARY 7-8, 2000 IN HOUSTON, TEXAS. DIRECTOR ROOM RESERVATIONS WILL BE MADE AT THE FOUR SEASONS HOTEL. H:\a Minutes\121499\Agenda.doc E0004388370 =XH002-02014 ============= Page 6 of 398 ============= EXH002-02015 ============= Page 7 of 398 ============= DRAFT MINUTES SPECIAL MEETING OF THE BOARD OF DIRECTORS ENRON CORP. September 17,1999 Minutes of a special meeting of the Board of Directors of Enron Corp. ("Company"), held pursuant to due notice at 4:30 p.m., C.D.T., on September 17, 1999 at the Enron Building in Houston, Texas. The following Directors were present, constituting a quorum, in person or by telephone conference connection whereby each of the participants could hear the comments and discussions by the other participants and join in the discussions: Mr. Kenneth L. Lay, Chairman Mr. Robert A. Belfer Mr. Norman P. Blake, Jr. Mr. Ronnie C. Chan Mr. John H. Duncan Mr. Joe H. Foy Dr. Wendy L. Gramm Mr. Ken L. Harrison Dr. Robert K. Jaedicke Dr. Charles A. LeMaistre Dr. John Mendelsohn Mr. Jerome J. Meyer Mr. Jeffrey K. Skilling Mr. John A. Urquhart Lord John Wakeham Mr. Herbert S. Winokur, Jr. Director Rebecca P. Mark was absent from the meeting. Messrs. Jeffrey McMahon and Joseph W. Sutton and Ms. Rebecca C. Carter, all of the Company, also attended the meeting. The Chairman, Mr. Lay, presided at the meeting, and the Secretary, Ms. Carter, recorded the proceedings. Mr. Lay called the meeting to order and inquired if the Committee members had received the material for the meeting, and each responded that he or she had received the material. He stated that the meeting had been called for the Board to E0004388372 XH002-02016 ============= Page 8 of 398 ============= consider a financing transaction and called upon Mr. McMahon to present the matter. Mr. McMahon stated that in December of 1997 the Company, with the Board's approval, had put in place a financing structure referred to as "Condor". He reviewed the original Condor transaction and stated that the Company and an outside third-party ("Nighthawk") had each contributed $500 million cash to a financing vehicle ("Whitewing"). Whitewing then paid the Company $1 billion cash for the Company's mandatory convertible preferred stock. He stated that the primary purpose of the transaction had been to convert debt to equity. He stated that the value of the preferred stock in Whitewing, in which the Company has a 50% ownership interest, had increased significantly since the original transaction. He stated that the Company was proposing a redemption of the original preferred stock and the issuance of a similar preferred stock. He stated that this would allow the Company to take advantage of the increase in value of the preferred stock. He discussed how Condor would be structured after the redemption of the preferred stock, noting that Whitewing would be funded by a private placement sale of bonds to institutional investors and outside equity. The Company would then contribute assets from its "Merchant Portfolio" and receive cash from Whitewing. Following a discussion in which Mr. McMahon answered questions from the Committee, upon motion duly made by Mr. Duncan, seconded by Mr. Blake, and carried, the following resolutions were approved: WHEREAS, Enron Corp. (the "Company") desires to consummate a structured finance transaction using a newly established series of Mandatorily Convertible Junior Preferred Stock, Series B of the Company (the "Preferred Shares") which are to be exchanged for the outstanding Series A Junior Voting Convertible Preferred Stock of the Company ("Exchanged Shares") presently held by Whitewing Associates L.L.C. ("Whitewing") to raise up to approximately $1.5 billion of funding for general corporate purposes (approximately $930 million) and to restructure the outstanding equity of Whitewing and provide funds for the repayment of a previous structured financing (approximately $570 million) which transaction involves the sale by Donaldson, Lufkin & Jenrette Securities Corporation, Deutsche Bank Securities Inc., Bear, Steams & Co. Inc., and Salomon Smith Barney Inc. (together the "Initial Purchasers") of up to $1,400,000,000 of senior secured notes (the "Osprey Notes") of a newly formed entity, Osprey Trust, and the issuance and sale by Osprey Trust of approximately $100 million of trust certificates (the "Osprey Trust Certificates") and the purchase by Osprey Trust using the proceeds of such offerings of a limited partner interest in Whitewing (which will be converted into a limited partnership in connection with such transactions) (all transactions 2 E0004388373 :XH002-02017 ============= Page 9 of 398 ============= necessary to recapitalize Whitewing and to consummate the sale of the Osprey Notes and the Osprey Trust Certificates are herein referred to as the "Osprey Transactions"); NOW, THEREFORE, IT IS RESOLVED, that the Osprey Transactions and the issuance of the Preferred Shares are hereby authorized and approved, and that the Company shall proceed with the consummation of such transactions in accordance with the resolutions hereby adopted; RESOLVED FURTHER, that the issuance of the Preferred Shares and the Osprey Transactions shall be subject to the following terms and conditions (the "Board Conditions"): (i) the Preferred Shares shall have the terms and conditions and powers, preferences, and relative, participating, optional, or other special rights, and the qualifications, limitations, and restrictions set forth in the Statement of Resolutions attached hereto as Exhibit A and which is incorporated herein by this reference as if fully set forth herein (together with any changes thereto consistent with the Board Conditions negotiated by and among the Initial Purchasers, the purchasers of the Osprey Trust Certificates, and the Company and approved by an officer of the Company or other person authorized and empowered to act pursuant to these resolutions, the execution and filing of which by any such officer or person, in the name and on behalf of the Company, with the appropriate agencies of the State of Oregon to be conclusive evidence of the approval by such officers or person of the contents thereof; (ii) the maximum number of Preferred Shares to be issued shall be an indefinite number of shares up to the number of shares necessary to fulfill the Company's obligations pursuant to the Share Settlement Agreement (as defined in Exhibit A), but in no event more than the number of authorized but unissued shares of Preferred Stock, with 250,000 shares to be initially issued; (iii) the Preferred Shares shall initially be convertible into no more than 50,000,000 shares of common stock of the Company ("Common Stock") (the same number of shares of Common Stock into which the Exchanged Shares are presently convertible), and the number of shares of Common Stock which the Company may ultimately be obligated to issue at the maturity of the Osprey Transactions shall also be increased by (a) antidilution adjustments to be provided in the terms of the Preferred Shares and (b) the requirements of the 3 E0004388374 XH002-02018 ============= Page 10 of 398 ============= Share Settlement Agreement upon a resale by the share trust pursuant to Remarketing (as defined in the remarketing and registration rights agreement associated with the Preferred Shares) based on the closing price per share of Common Stock on or about the date of such resale or such Remarketing, but in no event more than the number of authorized but unissued shares of Common Stock that have not been reserved by the Board of Directors for other purposes as of the date of such resale or such Remarketing (or as of such other date determined by any officer of the Company authorized to act in accordance with these resolutions); (iv) the liquidation preference per share of the Preferred Shares, exclusive of accrued dividends, shall not exceed $4,000 (an aggregate of $1.0 billion) in respect of initially issued Preferred Shares; and (v) the number of shares of Common Stock that may be issued after the Preferred Shares have been issued pursuant to the remarketing and registration rights agreement referred to above shall not exceed the number of authorized but unissued shares of Common Stock that have not been reserved by the Board of Directors for other purposes as of the date of such issuance; RESOLVED FURTHER, that each of the Chairman and Chief Executive Officer, the President and Chief Operating Officer, any Vice Chairman or any Vice President is hereby authorized, empowered, and directed, with the power and authority of the full Board of Directors to the fullest extent permitted by law, to authorize and approve (or ratify if already executed or taken) all agreements, instruments, and documents, and the taking of all actions, as any such officer may deem necessary, advisable, convenient, or proper to consummate the Osprey Transactions and the issuance of the Preferred Shares (subject, however, in all respects, to the Board Conditions), including, without limitation: (i) the determination of all or any part of the terms of the issuance of the Preferred Shares; (ii) the determination of all or any part of the designation and relative rights, preferences, and limitations of the Preferred Shares; (iii) the approval of a form certificate representing the Preferred Shares; 4 E0004388375 =XH002-02019 ============= Page 11 of 398 ============= (iv) all matters insofar as they affect the Company or any of its subsidiaries or affiliates associated with the issuance of the Osprey Notes and the Osprey Trust Certificates and the authorization, execution, and delivery by the purchasers of the Osprey Certificates of a trust agreement for Osprey Trust with such terms and conditions relative to the Company and any of its subsidiaries or affiliates as such officer shall approve; (v) the authorization, execution, and delivery of a purchase agreement among the Company, Osprey Trust, and the purchasers of the Osprey Trust Certificates for the sale of the Osprey Trust Certificates with such terms and conditions (including pricing terms) as such officer shall approve; (vi) the authorization, execution, and delivery of a purchase agreement among the Company, Osprey Trust, and the Initial Purchasers for the sale of the Osprey Notes with such terms and conditions (including pricing terms) as such officer shall approve; (vii) the authorization, execution, and delivery of an indenture among Osprey Trust, Osprey I, Inc. and a trustee to be selected with such terms and conditions as such officer shall approve; (viii) the approval insofar as they affect the Company or any of its subsidiaries or affiliates of a form of note representing the Osprey Notes and a certificate representing the Osprey Certificates; (ix) the authorization, execution, and delivery of a participation agreement (the Osprey Participation Agreement") among the Company, Osprey Trust, Whitewing, Whitewing Management LLC, Egret I LLC, Peregrine I LLC, Condor Share Trust, and the Indenture Trustee providing for the parties' participation in the Osprey Transactions and certain undertakings made by each of the parties, with such terms and conditions as such officer shall approve; (x) the authorization, execution, and delivery of (a) a remarketing and registration rights agreement among the Company, Condor Share Trust, Osprey Trust, Whitewing Associates L.P., Whitewing Management LLC, the Indenture Trustee, and the Initial Purchasers providing for, among other things, the registration of the Preferred Shares or Common Stock into which it is convertible, and (b) the related Share Settlement Agreement providing for the potential issuance of additional Preferred Shares or Common Stock to the extent required by the remarketing and registration rights agreement 5 E0004388376 XH002-02020 ============= Page 12 of 398 ============= and such Share Settlement Agreement with such terms and conditions as such officer shall approve; (xi) all matters insofar as they affect the Company or any of its subsidiaries or affiliates associated with the formation of Whitewing Associates L.P. (by the conversion of Whitewing into a limited partnership) and its subsidiary, Condor Share Trust, including the authorization, execution, and delivery of a trust agreement for the formation of Condor Share Trust with such terms and conditions as such officer shall approve; and (xii) the negotiation, authorization, execution, and delivery of such other agreements, instruments, and documents relating to the Osprey Transactions and the Preferred Shares, including, but not limited to, agreements, instruments, and documents that provide, among other things, for the indemnification of third parties, and the payment of fees and expenses of third parties as such officer may deem necessary, advisable, convenient, or proper in connection with the Osprey transactions or any other matters addressed by these resolutions; RESOLVED FURTHER, that Ben Glisan is hereby appointed as agent and attorney-in-fact of the Company and is authorized, empowered, and directed, with the power of the full Board of Directors, subject to control and direction by the Company, to the fullest extent permitted by law, to authorize and approve all agreements, instruments, and documents and the taking of all actions as such agent and attorney-in-fact may deem necessary or desirable and shall have all the powers of an officer of the Company with respect to these resolutions (subject, however, in all respects, to the Board Conditions) solely for the purpose of consummating the Osprey Transactions (excluding, however, the issuance of the Preferred Shares and the matters set forth in or contemplated by (ii) and (iii) in the immediately preceding resolution); it is the intent of the Board of Directors that Mr. Glisan, in his capacity as agent and attorney-in-fact of the Company, shall have all the duties, obligations, and responsibilities of an officer of the Company for purposes of the Osprey Transactions, as if he were an officer of the Company; RESOLVED FURTHER, that pursuant to the authority expressly granted and vested in this Board of Directors by the Company's Amended and Restated Articles of Incorporation (the "Articles"), and pursuant to the appointment and authorization by 5 E0004388377 :XH002-02021 ============= Page 13 of 398 ============= this Board of Directors to the officers of the Company set forth above, this Board of Directors hereby authorizes the amendment of the Articles for the purpose of the creation of the Preferred Shares, and hereby authorizes the officers of the Company to authorize, execute, and deliver for filing the Articles of Amendment, setting forth the Statement of Resolutions of the terms of the Preferred Shares, with the Office of the Secretary of State of the State of Oregon and such other offices as the officers of the Company shall deem necessary or advisable; RESOLVED FURTHER, upon issuance of certificates for the 250,000 initially issued Preferred Shares in exchange for the Exchanged Shares in accordance with the foregoing resolutions, such Preferred Shares shall be validly issued, fully paid, and nonassessable; RESOLVED FURTHER, upon issuance of certificates for any Preferred Shares required to be issued pursuant to the terms of the Share Settlement Agreement in accordance with the terms of the Share Settlement Agreement and in accordance with the foregoing resolutions, such Preferred Shares shall be validly issued, fully paid, and nonassessable; RESOLVED FURTHER, that the 50 million common shares currently reserved for Whitewing (in connection with the Exchanged Shares) shall remain reserved under the remarketing and registration rights agreement referred to above in for use in upon the conversion of the Preferred Shares; RESOLVED FURTHER, that, subject to the Board Conditions, effective immediately upon issuance of the Preferred Shares, there will be reserved 20 million additional shares of Common Stock of the Company and 100,000 Preferred Shares of the Company for issuance under the Share Settlement Agreement; RESOLVED FURTHER, that upon any adjustment to the conversion price of the Preferred Shares, sufficient additional shares of Common Stock shall be reserved and kept available so that the maximum number of shares of Common Stock issuable upon conversion of the Preferred Shares shall at all times be reserved and kept available; RESOLVED FURTHER, that the Company is authorized to issue such shares of Common Stock of the Company upon 7 E0004388378 XH002-02022 ============= Page 14 of 398 ============= conversion of the Preferred Shares, and that upon any such issuance in accordance with the terms of the Preferred Shares, such shares of Common Stock shall be validly issued, fully paid, and non- assessable; RESOLVED FURTHER, that upon issuance of certificates for any shares of Common Stock required to be issued pursuant to the terms of the Share Settlement Agreement in accordance with the terms of the Share Settlement Agreement and in accordance with the foregoing resolutions, such shares of Common Stock shall be validly issued, fully paid, and nonassessable; RESOLVED FURTHER, that if it is deemed necessary or advisable by the officers of the Company that the Preferred Shares and/or the Common Stock issuable upon conversion of the Preferred Shares be qualified or registered for sale under the applicable Blue Sky Laws or securities acts of any jurisdiction, or that a filing be made in any jurisdiction to secure or obtain an exemption from qualification or registration, or that a listing application be filed with any national securities exchange, the officers of the Company are each authorized to perform on behalf of the Company any and all such acts as any one or more of them may deem necessary or advisable in order to comply with such laws of such jurisdiction or the rules of such exchanges, and in connection therewith, to execute and file all requisite papers and instruments and to make any and all payments of filing, registration, or other fees, costs, and expenses, and to take any and all further action in connection with the foregoing which any one or more of them shall deem necessary or advisable; RESOLVED FURTHER, that the execution by any officer of the Company of any papers and instruments or the performance by any one or more of them of any act in connection with the foregoing resolutions shall conclusively establish their authority therefor from the Company and the approval and ratification by the Company of the papers and instruments so executed and the actions so taken; RESOLVED FURTHER, that the actions of the officers of the Company heretofore taken on behalf of the Company in connection with the above resolutions and the actions contemplated thereby are, in all respects, confirmed and ratified, and the officers of the Company, together or individually, may take any and all action and do any and all things as may be deemed by any of them to be necessary or advisable to effectuate the lawful issuance and sale of s E0004388379 --XH002-02023 ============= Page 15 of 398 ============= the Preferred Shares, and the taking of any and all such actions and the performance of any and all such things in connection with the foregoing shall conclusively establish their authority from the Company and the approval and ratification by the Company; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. Messrs. Lay and Skilling then gave the Board a brief update on activities throughout the Company. There being no further business to come before the Board, the meeting was adjourned at 4:50 p.m., C.D.T. Secretary APPROVED: Chairman H:\a Minutes\1999 Minutes\91799sp.doc 9 E0004388380 :XH002-02024 ============= Page 16 of 398 ============= DRAFT MINUTES MEETING OF THE BOARD OF DIRECTORS ENRON CORP. October 11-12, 1999 Minutes of a meeting of the Board of Directors of Enron Corp. ("Company") noticed to begin at 7:00 p.m., C.D.T., but actually begun at 7:20 p.m., C.D.T., on October 11, 1999 at the Four Seasons Hotel, Whitney Room, in Houston, Texas. The following Directors were present, constituting a quorum: Mr. Kenneth L. Lay, Chairman Mr. Robert A. Belfer Mr. Norman P. Blake, Jr. Mr. John H. Duncan Mr. Joe H. Foy Dr. Wendy L. Gramm Mr. Ken L. Harrison Dr. Robert K. Jaedicke Dr. Charles A. LeMaistre Ms. Rebecca P. Mark Dr. John Mendelsohn Mr. Jerome J. Meyer Mr. Jeffrey K. Skilling Mr. John A. Urquhart Lord John Wakeham Mr. Herbert S. Winokur, Jr. Director Ronnie C. Chan was absent from the meeting. The meeting was begun in executive session, during which Messrs. Richard A. Causey, Andrew S. Fastow, Mark E. Koenig, Jeffrey McMahon, and Joseph W. Sutton and Ms. Rebecca C. Carter, all of the Company or affiliates thereof, and Messrs. Paulo V. Ferraz Pereira and Frank Savage, candidates for election to the Company's Board of Directors, were also in attendance. The Chairman, Mr. Lay, presided at the meeting, and the Secretary, Ms. Carter, recorded the proceedings. Mr. Lay called the meeting to order and called for a revised agenda to discuss the election of two new directors to the Company's Board of Directors. He called upon Lord Wakeham to present the candidates. Lord Wakeham noted E0004388381 XH002-02025 ============= Page 17 of 398 ============= that the Nominating Committee of the Board was recommending that Messrs. Paulo Ferraz Pereira and Frank Savage be elected to the Company's Board. He proposed that Mr. Pereira be asked to join the Finance and Audit and Compliance Committees of the Board and Mr. Savage be asked to join the Finance and Compensation and Management Development Committees of the Board. Lord Wakeham moved approval of the recommendation, his motion was duly seconded by Dr. Gramm, and carried, and the following resolutions were approved: RESOLVED, that Paulo V. Ferraz Pereira and Frank Savage be, and each of them hereby is, elected a director of the Company, effective October 12, 1999, to serve during the ensuing year until the next Annual Meeting of Shareholders and until their successors shall have been duly elected and qualified; RESOLVED FURTHER, that Paulo V. Ferraz Pereira be, and hereby is, elected a member of the Finance Committee and the Audit and Compliance Committee of the Board of Directors of the Company, to serve for the ensuing year and until his successor is duly elected and qualified; and RESOLVED FURTHER, that Frank Savage be, and hereby is, elected a member of the Finance Committee and the Compensation and Management Development Committee of the Board of Directors of the Company, to serve for the ensuing year and until his successor is duly elected and qualified. Mr. Lay called upon Mr. Causey for the financial and earnings and the Year 2000 ("Y2K") Oversight Committee reports, and copies of Mr. Causey's presentations are filed with the records of the meeting. Mr. Causey discussed diluted earnings per share ("EPS") for the third quarter and first nine months of 1999 and compared them to the 1999 Operating Plan. He discussed the impact on third quarter earnings of the Company's sale of its ownership interest in Enron Oil & Gas Company ("EOG") and write-down of its MTBE facility. He noted that certain recent events led the Company to the decision that the MTBE asset value was impaired. He discussed the growth in EPS from 1998 to 1999, results for the third quarter and first nine months by operating unit, and certain items that had impacted the operating units' performance. He presented a roll-forward, from the end of 1998, of balance sheet debt and noted that the Company was in a strong position from a debt level and cash flow perspective. Mr. Causey then updated the Board on the Company's Y2K readiness program. He gave a general overview of the status of the Y2K project, noting that work on mission-critical applications, embedded systems, and third-party evaluations was essentially complete and that residual risk analyses were 2 E0004388382 KHO02-02026 ============= Page 18 of 398 ============= complete. He noted that there was one remaining Y2K compliance review to be performed in India, the legal review of documentation was underway, and detailed contingency planning continued. He discussed the status of mission-critical items and stated that all business units except some international regions had achieved 99% or 100% completion on mission critical items. He discussed what the potential consequences of inaction in making systems Y2K compliant would have been and noted that the majority of power plant control systems had not previously been Y2K compliant. He commented on the benefits of the Y2K efforts, which included risk mitigation, standardization, investment in performance enhancing solutions, and a thorough review of the business processes throughout the Company. He reviewed the contingency planning milestones and noted that risks had been prioritized by site, task level contingencies were under development, alternative communications were in place, and a crisis management center was under construction. He commented on the contingency planning tasks remaining and noted that the biggest concerns regarded any acquisitions made prior to year- end and the Y2K readiness of external entities, particularly internationally. Mr. Lay called upon Mr. Koenig for an investor relations update, a copy of which is filed with the records of the meeting. Mr. Koenig reviewed the Company's total return to shareholders for the first nine months of 1999, of 45.2%, and noted that it substantially exceeded the total return achieved by the S&P 500, of 5.4%, and the Company's peer group, of 15.6%. He reported on the Company's price-to-earnings ("p/e") valuation for 2000 compared to that of the S&P 500 and the Company's peer group and discussed the p/e ratios of the Company's industry peers. He presented the Company's largest shareholders and reviewed holdings by mutual funds. He discussed the top twenty holdings of the largest mutual funds owning the Company's stock ("investment peers") and displayed charts showing the investment peers' market capitalizations, expected five year earning-per-share growth rates, p/e ratios, and dividend yields. He commented on the investment analysts' current consensus valuations and the valuation methodology for each business unit commonly used. Mr. Lay stated that minutes of a meeting of the Board held on August 10, 1999 had been distributed to the Directors and were included in the meeting material. He called for additions, corrections, or comments. There being none, upon motion duly made by Mr. Foy, seconded by Lord Wakeham, and carried, the minutes of the meeting held August 10, 1999 were approved as distributed. He called upon Mr. Duncan to discuss Executive Committee meetings. Mr. Duncan reported on meetings of the Executive Committee of the Board of Directors held on September 3, 14, and 24, 1999. He stated that at the September 3, 1999 meeting the Executive Committee considered a transaction by Enron Energy Services, LLC ("EES") regarding the acquisition of a publicly traded equipment breakdown insurance company. He noted that the Company was 3 E0004388383 XH002-02027 ============= Page 19 of 398 ============= only seeking an indication from the Committee as to whether or not the potential acquisition warranted additional attention and stated that the potential acquisition was still being reviewed. He stated that at its September 14, 1999 meeting the Executive Committee considered a transaction proposed by Enron Communications, Inc. ("ECI") regarding the acquisition of a publicly traded company that is a leading provider of global network services. He stated that there were some concerns from the Executive Committee regarding the structure of the transaction and that the Committee asked for additional information before making a decision. He stated that at the September 24, 1999 meeting the Executive Committee approved the signing of financing documents related to the Cuiaba energy project in Brazil. He noted that minutes of the July 16, 1999 Executive Committee meeting, discussed at the August Board meeting, were included in the meeting material and moved the acceptance of the report and approval of the minutes of the July 16, 1999 meeting. Mr. Duncan's motion was duly seconded by Dr. LeMaistre and carried, and the reports of the Executive Committee were accepted and the minutes of the July 16, 1999 meeting were approved. Consideration of the approval of the minutes of the September 3, 14, and 24, 1999 meetings was deferred to a subsequent meeting. Dr. LeMaistre reported on the meeting of the Compensation and Management Development Committee held on October 11, 1999. He stated that at the meeting, the Committee approved for recommendation to the Board: (i) proposed amendments to the Enron. Corp. 1991 and 1994 Stock Plans to provide delegation of authority to an Administrative Committee, composed of at least two members of the Office of the Chairman, in granting awards to employees other than Section 16 officers subject to the terms and provisions of the Plans; (ii) proposed amendments to the Enron. Corp. 1991 and 1994 Stock Plans to change the definition of retirement to avoid constructive receipt and defer taxation relating to grants of restricted stock; (iii) a proposed amendment to the Enron Corp. 1994 Stock Plan to address certain grants of stock options that were priced and communicated to recipients on Friday, June 25, 1999 but not approved by the Committee until Monday, June 28, 1999; and (iv) the proposed adoption of the Enron Corp. 1999 Stock Plan ("1999 Plan"). He stated that the purpose of the 1999 Plan was to provide a funding source for the issuance of common stock of the Company in connection with special situations, including, but not limited to, divestitures, outsourcing, remuneration payable under compensatory programs sponsored by the Company, and any other circumstance deemed a special situation by the Committee. Dr. LeMaistre moved approval of the amendments and adoption of the 1999 Plan, his motion was duly seconded by Mr. Blake, and carried, and the following resolutions were approved: E0004388384 4 =XH002-02028 ============= Page 20 of 398 ============= Approval of Amendments to the 1991 Stock Plan WHEREAS, ENRON CORP. (the "Company") and the stockholders of the Company have heretofore approved and adopted the Enron Corp. 1991 Stock Plan (As Amended and Restated Effective May 4, 1999)(the "Plan"); and WHEREAS, the Company desires to amend the Plan; NOW, THEREFORE, the Plan is amended as follows: 1. Section 2.2 is deleted and the following is inserted in its place: "2.2 Subject to the terms of the Plan and applicable law, the Committee shall have sole power, authority, and discretion to: (i) designate Participants; (ii) determine the types of Awards to be granted to a Participant under the Plan; (iii) determine the number of Shares to be covered by or with respect to which payments, rights, or other matters are to be calculated in connection with Awards; (iv) determine the terms and conditions of any Award; . (v) determine whether, to what extent, under what circumstances, and how Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or may be canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret, construe, and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (ix) make a determination as to the right of any person to receive payment of an Award or other benefit; (x) except for awards made to persons subject to Section 16 of the Securities Exchange Act of 1934, as amended, or New York Stock Exchange listing requirements, delegate to individuals in specified officer positions of the Company the authority to make and issue awards for a specified number of Shares subject to the terms and provisions of the Plan, and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. E0004388385 5 XH002-02029 ============= Page 21 of 398 ============= NOW, THEREFORE, IT IS RESOLVED, that the Issued Grants are hereby ratified and approved, and that the Plan, with respect to the Authorized Grants and such related Issued Grants only, is amended to provide that the per share purchase price of the Authorized Grants shall be the Fair Market Value of shares of Company common stock on June 25, 1999; and RESOLVED FURTHER, that the Chairman of the Compensation Committee and proper officers of the Company and its counsel are hereby authorized, empowered, and directed to take all such further action, to amend, execute, and deliver all such instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses, as in their judgment may be necessary, appropriate, or advisable in order to fully carry into effect the purposes and intentions of this and the foregoing resolution. Approval of Adoption of the 1999 Stock Plan WHEREAS, it is the desire of the Company to adopt an Enron Corp. 1999 Stock Plan (the "Plan"); NOW, THEREFORE, IT IS RESOLVED, that the proper officers of the Company be, and they are, authorized and directed to prepare and execute a Plan document substantially in the form as outlined at this meeting, providing, among other things, for the issuance of stock options and shares of restricted stock, not exceeding an aggregate of 3,000,000 shares of Common Stock of the Company, to be granted only to persons who are not subject to Section 16 of the Securities Exchange Act of 1934, and for the administration of the Plan by the Compensation Committee of the Board of Directors of the Company; RESOLVED FURTHER, that upon execution of such Plan document prepared according to the above provisions, the Plan shall be deemed adopted by this Board and is hereby ratified and approved; RESOLVED FURTHER, that the officers of the Company be, and they hereby are, authorized to take all actions necessary to finalize and put the Plan into effect, including the authority and power to execute, in the name and on behalf of the Company and under its corporate seal, as registrant, a Registration Statement on Form S-8 for the registration under the Securities Act of 1933 of 3,000,000 shares of Common Stock of the Company for the Plan, said Registration 8 E0004388388 =XH002-02030 ============= Page 22 of 398 ============= waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (ix) make a determination as to the right of any person to receive payment of an Award or other benefit; (x) except for awards made to persons subject to Section 16 of the Securities Exchange Act of 1934, as amended, or New York Stock Exchange listing requirements, delegate to individuals in specified officer positions of the Company the authority to make and issue awards for a specified number of Shares subject to the terms and provisions of the Plan, and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. 2. Paragraph (u) under Section 9 regarding definitions is deleted and the following definition of "Retirement" is inserted in its place: (u) "Retirement" shall mean (i) with respect to an Employee of the Company or one of its Affiliates, with the consent of the Committee, after age 55 with at least five years of service, the Employee's termination of employment, and (ii) upon or after age 71 the employee's termination of employment and commencement of receipt of benefits accrued under the Enron Corp. Cash Balance Plan." Approval of Amendment to the 1994 Stock Plan WHEREAS, the Compensation Committee of the Company's Board of Directors, on June 28, 1999, authorized and approved grants of stock options to certain eligible employees under the 1994 Stock Plan (the "Plan") to purchase shares of Company common stock (the "Authorized Grants"); WHEREAS, the Company, pursuant to such authorization, issued written grants of stock options under the Plan dated June 25, 1999, having as the exercise price the Fair Market Value, as defined in the Plan, of shares of Company common stock on June 25, 1999 (the "Issued Grants"); WHEREAS, the Plan provides that the per share purchase price of an Option shall not be less than the Fair Market Value of a share on the date of grant of such Option; and WHEREAS, the Board has determined that the date of grant of such Authorized Grants was June 28, 1999; 7 E0004388387 XH002-02031 ============= Page 23 of 398 ============= 2. Paragraph (u) under Section 11 regarding definitions is deleted and the following definition of "Retirement" is inserted in its place: (u) "Retirement" shall mean (i) (a) with respect to an Employee of the Company or one of its Affiliates, with the consent of the Committee, after age 55 with at least five years of service, the Employee's termination of employment, or (b) upon or after age 71 the employee's termination of employment and commencement of receipt of benefits accrued under the Enron Corp. Cash Balance Plan, and (ii) with respect to a Director of the Company, with the consent of a majority of the Board of Directors of the Company, termination of service as a Director or Honorary Director after at least five (5) years of continuous service, or upon or after the date the Director attains age 72." Approval of Amendments to the 1994 Stock Plan WHEREAS, ENRON CORP. (the "Company") has heretofore adopted and maintains the Enron Corp. 1994 Stock Plan (the "Plan"); and WHEREAS, the Company desires to amend the Plan; NOW, THEREFORE, the Plan is amended effective October 11, 1999, as follows: 1. Section 2.2 is deleted and the following is inserted in its place: "2.2 Subject to the terms of the Plan and applicable law, the Committee shall have sole power, authority, and discretion to: (i) designate Participants; (ii) determine the types of Awards to be granted to a Participant under the Plan; (iii) determine the number of Shares to be covered by or with respect to which payments, rights, or other matters are to be calculated in connection with Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, under what circumstances, and how Awards may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or may be canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret, construe, and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (viii) establish, amend, suspend, or 6 E0004388386 XH002-02032 ============= Page 24 of 398 ============= Statement to be in such form as shall be approved by the officers of the Company, and by at least a majority of the Directors of the Company, whose approval shall be conclusively evidenced by their signatures thereon, in person or by power of attorney; and the officers of the Company be, and they hereby are, further authorized to cause said Registration Statement, when executed, to be, filed with the Securities and Exchange Commission, and thereafter to execute and file with said Commission, in the name and on behalf of the Company from time to time, any amendments to said Registration Statement, which in the judgment of said officers, may be necessary or advisable for the registration of said Common Stock under said Act; RESOLVED FURTHER, that the officers of the Company be, and each of them hereby is, authorized, in the name and on behalf of the Company, to make application to such securities exchange(s) as the officers acting shall deem necessary or appropriate for the listing thereon of any issue of the Securities subject to the Plan and that each such officer, or such other person as such officer may designate in writing, is authorized to appear before any official or officials or before any body of any such exchange, and to execute and deliver any and all papers and agreements, specifically including, without limitation, indemnity agreements for the benefit of any such exchange relating to the use of facsimile signatures, and to do any and all things which may be necessary to effect such listing; RESOLVED FURTHER, that the officers of the Company be, and they hereby are, authorized and empowered to execute, in the name and on behalf of the Company, any application, amendments, or other documents, including powers of attorney, for the receipt or acceptance of service of process, necessary or proper for the qualification or the registration by the Company of the Securities subject to the Plan, in any state of the United States under any State Securities Act, Blue Sky Law, or similar statutes, and to do any and all things, and to take any and all action, necessary or desirable in connection therewith; and RESOLVED FURTHER, that the proper officers of the Company and its counsel are hereby authorized, empowered, and directed to take all such further action, to amend, execute, and deliver all such instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses, as in their judgment may be necessary, appropriate, or advisable in order to fully carry into effect the purposes and intentions of this and the foregoing resolutions, including the execution of any 9 E0004388389 XH002-02033 ============= Page 25 of 398 ============= further amendments, forms, or documents recommended by counsel or required by any governmental agency, and to do anything necessary to effect compliance with applicable law or regulation. Mr. Winokur reported on the Finance Committee meeting that was held on October 11, 1999. He stated that the Finance Committee had approved certain items for recommendation to the Board. He stated that the first item related to a proposed "shelf' registration statement to be filed with the Securities and Exchange Commission. He noted that the proposed resolution was necessary to increase the number of shares that could be offered and sold from time to time pursuant to the registration statement to reflect the impact of the Company's recent stock split. He then discussed a proposed resolution to allow a Special Committee of the Board to approve the issuance and sale of shares of the Company's common stock in connection with acquisitions. He stated that this would enable the Company to use small amounts of stock to make relatively small acquisitions without having to bring the matter before the full Board. Mr. Winokur moved approval of the proposals, his motion was duly seconded by Mr. Blake, and carried, and the following resolutions were approved: Approval of Equity Shelf Registration WHEREAS, the Company desires to file with the Securities and Exchange Commission (the "Commission") a registration statement and post-effective amendments (collectively, the "shelf registration statement") for the registration and sale from time to time of shares of Common Stock; and WHEREAS, this Board desires to provide for the issuance and sale from time to time of Common Stock by the Company; RESOLVED, that the Board of Directors hereby deems it advisable and in the best interests of the Company for the Company to issue and sell from time to time up to 15 million (Fifteen Million) shares of its Common Stock, no par value (the "Common Stock") (of which amount 7.5 million shares have been previously registered pursuant to the Securities Act of 1933), at prices to be agreed upon and established by the Special Common Stock Committee referred to below, and to be sold from time to time in public or private offerings; RESOLVED FURTHER, that the Company enter into one or more purchase agreements, underwriting agreements, sales agency agreements, or other agreements, however designated, together with all necessary agreement wires, confirmation letters, or term 10 E0004388390 XH002-02034 ============= Page 26 of 398 ============= agreements (collectively the "Common Stock Agreements"), with such underwriting firm or firms or with such institutions or dealers or purchasers as may, in the judgment of the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be necessary to effect the sale of the Common Stock; that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company, be and each of them hereby is, authorized and directed to execute and deliver the Agreements, for and in the name and on behalf of the Company, in such forms as the officer executing such Common Stock Agreements shall approve, such approval to be conclusively evidenced by such execution; and that the Company be, and it hereby is, authorized and directed to perform in full all of its obligations under the Common Stock Agreements; RESOLVED FURTHER, that the officers of the Company be, and they hereby are, authorized, empowered, and directed to cause to be prepared, executed, and filed with the Commission (i) one or more Registration Statements, including exhibits thereto (collectively, the "Registration Statement"), and (ii) such amendments and post-effective amendments to the Registration Statement or supplements to the Prospectuses constituting a part thereof, and to take all such further action, including the filing of final forms of the Prospectuses, as may, in the judgment of such officers, be necessary, desirable, or appropriate to secure and thereafter to maintain the effectiveness of the Registration Statement; RESOLVED FURTHER, that the Board of Directors of the Company, in accordance with Section 60.354 of the Oregon Business Corporation Act and Article IV of the Bylaws of the Company, as amended, does hereby create a special Common Stock pricing committee (the "Special Common Stock Committee") and designate Kenneth L. Lay and Jeffrey K. Skilling as the members of the Special Common Stock Committee, and that the Special Common Stock Committee is hereby authorized and empowered to determine, for and in the name and on behalf of the Company, the price per share of Common Stock to be received by the Company in the offerings, and any other term of any Common Stock Agreement and all such other matters as may be determined by such Special Common Stock Committee consistent with Oregon law and these resolutions, such Special Common Stock Committee's approval of such terms and conditions to be conclusively determined by their 11 E0004388391 XH002-02035 ============= Page 27 of 398 ============= inclusion in the executed copies of any Common Stock Agreements; and that the Special Common Stock Committee is hereby authorized to take any and all action and to do or cause to be done any or all things which may appear to the Special Common Stock Committee to be necessary or advisable in order to offer, issue, and sell the Common Stock, to the full extent and with the same effect as the Board of Directors of the Company could take such action or do or cause such things to be done; and that a majority of the members of the Special Common Stock Committee shall constitute a quorum for the transaction of business; and that the Special Common Stock Committee shall keep a written record of its meetings, shall present such record to the meetings of the Special Common Stock Committee, and shall file a copy of such record in the corporate minutes of the Company; RESOLVED FURTHER, that the Chairman of the Board, any Vice Chairman of the Board, the President of the Company, any Vice President of the Company, the Corporate Secretary, any Deputy Corporate Secretary, or any Assistant Secretary of the Company be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Company, to sign, under the corporate seal of the Company (if required), any or all of the certificates of Common Stock and that the signatures of the aforesaid authorized officers and the corporate seal of the Company (if required) may be facsimile, and that the Company hereby adopts and approves any such facsimile signatures and seal; RESOLVED FURTHER, that the facsimile signatures which appear upon any of the certificates of Common Stock shall be valid regardless of whether such officer ceases to hold such office prior to the issuance of the Common Stock; RESOLVED FURTHER, that the.Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior 'Vice President, or any Vice President, and the Senior Vice President and Secretary, any Deputy Corporate Secretary, or any Assistant Secretary of the Company be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Company, to take any and all action which they may deem necessary or advisable in order to obtain a permit, to register or to qualify part or all of the Common Stock for issuance and sale or to request an exemption from registration of part or all of the Common Stock or to register or obtain a license for the Company as a dealer or broker under the securities laws of such of the states of the United States of America 12 EOO04388392 =XH002-02036 ============= Page 28 of 398 ============= and of such foreign jurisdictions as such officers may deem advisable, and in connection with such registrations, permits, licenses, qualifications, and exemptions, to execute, acknowledge, verify, deliver, file, and publish all such applications, reports, resolutions, irrevocable consents to service of process, powers of attorney, and other papers and instruments as may be required under such laws, and to take any and all further action which they may deem necessary or advisable in order to maintain such registration in effect for as long as they may deem to be in the best interests of the Company; RESOLVED FURTHER, that if the officers of the Company determine that it is necessary for the Company to do so, the Company make application to the New York Stock Exchange, Inc. and one or more other national securities exchanges for listing of the Common Stock in the number of shares issued or reserved for issuance; that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be, and each of them hereby is, authorized and directed to execute and deliver on behalf of the Company to the New York Stock Exchange, Inc. or other such L securities exchanges such indemnity agreements in such form as may be necessary to effect the aforesaid listing; and that the officers of the Company be, and they hereby are, authorized and directed to execute and deliver any applications, documents, or agreements, to take any and all actions, to appear before such exchanges if necessary, to appoint any banking or other institution as an agent of the Company for any purpose, and to do or cause to be done any and all things as may appear to them to be necessary or desirable in order to effect such listing; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. 13 E0004388393 KH002-02037 ============= Page 29 of 398 ============= Approval of Granting Authority to a Special Committee of the Board in connection with certain acquisitions WHEREAS, the Company desires to issue and sell from time to time shares of Company Common Stock in connection with the Company's acquisition of assets and securities of other parties; and WHEREAS, this Board desires to provide for the issuance and sale from time to time of Common Stock by the Company for such purpose; RESOLVED, that the Board of Directors hereby deems it advisable and in the best interests of the Company for the Company to issue and sell from time to time up to 500,000 (Five Hundred Thousand) shares of its Common Stock, no par value (the "Common Stock"), at prices to be agreed upon and established by the Special Common Stock Committee referred to below, and to be sold from time to time in public or private offerings, solely and specifically for the purpose of utilizing such shares as consideration currency in connection with the Company's acquisition of assets or securities of other companies or entities; RESOLVED FURTHER, that the Company enter into one or more purchase agreements, underwriting agreements, sales agency agreements, or other agreements, however designated, together with all necessary agreement wires, confirmation letters, or terms agreements (collectively the "Common Stock Agreements"), with such underwriting firm or firms or with such institutions or dealers or other counter-parties as may, in the judgment of the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be necessary to effect the sale of the Common Stock; that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be, and each of them hereby is, authorized and directed to execute and deliver the Common Stock Agreements, for and in the name and on behalf of the Company, in such forms as the officer executing such Common Stock Agreements shall approve, such approval to be conclusively evidenced by such execution; and that the Company be, and it hereby is, authorized and directed to perform in full all of its obligations under the Common Stock Agreements; E0004388394 14 XH002-02038 ============= Page 30 of 398 ============= RESOLVED FURTHER, in connection with the sale of Common Stock pursuant to the Common Stock Agreements, that the officers of the Company be, and they hereby are, authorized, empowered, and directed to cause to be prepared, executed, and filed with the Commission (i) one or more Registration Statements, including exhibits thereto (collectively, the "Registration Statement"), and (ii) such amendments and post-effective amendments to the Registration Statement or supplements to the Prospectuses constituting a part thereof, and to take all such further action, including the filing of final forms of the Prospectuses, as may, in the judgment of such officers, be necessary, desirable, or appropriate to secure and thereafter to maintain the effectiveness of the Registration Statement; RESOLVED FURTHER, that the Board of Directors of the Company, in accordance with Section 60.354 of the Oregon Business Corporation Act and Article IV of the Bylaws of the Company, as amended, does hereby create a special Common Stock pricing committee (the "Special Common Stock Committee") and designate Kenneth L. Lay and Jeffrey K. Skilling as the members of the Special Common Stock Committee, and that the Special Common Stock Committee is hereby authorized and empowered to determine, for and in the name and on behalf of the Company, the price per share of Common Stock to be received by the Company in the offerings, and any other term of any Common Stock Agreement and all such other matters as may be determined by such Special Common Stock Committee consistent with Oregon law and these resolutions, such Special Common Stock Committee's approval of such terms and conditions to be conclusively determined by their inclusion in the executed copies of any Common Stock Agreements; and that the Special Common Stock Committee is hereby authorized to take any and all action and to do or cause to be done any or all things which may appear to the Special Common Stock Committee to be necessary or advisable in order to offer, issue and sell the Common Stock, to the full extent and with the same effect as the Board of Directors of the Company could take such action or do or cause such things to be done; and that a majority of the members of the Special Common Stock Committee shall constitute a quorum for the transaction of business; and that the Special Common Stock Committee shall keep a written record of its meetings, shall present such record to the meetings of the Special Common Stock Committee, and shall file a copy of such record in the corporate minutes of the Company; 15 E0004388395 XH002-02039 ============= Page 31 of 398 ============= RESOLVED FURTHER, that the Chairman of the Board, any Vice Chairman of the Board, the President of the Company, any Vice President of the Company, the Corporate Secretary, any Deputy Corporate Secretary, or any Assistant Secretary of the Company be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Company, to sign, under the corporate seal of the Company (if required), any or all of the certificates of Common Stock and that the signatures of the aforesaid authorized officers and the corporate seal of the Company (if required) may be facsimile, and that the Company hereby adopts and approves any such facsimile signatures and seal; RESOLVED FURTHER, that the facsimile signatures which appear upon any of the certificates of Common Stock shall be valid regardless of whether such officer ceases to hold such office prior to the issuance of the Common Stock; RESOLVED FURTHER, that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President, and the Senior Vice President and Secretary, any Deputy Corporate Secretary, or any Assistant Secretary of the Company be, and each of them hereby is, authorized and directed, for and in the name and on behalf of the Company, to take any and all action which they may deem necessary or advisable in order to obtain a permit, to register or to qualify part or all of the Common Stock for issuance and sale or to request an exemption from registration of part or all of the Common Stock or to register or obtain a license for the Company as a dealer or broker under the securities laws of such of the states of the United States of America and of such foreign jurisdictions as such officers may deem advisable, and in connection with such registrations, permits, licenses, qualifications, and exemptions, to execute, acknowledge, verify, deliver, file, and publish all such applications, reports, resolutions, irrevocable consents to service of process, powers of attorney, and other papers and instruments as may be required under such laws, and to take any and all further action which they may deem necessary or advisable in order to maintain such registration in effect for as long as they may deem to be in the best interests of the Company; RESOLVED FURTHER, that if the officers of the Company determine that it is necessary for the Company to do so, the Company make application to the New York Stock Exchange, Inc. and one or more other national securities exchanges for listing of the 16 E0004388396 :H002-02040 ============= Page 32 of 398 ============= Common Stock in the number of shares issued or reserved for issuance; that the Chairman of the Board, any Vice Chairman of the Board, the President, any Executive or Senior Vice President, or any Vice President of the Company be, and each of them hereby is, authorized and directed to execute and deliver on behalf of the Company to the New York Stock Exchange, Inc. or other such securities exchanges such indemnity agreements in such form as may be necessary to effect the aforesaid listing; and that the officers of the Company be, and they hereby are, authorized and directed to execute and deliver any applications, documents, or agreements, to take any and all actions, to appear before such exchanges if necessary, to appoint any banking or other institution as an agent of the Company for any purpose, and to do or cause to be done any and all things as may appear to them to be necessary or desirable in order to effect such listing; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. Mr. Winokur then discussed information concerning an unaffiliated investment partnership, LJM 2, and stated that the partnership could possibly provide the Company with an alternative, optional source of private equity to manage its investment portfolio risk, funds flow, and financial flexibility. He noted that Mr. Andrew S. Fastow would be acting as the managing partner of LJM 2 and discussed Mr. Fastow's role in the LJM 2 partnership. He commented on the controls that would be put in place to manage any transactions between the Company and LJM 2 and noted that the Company and LJM 2 were not obligated to one another in any way. He noted that the controls include review and approval of all transactions by the Chief Accounting Officer and the Chief Risk Officer of the Company. He stated that the Audit and Compliance Committee would, on an annual basis, review all transactions completed within the past year and make any recommendations they deemed appropriate. He stated that the Company's Conduct of Business Affairs Policies (relating to investments and outside business interests of officers and employees) would prohibit Mr. Fastow from participating in LJM 2 as managing partner due to his position as Executive Vice President and Chief Financial Officer of the Company, absent appropriate reviews and waivers from the Board and a finding that such participation does not adversely affect the best 17 E0004388397 XH002-02041 ============= Page 33 of 398 ============= interests of the Company. He recommended that such review and findings be made in this instance, his motion was duly seconded by Mr. Urquhart, and carried, and the following resolutions were approved: WHEREAS, Andrew S. Fastow serves as the Executive Vice President and Chief Financial Officer of the Company; WHEREAS, Mr. Fastow has the opportunity to participate in the formation of an investment partnership (the "Partnership") that would not be affiliated with the Company; WHEREAS, it is anticipated that Mr. Fastow will serve as the managing partner/manager of the Partnership; WHEREAS, it is anticipated that the Partnership will invest in energy and communications-related businesses and assets, including businesses and assets of the Company; WHEREAS, the Partnership, as a potential ready purchaser of the Company's businesses and assets or as a potential contract counterparty, could provide liquidity, risk management, and other financial benefits to the Company; WHEREAS, the Office of the Chairman of the Company has determined, for the foregoing reasons, that Mr. Fastow's participation as the managing partner/manager of the Partnership will not adversely affect the interests of the Company; NOW, THEREFORE IT IS RESOLVED, that the Board hereby adopts and ratifies the determination by the Office of the Chairman pursuant to the Company's Conduct of Business Affairs/Investments and Outside Business Interests of Officers and Employees that participation of Mr. Fastow as the managing partner/manager of the Partnership will not adversely affect the interests of the Company; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, 18 E0004388398 =XH002-02042 ============= Page 34 of 398 ============= proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. Mr. Winokur stated that the Finance Committee had discussed the Company's dividend level taking into consideration the Company's increasing capital needs and investment opportunities. He recommended that the Board keep the dividend level constant and approve the declaration of dividends payable in the fourth quarter of 1999 for the common and preferred issues of stock; his motion was duly seconded by Mr. Blake, and carried, and the following resolutions were adopted: RESOLVED, that a dividend of $3.413 per share on the Cumulative Second Preferred Convertible Stock of the Company, covering the quarter ending December 31, 1999, be, and it hereby is, declared payable on January 3, 2000, to shareholders of record of said stock at the close of business on December 10, 1999; and RESOLVED FURTHER, that a dividend of $0.125 per share on the Common Stock of the Company be, and it hereby is, declared payable on December 20, 1999, to shareholders of record of said stock at the close of business on December 1, 1999, out of the net profits or surplus of the Company available for the payment of dividends. Mr. Winokur stated that the Committee had also discussed the Company's liquidity and noted that the Company had significantly increased its available capacity and lowered its cost by utilizing surety bonds, issued by insurance companies, in lieu of letters of credit. He stated that Messrs. Fastow, McMahon, and Skilling had met recently with Moody's Investor Services and formally requested an upgrade to the Company's credit rating. Mr. Lay called upon Dr. Jaedicke to report on the Audit and Compliance Committee's meeting held on October 11, 1999. Dr. Jaedicke stated that Mr. Causey and Mr. David B. Duncan, of Arthur Andersen, LLP ("AA"), had given a status report on the Company's internal controls. He noted that Mr. Richard B. Buy had given credit and market risk reports and Mr. Causey had discussed the progress made on the SAP implementation. He stated that the Committee also heard a report from Ms. Sharon A. Butcher, of the Company, regarding the Company's compliance with its Conduct of Business Affairs Policies. He stated that the Committee held an executive session with AA to discuss the adequacy of the Company's financial disclosure and he noted that AA was very comfortable with the Company's level of disclosure. 19 E0004388399 :XH002-02043 ============= Page 35 of 398 ============= Mr. Lay call upon Mr. Sutton to discuss a proposed Human Rights Policy, a copy of which is filed with the records of the meeting. Mr. Sutton stated that the Company was working on launching a program for Social and Environmental Responsibility which would include clear policies on expected behavior, training mechanisms for staff and contractors, and better interface with nongovernmental organizations in the human rights and environmental fields. He stated that, as a first step in its program for Social and Environmental Responsibility, the Company was proposing the adoption of a Human Rights Policy. He outlined the basic framework of the Policy and following a discussion, upon motion duly made by Mr. Duncan, seconded by Mr. Blake, and carried, the Enron Human Rights Policy discussed at the meeting, including any minor revisions authorized by Mr. Lay, was approved. Mr. Lay called on Mr. Skilling to present other general corporate matters for consideration by the Board. Mr. Skilling stated that the Company had recently hired three new corporate officers, Messrs. J. Mark Metts and Wesley H. Colwell and Ms. Charlene R. Jackson, and discussed each individual's role within the Company. He also noted that there had also been some individuals promoted to Vice President within the Company and recommended that the Board approve the election of Company officers. Upon motion duly made by Mr. Blake, seconded by Dr. LeMaistre, and carried, the following resolutions were approved: RESOLVED, that the following persons be, and each hereby is, elected to the position set forth opposite their names, to serve for the ensuing year and until their successors are duly elected and qualified: Kenneth L. Lay Jeffrey K. Skilling Joseph W. Sutton Richard B. Buy Richard A. Causey James V. Derrick, Jr. Andrew S. Fastow Steven J. Kean Mark E. Koenig Michael S. McConnell Jeffrey McMahon Chairman and Chief Executive Officer President and Chief Operating Officer Vice Chairman Executive Vice President and Chief Risk Officer Executive Vice President and Chief Accounting Officer Executive Vice President and General Counsel Executive Vice President and Chief Financial Officer Executive Vice President and Chief of Staff Executive Vice President, Investor Relations Executive Vice President, Technology Executive Vice President, Finance and Treasurer E0004388400 20 =XH002-02044 ============= Page 36 of 398 ============= J. Mark Metts Cindy K. Olson Rebecca C. Carter Joseph M. Hirko Terence H. Thorn Robert H. Walls, Jr. Wesley H. Colwell Charlene R. Jackson Mitchell S. Taylor Joe H. Allen Melissa A. Becker Philippe A. Bibi Robert H. Butts Edward R. Coats Angus H. Davis William R. Donovan James A. Ginty Alberto Gude, Jr. Robert J. Hermann E. Joseph Hillings Mary K. Joyce Drew C. Lynch R. Davis Maxey Peggy B. Menchaca Mark A. Palmer Christie A. Patrick Louis E. Potempa Greek L. Rice Paula H. Rieker Rex R. Rogers Richard S. Shapiro William W. Brown Executive Vice President, Corporate Development Executive Vice President, Human Resources and Community Relations Senior Vice President, Board Communications and Secretary Senior Vice President Senior Vice President and Chief Environmental Officer Senior Vice President and Deputy General Counsel Managing Director, Accounting Transaction Managing Director, Intellectual Capital Managing Director, Corporate Development Vice President, External Affairs Vice President, Strategic Initiatives Vice President, Technology Vice President and Controller Vice President, Tax, Audits Vice President and Deputy Corporate Secretary Vice President, Corporate Administrative Services Vice President, Tax, International Vice President, IT Compliance Vice President and General Tax Counsel Vice President and General Manager, Federal Government Affairs Vice President, Human Resources Vice President, Employee Relations Vice President, Tax, Planning Vice President and Assistant Secretary Vice President, Communications Vice President, North American Indian Affairs Vice President, Corporate Development Vice President, Tax, GPG Vice President, Investor Relations Vice President, Associate General Counsel and Assistant Secretary Vice President, State Government Affairs and Federal Regulatory Affairs Deputy Treasurer 21 E0004388401 =XH002-02045 ============= Page 37 of 398 ============= Michael F. Jakubik Elaine V. Overturf Kate B. Cole Denise A. Ernest Gary L. Foster Geneva K. Holland Linda F. Jenkins Timothy A. Despain Mary A. Perkins Deputy Treasurer Deputy Corporate Secretary Assistant Secretary Assistant Secretary Assistant Secretary Assistant Secretary Assistant Secretary Assistant Treasurer Assistant Treasurer RESOLVED FURTHER, that the effective date of following persons' election be, and hereby is, May 1, 1999. Edward R. Coats James A. Ginty R. Davis Maxey Greek L. Rice Vice President,Tax, Audits Vice President,Tax, International Vice President,Tax, Planning Vice President,Tax, GPG RESOLVED FURTHER, that the effective date of J. Mark Metts' election be, and hereby is, August 23, 1999. Mr. Lay recessed the executive session at 9:02 p.m., C.D.T. on October 11, 1999 and reconvened the meeting at 8:00 a.m., C.D.T., on October 12, 1999 in open session at the Enron Building in Houston, Texas. All of the Directors noted in attendance on the previous evening returned to the meeting and Messrs. James P. Badum, Robert B. Butts, Joseph E. Earle, John B. Echols, Joseph M. Hirko, Gene E. Humphrey, Daniel P. Leff, Michael S. McConnell, Mark S. Muller, Lou L. Pai, Kenneth D. Rice, Martin Sunde, Joseph W. Sutton, Greg L. Whalley, and Thomas E. White and Mesdames Rebecca C. Carter, Louise J. Kitchen, Rebecca A. McDonald, and Victoria T. Sharp, all of the Company or affiliates thereof, joined the meeting. Messrs. James A. Bannantine, Donald W. Black, Richard A. Causey, Orlando R. Gonzalez, and Ricky L. Waddell, all of the Company or affiliates thereof, joined the meeting in progress as noted below. Mr. Lay called upon Mr. Whalley to discuss the Company's Global Risk Management function. Mr. Whalley stated that as the Chief Executive Officer of Risk Management he had three groups, Insurance, EnronOnline, and Research, reporting directly to him. He discussed each of the group's roles within the Company and the number of employees. He noted that in addition to his direct reports, he had indirect supervisory authority over all trading operations, in all commodities, throughout the Company. He discussed the reports related to the Company's trading operations, including volumes traded, profit and loss, and net open positions that were produced daily for his review. He stated that his groups' primary responsibilities included reviewing major commodity risks taken by the 22 E0004388402 :XH002-02046 ============= Page 38 of 398 ============= business units, facilitating the transfer of information and skill sets across the business units, assisting in staffing and training for the trading organizations, and consulting with local traders on general market conditions and global information relevant to the Company's operations. He gave an overview of the current market conditions, focusing on gas and power markets liquidity and the growth in the power markets on the Continent. Mr. Skilling then gave a brief overview of EnronOnline, the Company's new online trading system, and called upon Ms. Kitchen to present the matter. Ms. Kitchen noted that EnronOnline was a free, internet-based transaction system that will allow the Company's counterparties to view real time prices from the Company's traders and transact online. She stated that the system was multi- currency, multi-commodity, and would eventually be offered globally. She presented a demonstration how the system will operate and discussed the information that would be available to users. She commented on the support work that had gone into the development, the different systems built to support EnronOnline, and the timeline for when the system would be available in different areas of the world. She discussed the projected number of transactions that would be done online over the next two years and noted that by the end of 2001 the Company estimated that over two-thirds of all transactions would be done online. Ms. Kitchen answered questions from the Board regarding the security built into the system, potential credit issues, applicable laws and regulations that could impact the ability to transact online, and the counterparties ability to customize their EnronOnline screens. A copy of Ms. Kitchen's presentation is filed with the records of the meeting. Messrs. McConnell, Skilling, and Whalley and Ms. Kitchen left the meeting following the presentation. Mr. Lay called upon Mr. White to update the Board on EES. Mr. White stated that EES' presentation would be focused on the details of execution related to contracts that had previously been signed and the progress to date on previously stated goals. He discussed the strong market response to total energy outsourcing that EES has experienced and stated that both third and fourth quarter results would be very strong. He noted that EES had put in place an organization to successfully execute the deals already signed and stated that financial goals for the year would be met. He introduced the other employees from EES in attendance and called upon Mr. Sunde to discuss the sales function. Mr. Sunde stated that the biggest issues EES faced in executing transactions included the counterparties' concerns regarding the length of the contract obligation, typically ten years, and EES' concern regarding change of control risk. He noted that the biggest obstacle EES faced was a "business as usual" philosophy. He discussed the deals in progress for the third and fourth quarters 23 E0004388403 =XH002-02047 ============= Page 39 of 398 ============= and noted whether they were outsourcing, commodity, upsell, or other types of contracts. He commented on the stages of deal development, the time frame involved, and the percentage of initiated transactions that typically closed. Mr. Sunde answered questions from the Board concerning the average contractual savings offered to customers and change of control unwind provisions in contracts. Mr. Sunde stated that in addition to spending considerable time negotiating the unwind provisions EES also took reserves when the contract was recorded related to the potential for a change of control at the counterparty company. Mr. White called upon Mr. Echols to discuss EES's risk management function. Mr. Echols discussed EES' near-term and long-term value levers, or the manner in which the Company makes money on a transaction. He stated that near-term value came from optimizing the operations at companies that had outsourced operations to EES and included establishing best practices/processes, making capital investments in more energy efficient equipment, and better management of the commodity price aspect of the business. He stated that long- term value related to scale procurement, improved technology, and more efficient use of labor. Mr. Echols introduced Mr. Leff to discuss EES execution account management division. Mr. Leff discussed EES' existing portfolio of contracts, including the total contract value ("TCV"), a measure of the value of the contract over the entire life of the deal, and the potential additional value that could come from selling incremental services to the customer. He discussed the five divisions within his organization and the roles and responsibilities of each division. He commented on how the effectiveness of his organization was measured and noted that customer satisfaction was considered the most important measurement. He showed the results of customer satisfaction surveys from earlier in the year, differentiated by type of customer, and stated that his organization had established a "referral threshold" that they felt was necessary to achieve in order to get business referrals. Mr. Leff called upon Mr. Earle to discuss EES' facility services division. Mr. Earle stated that the group's goal was to be the premier nationwide provider of comprehensive services for energy systems. He noted that facility services included facilities management, mechanical and electrical construction, heating, ventilation, and air conditioning ("HVAC") service and HVAC franchising. He commented on the strategy of the group going forward and the anticipated financial performance for 1999. Mr. Earle called upon Mr. Muller to discuss EES' international operations. Mr. Muller discussed the status of commercial development, including the deals currently in place, the status of the market, and EES' evaluation of opportunities in Europe, the Southern Cone, the Pacific Rim, and other markets. He discussed 24 E0004388404 :XH002-02048 ============= Page 40 of 398 ============= completed deals in Europe and noted the TCV of the transactions, countries where delivery of services would occur, and the projected timeline for closing the transactions. He discussed a proposed acquisition of a publicly traded equipment breakdown insurance company that EES had discussed with the Executive Committee of the Board but noted that due to changes in market conditions EES was now considering an outsourcing contract as opposed to an acquisition. Mr. Muller called upon Mr. Pai to update the Board on EES' residential business ("ResCo"). Mr. Pai stated that opportunities in the residential market were improving and that EES had recently executed a letter of intent with America OnLine that would give ResCo a six-year exclusive. He stated that the initial funding for ResCo was coming from external sources and discussed the amounts each of the external sources had committed to. He noted that EES was still anticipating an initial public offering of common stock in ResCo in early 2000 and discussed the estimated valuation and the anticipated percentage of ResCo that the Company would retain. Mr. Pai then discussed the financial performance of EES during 1999 and that projected for 2000. He commented on the TCV of deals closed during 1999 and the margins that had been created, noting whether the contracts were bundled/outsource, facility services, or commercial gas. He discussed the projected gross margin, operating expenses, and earnings for each quarter of 2000. Messrs. Earle, Echols, Leff, Muller, Pai, Sunde and White left the meeting and Messrs. Bannantine, Black, and Waddel joined the meeting following the presentation. Mr. Lay called upon Mr. Humphrey to discuss Enron Economic Development Corp. ("EEDC"). Mr. Humphrey showed a short video that focused on EEDC's current customers and purpose, to create a profit-oriented "social investing" business that focused on historically underserved and economically disadvantaged communities. He then discussed the number of deals that had been closed, evaluated, or rejected during the third quarter and the third-party investor commitments that had been received thus far to help fund EEDC's initiatives. He gave a brief summary of each company that had received funding from EEDC and the amount and closing date of the funding. He discussed the expected return on the capital funded to the companies and the range of ownership that EEDC would hold in the companies. He noted that EEDC was working to establish a national economic opportunity fund and discussed how it would be structured and the targeted cities. Mr. Humphrey left the meeting and Mr. Causey joined the meeting following the presentation. 25 E0004388405 =XH002-02049 ============= Page 41 of 398 ============= Mr. Lay then called upon Ms. McDonald to discuss the Company's operations in the Asia/Pacific region, Africa, and China ("APACHI"). Ms. McDonald displayed a map outlining the facilities that the APACHI group currently has under development or in operation. She stated that there was significant disparity within the regions as to the availability of natural resources and noted that some countries have existing networks that the APACHI group could leverage off of while in other countries there was the opportunity for the APACHI group to develop a network. She discussed the forecasted versus plan 1999 net income by region and discussed reasons for a shortfall in the China region. She outlined the group's rationale for concentrating on certain regions and noted that two factors, strategic importance to the Company and execution lead- time, were important in determining which regions to focus on. She discussed Japan's liberalizing power market, high industrial power prices, and desirable market characteristics. She discussed in detail APACHI's two-pronged approach to Japan, (i) focusing on generation aggregation and (ii) offering a full array of the Company's products and services to the country. She updated the Board on the Company's current investment in Korea and outlined the factors necessary to establish a viable origination and trading business. She discussed the Company's electricity trading and projected revenues in Australia and gave a brief overview of regions where APACHI is not currently focusing its efforts. A copy of Ms. McDonald's presentation is filed with the records of the meeting. Mr. Skilling rejoined the meeting during Ms. McDonald's presentation. Mr. Lay called upon Mr. Rice to discuss ECI. Mr. Rice discussed the outlook for the internet and e-commerce markets over the next three years and stated that ECI's vision was to be the world's first global eBusiness network. He displayed charts showing ECI's five year projections for different aspects of the internet and e-commerce businesses, including access speed, content revenue rates, broadband and bandwidth market size and potential, and revenue potential. He gave an update on ECI's domestic and international strategy and noted it focused on two areas, (i) network reach, including a global, flexible backbone with a broad distribution network and (ii) network commerce, which includes the Enron Intelligent Network, bandwidth commerce, financing, trading, streaming video, data storage and archiving, and distributed computing. He updated the Board on the domestic and international network reach currently in place and that anticpated by the end of 2000. He commented on video streaming that ECI had recently performed for the Country Music Awards and discussed the number of viewers who had participated. He discussed the competitive landscape and noted where competitors fell within the internet value chain, from content providers to internet service providers. He concluded by stating that business will increasingly move toward electronic, internet-based commerce, there is a need for a global eBusiness network provider, and that the Company is capable of creating the global 26 E0004388406 XH002-02050 ============= Page 42 of 398 ============= eBusiness platform. Mr. Hirko joined Mr. Rice in answering questions from the Board. Messrs. Causey, Hirko, and Rice and Ms. McDonald left following the presentation. Mr. Lay called upon Mr. Bannantine to begin the presentation on Enron South America ("ESA"). Mr. Bannantine displayed a map showing ESA's existing assets and operations and projects/businesses under construction and discussed the rapid expansion of the Company's activities in South America over the last three years. He explained how ESA was organized and the number of personnel employed. He commented on ESA's successes in 1999 including a consolidation of the Company's position in Elektro, beginning commercial operations at the Cuiaba power facility, and flowing gas on the Bolivia to Brazil pipeline. He discussed how capital was employed in South America and commented on whether the capital was invested in strategic assets, completed expansion/exploitation opportunities, or expansion/exploitation opportunities in progress. He commented on ESA's South American market outlook over the next five years and noted that the Company was a dominant player in a large and fast growing energy market. He called upon Mr. Gonzalez to discuss Elektro. Mr. Gonzalez discussed ESA's Elektro concession, which gave ESA the right to generate and distribute electricity from two hydroelectric facilities, and commented on the area served, number of customers, area population, revenues, and number of employees. He discussed the 1999 major accomplishments which included achieving a tariff increase, reducing operating costs, completing a successful reorganization, and being chosen the best electric distribution company in Brazil. He discussed Elektro's targets for 2000 of continued improvement in profitability, environmental, health and safety performance, and successfully pursuing joint development opportunities with the Company's other business units. He then called upon Mr. Waddell to discuss ESA's gas business unit. Mr. Waddell discussed the locations of ESA's Brazilian gas local distribution companies, Gaspart and CEG/RIOGAS, and commented on the Brazilian states where they operated and the population of the regions. He then discussed the gas business unit's 1999 accomplishments and the action plan for 2000. He called upon Mr. Christodoulou to discuss ESA's overall strategy. Mr. Christodoulou stated that ESA's strategy was to fully transition its asset holdings and merchant functions into an integrated Southern Cone business. He noted that the Company's selective asset positions gave it an opportunity to deliver unique merchant services. He stated that there were three phases to the strategy, (i) build a strategic asset position whereby the Company would receive regulated returns, (ii) expansion/exploitation of the strategic assets for an enhanced return on 27 E0004388407 .XH002-02051 ============= Page 43 of 398 ============= equity, and (iii) establish a network integration of gas and power trading, communications functions, an EES type business, and asset monetizations which would lead to an increasing return on intellectual capital. He discussed the key areas of focus for the merchant business and the potential need for additional strategic assets and commented on the potential expansion/exploitation opportunities they could bring to the Company. There being no further business to come before the Board, the meeting was adjourned at 12:30 p.m., C.D.T. Secretary APPROVED: Chairman H:\a Minutes\1999 Minutes\101299.doc 28 E0004388408 XH002-02052 ============= Page 44 of 398 ============= rn O co 00 M O O U W =XH002-02053 ============= Page 45 of 398 ============= MINUTES MEETING OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS ENRON CORP. September 3, 1999 Minutes of a meeting of the Executive Committee ("Committee") of the Board of Directors of Enron Corp. ("Company"), held pursuant to due notice at 9:00 a.m., C.D.T., on September 3, 1999 at the Enron Building in Houston, Texas. The following Committee members were present, either in person or by telephone conference connection, where each participant could hear the comments of the others and join in the discussion, constituting a quorum: Mr. Robert A. Belfer Mr. Joe H. Foy Mr. Kenneth L. Lay Dr. Charles A. LeMaistre Mr. Jeffrey K. Skilling Mr. Herbert S. Winokur, Jr. Chairman John H. Duncan was absent from the meeting. Messrs. John B. Echols, Jeffrey R. Golden, Mark E. Koenig, J. Mark Metts, Lou L. Pai, and Thomas E. White and Ms. Rebecca C. Carter, all of the Company or affiliates thereof, also attended the meeting. Mr. Joseph W. Sutton, of the Company, joined the meeting in progress as noted below. With the Committee's permission, Mr. Lay acted as Chairman and presided at the meeting and the Secretary, Ms. Carter, recorded the proceedings. Mr. Lay called the meeting to order and inquired if the Committee members had received the material for the meeting, and each responded that he had received the material. He noted that the purpose of the meeting was for the Committee to consider a potential transaction that had previously been discussed with Mr. Winokur and Director Norman P. Blake, Jr. He called upon Mr. Skilling, who indicated that the meeting had been called for the Committee to discuss a potential acquisition by Enron Energy Services, LLC ("EES"). He noted that the Company was only seeking an indication from the Committee as to whether or not the potential acquisition warranted additional attention and that approval of the potential transaction was not being sought at the time. Mr. Skilling gave an overview of the potential transaction, "Project Newton" and noted that the company being considered for acquisition was publicly traded. He discussed the anticipated purchase price, strategic rationale for the potential transaction, E0004388410 :XH002-02054 ============= Page 46 of 398 ============= and proposed timeline for completion of a definitive agreement, if appropriate. He discussed the valuation analysis performed by the Company and the price-to-earnings ("P/E") multiples of companies in the same industry as Newton. Mr. Sutton joined the meeting. Mr. Skilling stated that there were different aspects of Newton that made the company an appealing acquisition target for EES. He discussed Newton's two business segments, analyzing the P/E multiples of each and discussing how each segment could be optimized if acquired by the Company. He commented on the potential synergies between EES and Newton and discussed the financial impact the acquisition would have on the Company. A copy of Mr. Skilling's presentation is filed with the records of the meeting. A discussion ensued, with Messrs. Lay, Pai, Skilling, and White answering questions from the Committee regarding Newton's reputation within the industry and the expected reaction from investment analysts and investors if the Company were to proceed and complete this type of an acquisition. Following a discussion, upon motion duly made by Mr. Foy, seconded by Mr. Belfer, and carried, the Committee approved the Company going forward with due diligence on Project Newton. There being no further business to come before the Committee, the meeting was adjourned at 9:30 a.m., C.D.T. Secretary APPROVED: Chairman H:\a Minutes\1999 Minutes\9399EX.doc 2 E0004388411 EXH002-02055 ============= Page 47 of 398 ============= DRAFT MINUTES MEETING OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS ENRON CORP. September 14, 1999 Minutes of a meeting of the Executive Committee ("Committee") of the Board of Directors of Enron Corp. ("Company"), held pursuant to due notice at 9:15 a.m., C.D.T., on September 14, 1999 at the Enron Building in Houston, Texas. All of the Committee members were present, either in person or by telephone conference connection, where each participant could hear the comments of the others and join in the discussion: Mr. John H. Duncan, Chairman Mr. Robert A. Belfer Mr. Joe H. Foy Mr. Kenneth L. Lay Dr. Charles A. LeMaistre Mr. Jeffrey K. Skilling Mr. Herbert S. Winokur, Jr. Messrs. C. Kevin Garland, Joseph M. Hirko, Steven J. Kean, J. Mark Metts, Kenneth D. Rice, and Joseph W. Sutton and Ms. Rebecca C. Carter, all of the Company or affiliates thereof, also attended the meeting. The Chairman, Mr. Duncan, presided at the meeting, and the Secretary, Ms. Carter, recorded the proceedings. Mr. Duncan called the meeting to order and inquired if the Committee members had received the material for the meeting, and each responded that he had received the material. He asked Mr. Lay to present the business of the meeting. Mr. Lay indicated that the meeting had been called for the Committee to consider transactions proposed by Enron Communication, Inc. ("ECI") and Enron Energy Services, LLC ("EES"). He called upon Mr. Skilling to present the ECI transaction and to solicit preliminary comments from the Committee. Mr. Skilling noted that ECI was considering an acquisition of a publicly traded company that was a leading provider of global network services ("Mountaineer"). He discussed the strategic rationale for the acquisition and noted that Mountaineer provided a similar range of services to those provided by ECI. He noted that the acquisition of E0004388412 EXH002-02056 ============= Page 48 of 398 ============= Mountaineer primarily related to the purchase of intellectual capital and market position as opposed to assets. He called upon Mr. Rice to present an overview of the transaction. Mr. Rice stated that the primary goal of ECI was to become a global e-commerce company, with significant scale and scope throughout the world. He stated that Mountaineer had been involved in the market for two to three years and had established very good customer relationships. He gave a brief overview of the total transaction cost, supplied additional information on the strategic rationale for the acquisition, and called upon Mr. Hirko to give a business overview. Mr. Hirko stated that Mountaineer provided customers a global network with a total outsourcing of e-commerce applications utilizing low bit rate applications, as opposed to ECI's current orientation, which utilized high bit rate technology. He discussed Mountaineer's customer base, regional data centers, the experience level of the senior management, and the strategic fit between the Company and Mountaineer. He called upon Mr. Garland to discuss the proposed purchase price. Mr. Garland discussed Mountaineer's market capitalization and valuation, including current and 52 week high and low share prices. He noted that Mountaineer has traded at a significant discount to its comparable companies. He reviewed an analysis of comparable companies and noted that the industry's stocks typically traded based on revenues rather than earnings or cash flow. He discussed the impact the acquisition would have on the Company's earnings and credit ratios, noting that it would be dilutive to earnings. Mr. Skilling joined in a discussion of potential options regarding the goodwill amortization period. Mr. Hirko discussed how the acquisition would be financed and the anticipated timing if the transaction were approved. He and Messrs. Rice and Skilling answered questions from the Committee regarding competitors, ongoing capital requirements, financing possibilities, stock ownership of and retention issues affecting Mountaineer's management, and the structure of the transaction. Following a discussion, the Committee agreed by consensus that it had concerns about the consequences on the Company's stock of the dilution which would result from the proposed transaction and the ability to retain and motivate the key managers of Mountaineer and that additional information was needed before the Committee could recommend the transaction. Mr. Lay left the meeting following the discussion. Mr. Duncan called upon Mr. Skilling to discuss the proposed EES transaction. Mr. Skilling stated that EES was proposing to acquire Torpy Group, a small, privately-held United Kingdom ("UK") based company providing engineering and facility management services in the UK and continental Europe. He noted that the Company's management 2 E0004388413 EXH002-02057 ============= Page 49 of 398 ============= could have approved an acquisition of this size but because the transaction called for 25% of the consideration to be paid in Company stock it required the Committee's approval. Following a discussion, upon motion duly made by Mr. Foy, seconded by Mr. Belfer, and carried, the following resolutions were approved: RESOLVED, that in connection with the acquisition by Enron Energy Services Operations, Inc. or its affiliates ("EESOI") of the outstanding capital stock of Torpy M&E Engineers Limited, Torpy & Partners Limited, and Torpy M&E Engineers (Northern) Limited (collectively, "Torpy"), the Chairman of the Board, any Vice Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Treasurer, or any Deputy Treasurer of the Company (each an "Authorized Officer") be, and each of them hereby is, in consideration of the acquisition by EESOI of the capital stock of Torpy ("Acquisition"), authorized at any time or from time to time to: (a) cause EESOI to purchase, on one or more of the stock exchanges on which the common stock, no par value, of the Company ("Common Stock") is listed for trading, a number of shares of Common Stock (such shares being hereinafter referred to as "Purchased Shares") equal to (i) $1,000,000, divided by (ii) the average of the last reported sales prices of the Common Stock on the New York Stock Exchange on the 20 trading days immediately preceding the date of closing of the Acquisition; (b) determine the price to be paid by EESOI for the Purchased Shares; (c) cause EESOI to transfer and assign the Purchased Shares to the shareholders of Torpy as part of the consideration for the Acquisition; and (d) negotiate and execute any agreements providing for the purchase and subsequent transfer and assignment of the Purchased Shares to the shareholders of Torpy (the "Definitive Agreements") and take any and all other actions and do or cause to be done any or all things that may appear to the Authorized Officers to be necessary or advisable in order to purchase, transfer, and assign the Purchased Shares, to the full extent and with the same effect as the Board of Directors of the Company could take such action or do or cause such things to be done; RESOLVED FURTHER, that the Authorized Officers be, and each hereby is, authorized, empowered, and directed (any one of them acting 3 E0004388414 =XH002-02058 ============= Page 50 of 398 ============= alone) to take such further actions as such officer deems necessary or desirable to cause the purchase, transfer, and assignment of the Purchased Shares at any time or from time to time and to consummate the Acquisition, including, without limitation, (i) the issuance of certificates of the Company evidencing the Purchased Shares, with or without restrictive legends as may be necessary for such issuances, (ii) the making of any federal or state securities or "blue sky" filings or applications in conjunction with the issuances, and (iii) the making of any other required regulatory filings; RESOLVED FURTHER, that the Authorized Officers be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone), for and in the name of the Company, to negotiate, execute, deliver, amend, and consummate the Definitive Agreements, in such forms as shall be approved by the officer executing same, such approval to be conclusively evidenced by the execution thereof by such officer; RESOLVED FURTHER, that the Authorized Officers be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone), for and in the name and on behalf of the Company, to take any and all action which they may deem necessary or advisable in order to obtain a permit or to qualify part or all of the Purchased Shares for sale to the shareholders of Torpy, or to request an exemption from registration of part or all of the Purchased Shares, or to register or obtain a license for the Company as a dealer or broker under the securities laws of the United States of America and any states thereof and of such foreign jurisdictions as such officers may deem advisable, and in connection with such permits, licenses, qualifications, and exemptions, to execute, acknowledge, verify, deliver, file, and publish all such applications, reports, resolutions, irrevocable consents to service of process, powers of attorney, and other papers and instruments as may be required under such laws; RESOLVED FURTHER, that the signature of any of the Authorized Officers and the corporate seal of the Company on any or all of the certificates representing the Purchased Shares may be facsimile, and that the Company hereby adopts and approves any such facsimile signatures and seal; RESOLVED FURTHER, that the facsimile signatures which appear on any of the certificates representing the Purchased Shares shall be valid regardless of whether such officer ceases to hold such office prior to the issuance of the Common Stock; 4 E0004388415 =XH002-02059 ============= Page 51 of 398 ============= RESOLVED FURTHER, that the Authorized Officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary or desirable to carry into effect the purposes and intentions of this and each of the foregoing resolutions; and RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company related to or in connection with the transactions contemplated by these resolutions be, and hereby are, adopted, ratified, confirmed, and approved in all respects. There being no further business to come before the Committee, the meeting was adjourned at 10:20 a.m., C.D.T. Secretary APPROVED: Chairman H:\a Minutes\1999 Minutes\91499EX.doc 5 E0004388416 XH002-02060 ============= Page 52 of 398 ============= DRAFT MINUTES MEETING OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS ENRON CORP. September 24, 1999 Minutes of a meeting of the Executive Committee ("Committee") of the Board of Directors of Enron Corp. ("Company"), held pursuant to due notice at 9:30 a.m., C.D.T., on September 24, 1999 at the Enron Building in Houston, Texas. All of the Committee members were present, either in person or by telephone conference connection, where each participant could hear the comments of the others and join in the discussion: Mr. John H. Duncan, Chairman Mr. Robert A. Belfer Mr. Joe H. Foy Mr. Kenneth L. Lay Dr. Charles A. LeMaistre Mr. Jeffrey K. Skilling Mr. Herbert S. Winokur, Jr. Messrs. James M. Bannantine, James V. Derrick, Jr., Richard A. Lammers, and Joseph W. Sutton and Ms. Rebecca C. Carter, all of the Company or affiliates thereof, also attended the meeting. The Chairman, Mr. Duncan, presided at the meeting, and the Secretary, Ms. Carter, recorded the proceedings. Mr. Duncan called the meeting to order and inquired if the Committee members had received the material for the meeting, and each responded that he had received the material. He asked Mr. Sutton to present the business of the meeting. Mr. Sutton indicated that the meeting had been called for the Committee to approve the financing documents related to the Cuiaba Integrated Energy Project ("the Project") in Brazil. He stated that the Board of Directors had originally provided authorization to construct the Project in November of 1997 but did not explicitly provide approval to execute financing documents. He called upon Mr. Bannantine to provide an update on the project. E0004388417 =XH002-02061 ============= Page 53 of 398 ============= Mr. Bannantine gave a description of the Project and noted that it was the first power project tied to the Company's Bolivia to Brazil pipeline. He discussed the different phases of the Project, the status of the construction, and the financing approvals obtained from third parties. Following a discussion, upon motion duly made by Mr. Belfer, seconded by Dr. LeMaistre, and carried, the Committee authorized the Company or its designated affiliate to sign financing documents related to the Cuiaba Integrated Energy Project. There being no further business to come before the Committee, the meeting was adjourned at 9:40 a.m., C.D.T. Secretary APPROVED: Chairman H:\a Minutes\1999 Minutes\92499EX.doc 2 E0004388418 EXH002-02062 ============= Page 54 of 398 ============= rn d- cc cc (Y) 0 0 U w Compensation Committee Agenda Fuunm_mnF,~ ============= Page 55 of 398 ============= Charles A. LeMaistre - Chairman Norman P. Blake John H. Duncan Robert K. Jaedicke Frank Savage AGENDA MEETING OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS ENRON CORP. 1:00 p.m. on Monday, December 13,1999 The Enron Building - 50`h Floor - 50M Dining Houston, Texas 1. Approve minutes of the meeting held on October 11, 1999. 2. Approve and recommend to the Enron Board an amendment to the 1991 and 1994 Stock Plans to provide clarification of grant limits as a result of the August 13, 1999 stock split and an amendment to the 1991 Stock Plan to change the definition of the "Management Committee." 3. Review total shareholder return relative to the Performance Unit Plan and discuss replacement for Sonat. 4. Stock Plan items. a) Revisions to All-Employee Stock Program (AESOP) operating guidelines. b) Approve expansion of Enron's equity program for key performers. 5. Other Business. 6. Executive Session. a) Grants to executives pursuant to contractual agreements. b) Quarterly update of Executive Committee compensation values. c) Other Executive Items. 7. Adjournment. E0004388420 EXH002-02064 ============= Page 56 of 398 ============= N Co 00 M 'IT O O U W 3 (b) EXH002-02065 ============= Page 57 of 398 ============= AGENDA ITEM 3(b) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, Enron Corp. (the "Company") and the shareholders of the Company have heretofore approved and adopted the Enron Corp. 1991 Stock Plan (As Amended and Restated Effective May 4, 1999) (the "Plan"); and WHEREAS, the Company desires to amend the Plan; NOW, THEREFORE, IT IS RESOLVED, that the proper officers of the Company be, and they are authorized and directed to prepare an amendment to the Plan incorporating the form of amendment presented at this meeting; RESOLVED FURTHER; that upon execution of such amendment prepared according to the above provisions, such amendment shall be deemed adopted by this Board and is hereby ratified and approved; and RESOLVED FURTHER, that the proper officers of the Company and its counsel are hereby authorized, empowered, and directed to take all such further action, to amend, execute, and deliver all such instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses, as in their judgment may be necessary, appropriate, or advisable in order fully to carry into effect the purposes and intentions of this and each of the foregoing resolutions, including the execution of any further amendments, forms, or documents recommended by counsel or required by any governmental agency, and to do anything necessary to effect compliance with applicable law or regulation. J:\User\rcarter\a Minutes\121499\3rd amendment to 1991 Stock Plan as restated -F.doc E0004388422 EXH002-02066 ============= Page 58 of 398 ============= M N ~T 00 M d' O O U W EXH002-02067 ============= Page 59 of 398 ============= AGENDA ITEM 3(c) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, ENRON CORP. (the "Company") has heretofore adopted and maintains the Enron Corp. 1994 Stock Plan (As Amended and Restated Effective October 11, 1999) (the "Plan"); and WHEREAS, the Company desires to amend the Plan; NOW, THEREFORE, IT IS RESOLVED, that the proper officers of the Company be, and they are authorized and directed to prepare an amendment to the Plan incorporating the form of amendment presented at this meeting; RESOLVED FURTHER; that upon execution of such amendment prepared according to the above provisions, such amendment shall be deemed adopted by this Board and is hereby ratified and approved; and RESOLVED FURTHER, that the proper officers of the Company and its counsel are hereby authorized, empowered, and directed to take all such further action, to amend, execute, and deliver all such instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses, as in their judgment may be necessary, appropriate, or advisable in order fully to carry into effect the purposes and intentions of this and each of the foregoing resolutions, including the execution of any further amendments, forms, or documents recommended by counsel or required by any governmental agency, and to do anything necessary to effect compliance with applicable law or regulation. J:\User\rcarter\a Minutes\121499\lst amendment to 1994 Stock Plan as restated.doc E0004388424 EXH002-02068 ============= Page 60 of 398 ============= N ~T 00 OD M fit' O O U W FXH002-02069 ============= Page 61 of 398 ============= Dr. Robert K Jaedicke, Chairman Mr. Ronnie C. Chan Mr. Joe H. Foy Dr. Wendy L. Gramm Dr. John Mendelsohn Mr. Paulo V. Ferraz Pereira Lord John Wakeham Agenda Meeting of the Audit and Compliance Committee of the Board of Directors Enron 2:30 p.m., December 13,1999 Boardroom - Enron Building Houston, Texas 1. Approve minutes of meeting of the Audit Committee held on October 11, 1999. - Dr. Jaedicke. 2. 1999 Internal Controls Update. -Mr. Causey and Messrs. Duncan and Bauer, Arthur Andersen LLP. 3. Review of Enron Compliance Report for 1998. - Ms. Butcher and Ms. Backus, VINSON & ELKINS L.L.P. 4. Other Business, including executive session with auditors and/or management as deemed necessary. - Dr. Jaedicke. 5. Adjourn to the joint session of the Audit and Compliance Committee and the Finance Committee. E0004388426 EXH002-02070 ============= Page 62 of 398 ============= N 00 aD M O O W Joint Audit & Finance Committee Agenda rvunny))n71 ============= Page 63 of 398 ============= Audit and Compliance and Finance Committees Robert K. Jaedicke - Chairman, Audit and Compliance Committee Herbert S. Winokur, Jr. - Chairman, Finance Committee Robert A. Belfer Norman P. Blake, Jr. Ronnie C. Chan Joe H. Foy Wendy L. Gramm John Mendelsohn Jerome J. Meyer Paulo V. Ferraz Pereira Frank Savage John A. Urquhart John Wakeham AGENDA JOINT MEETING OF THE AUDIT AND COMPIANCE AND FINANCE COMMITTEES OF THE ENRON CORP. BOARD OF DIRECTORS December 13, 1999 3:00 p.m. (C.S.T.) Enron Corp. Boardroom Houston, Texas 1. Merchant Portfolio Summary Mr. Buy 2. Merchant Investment Returns Mr. Buy 3. Market Risk Update Mr. Murphy 4. Enron Online Risk Perspective Mr. Buy 5. Enron Energy Services Risk Perspective Mr. Buy 6. Other Business 7. Adjourn E0004388428 EXH002-02072 ============= Page 64 of 398 ============= FxHnm-02073 ============= Page 65 of 398 ============= Herbert S. Winokur, Jr. - Chairman Robert A. Belfer Norman P. Blake, Jr. Ronnie C. Chan Jerome J. Meyer Paulo V. Ferraz Pereira Frank Savage John A. Urquhart AGENDA MEETING OF THE FINANCE COMMITTEE OF THE ENRON CORP. BOARD OF DIRECTORS 4:00 p.m. (C.S.T.), December 13,1999 Boardroom, Enron Building Houston, Texas 1. Approval of October 11, 1999 Finance Committee Minutes 2. Chief Financial Officer Report 3. Treasurer Report • Revision of Cash Management Policy Approve for Recommendation to the Board • Operating Plan Financing Approve for Recommendation to the Board 4. Projects and Amendments • Enron Caribbean/Middle East Project Dolphin Approve for Recommendation to the Board • Turbine Purchases North America Southern Cone EE&CC Approve for Recommendation to the Board • Enron North America EEX Project Approve for Recommendation to the Board • Revision to the Risk Management Policy Approve for Recommendation to the Board Mr. Winokur Mr. Fastow Mr. McMahon Mr. Sutton Mr. Sutton Mr. Buy Mr. Buy E0004388430 =XH002-02074 ============= Page 66 of 398 ============= • Subsidiary Preferred Stock Financing Mr. Causey Approve for Recommendation to the Board • Bahia Las Minas (Panama) Sell Down Mr. Causey Approve for Recommendation to the Board 5. Other Business 6. Adjourn EOO04388431 EXH002-02075 ============= Page 67 of 398 ============= N M Iq OD co M O O 6 (b) w EXH002-02076 ============= Page 68 of 398 ============= AGENDA ITEM 6(b) (SUGGESTED FORM OF RESOLUTIONS) RESOLVED, that the Cash Management Policy (the "Cash Management Policy") be, and the same hereby is, approved and adopted, in the form presented to and discussed at this meeting, a copy of which is attached to the minutes of the meeting as Exhibit I; RESOLVED FURTHER, that the Cash Management Policy shall supersede and replace all prior policies or guidelines relating to the cash management process; and RESOLVED FURTHER, that the Chairman of the Board, the Vice Chairman of the Board, the President, the Chief Financial Officer, the Treasurer, any Deputy Treasurer and any Assistant Treasurer of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. J:\User\rcarter\a Minutes\121499\rl38coa.doc E0004388433 EXH002-02077 ============= Page 69 of 398 ============= EXHIBIT I Cash Management Policy OBJECTIVE: Enron Corp's (the Company) primary objectives are to: 1) Protect the cash assets of the Company with respect to cash management; 2) Effectively employ the cash resources of the Company; 3) Provide strong controls for the operation and maintenance of cash accounts and cash information; and 4) Manage bank relationships and services. SCOPE: This policy will apply to all entities and joint ventures where Enron Corp. directly or indirectly owns greater than 50% of the voting rights of the entity (Enron Companies). SERVICES: All administrative aspects relating to cash management and banking services will be managed centrally by Enron Corp. Cash Management (Treasury). Cash management services provided by Treasury include: • Administration of bank accounts, including managing the opening, closure, authorized signatories, and maintenance of the account. • Selection or approval of financial institutions with which accounts are maintained. • Management of draw-downs and repayments of borrowings that directly affect Enron Corp.'s balance sheet. • Investment of excess account balances in compliance with the Enron Corp Investment Policy. • Execution of foreign exchange transactions associated with liquidity. • Administration of inter-company funding agreements. • Negotiation and management of payment, collection, and other banking services BORROWINGS OR OTHER OBLIGATIONS: All third-party agreements (any agreement with a non-Enron entity) that represent current or future obligations of Enron Companies to borrow money must be approved by the Treasurer of Enron Corp. prior to execution. REGIONAL TREASURY: Treasury may establish regional treasury offices to facilitate this policy. Regional Treasuries operate under the direction of Enron Corp. E0004388434 EXH002-02078 ============= Page 70 of 398 ============= OPERATING PROCEDURES: Treasury is responsible for maintaining operating procedures for the implementation of this policy. The procedures will be approved by the Treasurer of Enron Corp. COMPLIANCE: It is the responsibility of each operating unit to ensure compliance with this policy. Compliance shall be monitored in conjunction with regular internal audit procedures. Exceptions to this policy may be granted by the Treasurer of Enron Corp. This policy replaces the Financial Institutions Account & Funding Policy previously approved by the Enron Corp. Board of Directors in October 1995. E0004388435 EXH002-02079 ============= Page 71 of 398 ============= (D M ' d. co M M O O U W EXH002-02080 ============= Page 72 of 398 ============= AGENDA ITEM 6(c) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, pursuant to a Project Development Agreement (the "PDA") to be executed by and among (a) Enron Gulf Holdings Ltd., a company organized and existing under the laws of the Cayman Islands ("EGHL") and an indirect, partially owned subsidiary of the Company, (b) The United Arab Emirates Offsets Group, an instrumentality of the Government of the United Arab Emirates ("UOG") and (c) Elf Gulf Limited, a company organized and existing under the laws of Bermuda ("Elf') and an indirect, partially owned subsidiary of Elf Acquitaine, EGHL, UOG and Elf (collectively, the "Project Sponsors") intend to engage in the development, construction, financing, ownership, operation and maintenance of a major natural gas pipeline and related facilities and infrastructure project designed to source natural gas and associated liquids from Qatar and transport and market such natural gas in the United Arab Emirates, Oman, Pakistan and eventually Northwestern India, as well as transporting and marketing the associated liquids on a worldwide basis (the "Project"); and WHEREAS, the Project Sponsors intend to carry out all Project activities through DTC Limited, a company organized and existing under the laws of Jersey, Channel Islands, and various subsidiaries of DTC (collectively, "DTC"), and in connection therewith, EGHL requires funding for its share of initial equity funding contributions to DTC of approximately $25 million and working capital (debt) contributions of approximately $5 million, the full amount of such contributions being refundable to EGHL upon withdrawal from the Project subject to certain conditions within the earlier to occur of (a) one (1) year or (b) the signing of a definitive Joint Venture Agreement governing the terms and conditions under which the Project Sponsors intend to further develop and implement the Project through DTC; and WHEREAS, UOG and Elf may require that the Company provide a direct corporate guaranty of certain exclusivity and non-competition obligations of EGHL under the PDA; and WHEREAS, the Company, through its affiliates, owns or has the right to own a legal and/or beneficial interest in EGHL of one hundred percent, and upon execution of the PDA will own a legal and/or beneficial interest in DTC of twenty four decimal five percent (24.5%), and such ownership will benefit, directly or indirectly, the Company, and the Company's financial resources E0004388437 EXH002-02081 ============= Page 73 of 398 ============= are necessary in order for EGHL to meet the financial requirements of being a Project Sponsor; NOW, THEREFORE, IT IS RESOLVED, that the Company be, and it hereby is, authorized to take such action as the appropriate officers of the Company deem necessary or desirable in connection with the furtherance of EGHL's participation in the Project, including without limitation: (a) making available EGHL's initial equity funding contributions of up to $25 million and working capital contributions of up to $5 million, and (b) guaranteeing the performance of certain exclusivity and non-competition obligations of EGHL or its subsidiaries or affiliates pursuant to the PDA; RESOLVED FURTHER, that the Chairman of the Board, the Vice Chairman of the Board, the President, any Vice President, the Treasurer or any Assistant Treasurer of the Company be, and each of them hereby is, authorized in the name and on behalf of the Company, under its corporate seal or otherwise, to take such action and to do all things that may appear to be reasonably necessary, in the sole discretion of any of such officers, to undertake, effectuate and carry out the further participation of EGHL in connection with the development and implementation of the Project, insofar as such action or things relate to the Company, including without limitation, the authority and power to negotiate, execute, deliver, amend, perform, and consummate the guarantee described above and such other agreements, instruments, or documents as such officer may deem necessary or desirable to carry out the purpose and intent of the foregoing premises and resolutions, in such forms as shall be approved by the officer executing the same, such approval to be conclusively evidenced by the execution thereof by such officer; RESOLVED FURTHER, that each such officer be, and each such officer hereby is, authorized in the name and on behalf of the Company to take or cause to be taken such action as such officer may deem necessary or desirable in connection with the performance by the Company of its obligations under such guarantee or any other agreement, document or instrument related to these transactions to which the Company is a party; RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company, related to or in connection with the transactions contemplated by these resolutions, including without limitation the execution and delivery of any of such guarantee, instruments or other documents as any 2 E0004388438 EXH002-02082 ============= Page 74 of 398 ============= such officer shall have deemed necessary, proper, or advisable, are hereby adopted, ratified, confirmed and approved in all respects; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing premises and resolutions. J:\User\rcarter\a Minutes\121499\CORP-RESOS-DOLPHIN(12-6-99).doc 3 E0004388439 EXH002-02083 ============= Page 75 of 398 ============= Project Dolphin Enron has executed non-binding LOI with the government of United Arab Emirates to develop an interconnected 3 bcf/day gas pipeline system from Qatar through UAE to Oman - 650 km, 48"-28" offshore/onshore pipeline - Multiple off-takers / new downstream industries - Future expansion to Pakistan, India Partnership between Enron, UAE government, and Elf Rationale: excess gas supply in Qatar, need for cheap gas & gas-based industry in Abu Dhabi, Dubai, and Oman 1_ Enron roles: co-lead developer, pipeline builder & operator, 'r risk manager, downstream market maker, equity investor Enron benefits: earnings, cash flow, regional stature, downstream opportunities, partner relationship, international gas / LNG plays E0004388440 1 EXH002-02084 ============= Page 76 of 398 ============= Dolphin Pipeline Route BAHRAIN! Ras Laffan Compressor pEr :,z,~ r'ulf ~S t1p 141,000HP 28", 200 Km (124M1):Offshore Production Area 0.350 BCFD t Ras Laffan s u fl_FuJ&irah~` r~ Q, f'r 36", 75 Km (47 MI) ,m C ~,Frer~ ;. 48", 366 Km (227M1) 1.2 BCFD F ฐ r,~ 9 jDoha 3.3 BCFD ~Sharja QATAR."•IV'd9krah~ub_ di Y a e Jebel All . }r, w unm s ~~~;: Umm Shaif [sales of 0.3 BCFD] Taweelah Compressor 38,000HP Sohar..e Taweelah Abu Dhabl [sales of 0.3 BCFD] Upstream Facilities Million [sales of 1,s BCFD] - High Case $2,100 AI W~"cz - Low Case $1,120 Pipeline and Compression OMAN - Offshore Pipeline, Ras Laffan to Taweelah (48") $ 890 - Onshore Pipeline, Taweelah to Dubai (36") $ 150 - Onshore Pipeline, Dubai to Sohar (28") 110 TOTAL (pipeline) $1,150 11 •costs are order of magnitude only (+/- 40%) Total Phase 1 project $2,350-$3,250 E0004388441 ,, 2' EXH002-02085 ============= Page 77 of 398 ============= Key Project Motivators UAE - Large cash reserves; expensive gas; need huge gas volumes for reinjection; need economic diversification; "short" 800 mmcf/d commitment to Dubai Qatar - 350 tcf proven gas reserves, less than 5% committed; no non-LNG markets; potential threat from Iran; need cash flow for economic growth; loans from UAE; close ties to UAE Sheik Zayed Dubai - Gas shortage limits electricity, industrial growth, declining production curves; Shortage in 1-2 years Oman - Limited gas reserves; need economic diversification E0004388442 3 '~90 EXH002-02086 ============= Page 78 of 398 ============= Key Commercial Terms Enron, Elf contribute $25mm each. UAE contributes all prior work, studies, MOU's, exclusivity Future contributions: - Phase I (Qatar to Oman): Enron 40%, Elf 40%, UOG 20%, up to first $800mm equity - Projected 70/30 Debt / Equity - Future phases / expansions: Enron 24.5%, Elf 24.5%, UOG 51% Distributions - Phase I: - 10% preferred return on all capital needed - Thereafter 51 % UOG (24.5% Enron & Elf) until UOG has 25% ROE, then declines to 33% / 33% / 33% once UOG achieves 40% ROE - After Phase I, capital contributions and dividends 51% / 24.5% / 24.5% Voting rights: 51% / 24.5% / 24.5% but all capital and contractual commitments require unanimous agreement E0004388443 4 EXH002-02087 ============= Page 79 of 398 ============= Benefits to Enron Base economics: 17% IRR, $50 MM NPV14, $320 MM ENE Investment (Phase I) Steady earnings growth and upside - $1 billion pipeline construction @ 5% = $50MM - Improve D/E ratio above 70/30 base case - Downstream development fees/sell downs - Continuation to Pakistan and India Strongest partner (UAE government) in region, one of richest in world Reputation as partner in largest integrated energy project in region Enron showcase - development, gas marketing, risk management, financial services Regional spinoffs - Power plants and other downstream gas-based projects - Access to -100MBD Qatari liquids plus LPG's - Local gas distribution companies (Oman and Abu Dhabi) - EES opportunities Worldwide spinoffs, e.g. Jordon IPP, Argentina gas project (TGN) E0004388444 O 5 FXH002-02088 ============= Page 80 of 398 ============= Continue MOU negotiations to execution - Initial MOU, then conduct 2 week "due diligence" - Pay initial $25 million "promote" to UOG, with rights for refund in very limited circumstances (e.g., UAE takes project from UOG, UOG management changes, no JVA signed in 6 months) - Pay $5 million into project company for 1 /3 of working capital Requesting board to delegate to Office of Chairman approval of initial investment ($30mm) E0004388445 6 yo e EXH002-02089 ============= Page 81 of 398 ============= ENRON RISK ASSESSMENT AND CONTROL DEAL APPROVAL SHEET DEAL NAME: DOLPHIN Date DASH Completed: December 3, 1999 Counterparty: United Arab Emirates (UAE) and Elf RAC Analyst: Annabelle Brown /Laura Wente Aquataine Investment Type: Equity Business Unit: Enron Middle East Capital Funding Source(s): Balance Sheet Business Unit Originator: David Haug/RickBergsieker/Jan Avery Expected Closing Date: December 15, 1999 OPublic OPrivate Expected Funding Date: December 17, 1999 DMerchant OStrategic Board Approval: OPending DReceived DDenied ON/A OConforming l INonconforming RAC Recommendation: OProceed with Transaction DRetums below Capital Price DDo not Proceed Due to the preliminary nature of the project and the corresponding uncertainty relating to project risks and economics, a normal RAC review at this juncture is not meaningful; therefore, a RAC recommendation has not been provided. APPROVAL AMOUNT REQUESTED Enron Middle East is requesting approval to spend $30 million to obtain the rights to participate in a gas supply, pipeline transportation, and gas marketing project to move gas from Qatar to the UAE and Oman. EXPOSURE SUMMARY This Transaction: $30 million* E0004388446 Total Counterparty Exposure: $30 million * Includes $5 million of working capital and a $25 million payment ("entry fee"). After the entry fee is paid, Enron will become the key developer for gas sales agreements, gas supply agreements and related pipeline contracts. Until further development work in these areas is completed, it is difficult to define precise capital requirements beyond the $30 million proposed herein. Future project equity requirements require unanimous consent; therefore, capital related to the actual project development would require a separate RAC review and management approval. DEAL DESCRIPTION The United Offsets Group (UOG), a United Arab Emirates (UAE) government agency, is sponsoring an integrated gas supply, transportation, and gas marketing project in the Arab Gulf region. The pipeline initially will transport natural gas from Qatar to Abu Dhabi, Dubai and Oman. UOG has identified two strategic partners, Enron and Elf, to contribute capital and technical expertise, and has executed Letters of Intent (LOI's) with each. The ownership of the project company will be Enron 24.5%, Elf 24.5%, and UOG 51%. Enron and Elf will each fund 40% of the first $800 million (Phase I) of equity capital associated with the development of upstream facilities in Qatar and the pipeline (total Phase I project cost estimated at $2.7 billion). Subsequent funding will match the aforementioned ownership structure. Dividends will be distributed as follows: (a) a 10% non-cumulative preferred dividend allocated among the parties based on their relative equity capital contributions, (b) a second tranche distributed 51% to UOG and 24.5% each to Enron and Elf until UOG's annual return on capital ("ROC") reaches 25%, (c) a third tranche distributed on a sliding scale which declines from 51% to 33% for UOG (with the remainder split equally between Enron and Elf) as UOG's annual ROC increases from 25% to 40%, and (d) a fourth tranche distributed 33% each to UOG, Enron and Elf if UOG's annual ROC exceeds 40%. These terms are set out in the LOI's. UOG has executed a Memorandum of Understanding ("MOU") with the Government of Qatar regarding development of upstream gas supplies and an MOU with Mobil Oil Qatar to supply the first tranche of long-term gas (roughly 500 MCF/D) to the project. UOG also has executed MOUs with the Abu Dhabi Water and Electricity Authority and with the governments of Dubai and Oman regarding purchase of up to 3 BCF/D of gas from the project and an MOU with the government of Pakistan which provides for up to an additional 1.5 BCF/D supply to Pakistan. In addition, UOG and the Abu Dhabi National Oil Company ("ADNOC") have agreed on guidelines regarding market allocation and common use of ADNOC's existing pipeline infrastructure to the extent feasible. However, these agreements are very general and do not include specific commercial terms. Substantial commercial analysis and development needs to be done before the project becomes a reality. The $25 million payment should be viewed as a one-time "entry fee" or "exclusivity fee", allowing Enron to participate with Elf and UOG in developing the project. It could also be viewed as development expenditure for the region. There is no guarantee that the project will be completed; other companies have attempted to develop Arab Gulf gas pipelines over the last eight years. However, previous developers have been private rather than government entities and have not enjoyed the regional multi- government support that is now in place for this project. At this time, Enron Middle East is requesting approval to sign an MOU among affiliates of Enron, Elf, and UOG. Joint project development will begin when the MOU is executed; a Joint Venture Agreement ("JVA") will be signed at a later date. The key provisions in the MOU are: (i) it legally binds the parties as exclusive partners; (ii) it defines the terms of the initial $25 million investments by Enron and Elf and related initial working capital funding; (iii) it defines Phase 1 of the project (3 BCF/D pipeline from Qatar to Oman); (iv) it defines the parameters of UOG's carried interest and the dividend distribution structure; and (v) it outlines the IV management and governance structure including minority shareh9lder protections. A side letter to be EXH002-02090 ============= Page 82 of 398 ============= RAC Deal Approval Sheet Deal Name: Dolphin executed directly by UOG includes provisions that allow Enron to terminate the MOU and to recoup its $25 million investment if, prior to the execution of a JVA, either (i) any of the key project MOU's referenced above are amended or cancelled, (ii) UOG ceases to be authorized by the UAE government to develop the project, (iii) certain project development milestones are not achieved, (iv) the top management of UOG is replaced or (v) any legal actions are taken which would delay the project. Per the MOU, major commitments, including all capital investments, will require the unanimous consent of the partners and will be subject to Enron's Transaction Approval Process. Per the MOU, major decisions also will require unanimous approval. The strategic rationale for Enron Middle East's participation in the Dolphin project includes the following: 1) it is expected to provide strong IRR/NPV earnings on the base project; 2) it provides several potential ancillary revenue opportunities related to the capital assets (pipeline EPC, O&M); 3) it establishes a platform for potential future business activity in the region (risk management, trading, asset development); and 4) it builds strong political ties and goodwill in the Middle East. TRANSACTION SOURCES AND USES OF FUNDS Sources (000s) Uses (000s) Enron Equity $30,000 Exclusivity Fee $25,000 Working Capital 5.000 Total $30,000 $30,000 RETURN SUMMARY Given the limited information available, no RAROC analysis was performed. RISK MATRIX - THE FOLLOWING RISK MATRIX INCLUDES ONLY THOSE RISKS IDENTIFIED BY RAC AT THIS TIME. A MORE COMPLETE MATRIX WILL BE DEVELOPED AS FUTURE INVESTMESTS WHICH REQUIRE ENRON CORP APPROVAL BECOME MORE CLEARLY DEFINED. DESCRIPTION MITIGATION/COMMENTS Upstream Development Costs and Price of  Recent statements by several key Government of Qatar Qatari Gas officials (including the Emir) indicate strong support of the - Upstream capital costs are as yet undefined project for both economic and political reasons. - FOB export terms have not yet been discussed  No capital or contractual commitments (other than the $30 Both are key drivers in the economics. million requested herein will be made without Enron approval Marketing Margins  The project team has run indicative economics on several - project economics are very sensitive to different investments, volume, and pricing scenarios. Although assumed margins such economics are purely speculative at this time, they - at this time, actual margins are unknown indicate that, within a reasonable range of parameters, the because neither capital costs nor market prices - project will show satisfactory returns. have been a ed E0004388447 G:\MiddleEast\dolphin\DashDolphin 120399 latest from patrick.doc Page 2 EXH002-02091 ============= Page 83 of 398 ============= RAC Deal Approval Sheet Deal Name: Dolphin Political Issues A successor to the President has been named (Khalifa), and he The age and health of the current leader of Abu is effectively already managing the day-to-day affairs of the Dhabi (UAE president) as well as the existing and country. potential rivalries within the royal family pose a  The most prominent potential rival to Khalifa is his brother potential threat to the project. Mohammed, the Minister of Defense. Mohammed oversees the activities of the UOG and is a strong supporter of the Project.  A recent agreement between Dolphin and ADNOC has been reached, stipulating the role of each player in the Development of Dolphin. Both Khalifa and Mohammed have blessed such agreement. Immature Gas Market  Regional demand growth potential appears to be high (per the A developed and operating regional natural gas EIU and reports of Abu Dhabi's re-injection needs). market does not currently exist. • Pricing and marketing opportunities are uncertain. ADNOC  A recent agreement between Dolphin and ADNOC has been ADNOC (the state oil company) is the traditional reached, stipulating the role of each player in the development developer of oil and gas assets in the UAE and of Dolphin. Both Khalifa and Mohammed have reportedly may view Dolphin as a rival. blessed such agreement. Uncertainty Related to Overall Economics Enron receives a 10% annual return on its capital invested The projected annual ROE in the deterministic before the government receives its promote. model may be aggressive. KEY SUCCESS FACTORS NA Poor Excellent Core Business X Strategic Fit X Upside Potential X Management X Risk Mitigation NA OTHER RAC COMMENTS: The project economics (upstream, pipeline, and marketing) are very general at this time; therefore, a RAROC analysis was not performed. ' E0004388448 \\ecthou-user2\phickey$\dolphin\dolphin dash_120399.doc Page 3 EXH002-02092 ============= Page 84 of 398 ============= DEC 06 1999'16:54 FR DAVID HAUG 713 868 3573 TO 7138535476 WM- vo &..- -.. .. .. - ~`. ~)'1 4'11 c Reteivad 12/06/1999 12:O4 on tine 6 for Pt IMT36 TD 97336155036 DEC 06 1999 12=1a FR ENRON IN'TL.-FUELS OFF P.02/82 P. Os/as BAC Deal Approval Sheet beet Name: Ddphia APPROVALS Nam Sig atur Diu Region O abw 7 vtav Rc&m Mansmmrat Mk lekrc r Z• G Regloa mabagement David JIa ig Q RsptanLegs! Dan Rogerc RAC Management Rick Bu or Dave Goth Easesa Capitat Mi>,agemem jln r Fatttov cr Jeff MeM hon O1ee of 6e Chait>ooaa Joe Su l Office of he Chaimsan kt~ey sultan E0004388449 G'1F4idd1. ~.t1do a ~n\I1..A bpleltm 12Q! tateit fin o~a{ahilesn pe{~& J M 19ida. Pip4 ** TOTAL PAGE.02 ** XH002-02093 ============= Page 85 of 398 ============= RAC Deal Approval Sheet APPROVALS Region Originator Region Management Region Management Region Legal RAC Management Enron Capital Management Office of the Chairman Office of the Chairman Deal Name: Dolphin Name Signature Date Jan Avery Rick Bergsieker David Haug Dan Rogers Rick Buy or Dave Gorte Andy Fastow or Jeff McMahon Joe Sutton Jeffrey Skilling E0004388450 \\ecthou-user2\phickey$\dolphin\dolphin dash_120399.doc Page 4 EXH002-02094 ============= Page 86 of 398 ============= y9O Executive Committee John H. Duncan, Chairman Robert A. Belfer Joe H. Foy Kenneth L. Lay Charles A. LeMaistre Jeffrey K. Skilling Herbert S. Winokur, Jr. Audit Committee Robert K. Jaedicke, Chairman Ronnie C. Chan Joe H. Foy Wendy L. Gramm John Mendelsohn Paulo V. Ferraz Pereira John Wakeham Finance Committee Herbert S. Winokur Jr., Chairman Robert A. Belfer Norman P. Blake, Jr. Ronnie C. Chan Jerome J. Meyer Paulo V. Ferraz Pereira Frank Savage John A. Urquhart Compensation Committee Charles A. LeMaistre, Chairman Norman P. Blake, Jr. John H. Duncan Robert K. Jaedicke Frank Savage Nominating Committee John Wakeham, Chairman Wendy L. Gramm John Mendelsohn Jerome J. Meyer SCHEDULE OF EVENTS 4 'A BOARD AND COMMITTEE MEETINGS HOUSTON, TEXAS DECEMBER 13-14, 1999 BOARD OF DIRECTORS Kenneth L. Lay, Chairman Robert A. Belfer Norman P. Blake, Jr. Ronnie C. Chan John H. Duncan Joe H. Foy Wendy L. Gramm Ken L. Harrison Robert K. Jaedicke Charles A. LeMaistre Rebecca Mark-Jusbasche John Mendelsohn Jerome J. Meyer Paulo V. Ferraz Pereira Frank Savage Jeffrey K. Skilling John A. Urquhart John Wakeham Herbert S. Winokur, Jr. XH002-02095 ============= Page 87 of 398 ============= SCHEDULE OF EVENTS Monday, December 13 10:00 a.m. Year 2000 Oversight Committee Meeting* 50M Dining 11:30 a.m. Individual Photo Sessions (times available until 6:00 p.m.) 50th Floor Lobby 1:00 p.m. Compensation and Management Development Committee Meeting* 50M Dining 2:30 p.m. Audit and Compliance Committee Meeting* 50th Floor Boardroom 3:00 p.m. Joint Audit and Compliance and Finance Committee Meeting* 50th Floor Boardroom 4:00 p.m. Finance Committee Meeting* 50th Floor Boardroom 6:45 p.m. Depart Four Seasons for Holiday Dinner hosted by Linda and Ken Lay** 7:00 p.m. Holiday Dinner, Grille 5115 *A car will bring Committee Members from the Four Seasons to the Enron Building 15 minutes prior to the start of the Committee meetings and will return Directors to hotel upon conclusion of respective meetings **A car will bring Directors and spouses from the Four Seasons to Grille 5115 for the Holiday Dinner and return to hotel following dinner Tuesday, December 14 7:45 a.m. Group Photo Session*** 50th Floor Boardroom 8:00 a.m. Board of Directors Meeting 50th Floor Boardroom 12:00p.m. Estimated time of adjournment A light lunch will be served following the Board Meeting 50M Dining 1:00 p.m. Directors depart Enron Building**** ***A van will bring Directors from the hotel to the Enron Building at 7:30 a.m. for the Board meeting. ****A car will bring Directors from the Enron Building to the Four Seasons for departure with spouses from local airport Location Enron Building 1400 Smith Street Houston, Texas Hotel Accommodations Four Season Hotel 1300 Lamar Street Houston, Texas 77010-3098 (713) 650-1300 Telephone (713) 652-6220 Facsimile Board Dinner Grille 5115 5115 Westheimer Houston, Texas E0004388897 :XH002-02096 ============= Page 88 of 398 ============= RAC Deal Approval Sheet Deal Name: Dolphin APPROVALS /XA Name Signature Date . / ~ P 16 199 Region Originator ,/7 - Jan Avery Region Management Rick Bergsieker 6 e9 Region Management David Haw Region Legal Dan Rogers RAC Management Rick Buy or Dave Gorte Enron Capital Management Andy Fastow or Jeff McMahon Office of the Chairman Joe Sutton Office of the Chairman Jeffrey Skilling E0004388451 G•\MiddleEast\.dolphin\Dash Dolphin 120399 latest from natrick-clean.docC:\WIND93XS'r EMP\ 002 030.de Page 4 EXH002-02097 ============= Page 89 of 398 ============= DEC 06 1999 17:43 FR INT'L PROJECT FINANCE713 646 7756 TO 97138539476 P.02/02 RAC Deal Approval Sheet Deal Name: Dolphin Addendum Global Finance Summary 1. Transaction Summary Total Deal/Project Capital Commitment Less: Financings Less: Syndication Net Enron Investment 2. Investment terms and pricing: Describe (if necessary): 3. Financing terms and pricing: Describe (if necessary): Legal or practical liquidity restrictions: Restricted Describe (if necessary): Amount ($000) $30,000 -0- -0- $30,000 deMarket 0 Above Market 0 Below Market 0 Market 0 Above Market 0 Below Market 0 Unrestricted 0 Legally Restricted Practically 4. Any recourse to Enron (other than investment): recourse 0 No Recourse Describe (if any): ,~4f sa~t e~l~lu 6a. Business unit intent to syndicate: bone 0 Partial 0 All Describe (if necessary): 8rrct , /fit Gp•,.~e~ L"GGr~4 , 6b. Intend nron hold period: r ~I 6c. Likely Syn 0 industry/Strategic Partner QDirect Private Equity O Capital Markets 0 JEDI 1 0 JEDI 2 O Enserco 0 LJM 1 or 2 0 Condor O Other: O Margaux 6d. Is this a JEDI 2 "Qualified Investment"? 0 Yes 140 Global Finance Representative: 4e~~ f.~ /2 /1 IW Signature Name (Printed) Date C:\windows\TEMRdolphin_dash_120399.doc Page S E0004388452 ** TOTAL PAGE.02 ** --XH002-02098 ============= Page 90 of 398 ============= M LO O 00 M t1' O O U W EXH002-02099 ============= Page 91 of 398 ============= AGENDA ITEM 6(d) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, Enron North America Corp., by and through affiliates and designees (collectively, "ENA"), is developing approximately 1,605 MW of simple-cycle, natural gas-fired peaking generating facilities in prime markets of the Eastern Interconnect, scheduled to become commercially operational between July, 2000 and 2001 (collectively, the "Facilities"), and to incur capital expenditures of up to $438 million in connection therewith and in furtherance thereof (collectively, the "Transaction"); and WHEREAS, ENA has committed a non-refundable $16.7 million for the option to purchase twenty-four (24) new GE LM6000 turbines and to intends incur total capital expenditures of up to $336 million in connection therewith and in furtherance thereof; and WHEREAS, ENA has committed a non-refundable $1 million deposit for the purchase of five (5) used Fiat/Westinghouse TG-50C turbines from Enel, the Italian State utility and intends to incur total capital expenditures of up to $102 million in connection therewith and in furtherance thereof; and WHEREAS, it appears that the commitment for the capital expenditures of up to $438 million is in the best interests of Enron Corp. (the "Company"); NOW, THEREFORE, IT IS RESOLVED, that ENA be, and hereby is, authorized, to develop, design, engineer, finance, procure, construct, equip, supply, and maintain the Transaction and to commit for and to incur capital expenditures of up to $438 million in connection therewith and in furtherance thereof; and RESOLVED FURTHER, that the proper officers of ENA and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of ENA, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and the foregoing resolution. FURTHER RESOLVED, that all actions heretofore taken by the officers and directors of ENA with respect to the transactions contemplated above be, and hereby are, in all respects, approved, confirmed and ratified; E0004388454 EXH002-02100 ============= Page 92 of 398 ============= FURTHER RESOLVED, that the authority granted to any of the officers of ENA appointed under the foregoing resolutions, shall be deemed to include, in the case of each such resolution, the authority to perform such further acts and deeds as may be necessary or appropriate, in the judgment of such officers, to carry out the transactions contemplated thereby. RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. \\ENE1\DATA1\User\rcarter\a Minutes\121499\Turbines Final.doc E0004388455 2 EXH002-02101 ============= Page 93 of 398 ============= AGENDA ITEM 6(d) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, Enron South America, a wholly owned subsidiary of the Company ("ESA"), has an opportunity to purchase from Mitsubishi Heavy Industries Ltd. and/or one of its affiliates major equipment, including two M501F gas turbine packages and associated materials and equipment (the "501F Package"), and to purchase from Siemens Westinghouse Power Corporation. and/or one of its affiliates major equipment, including two W501D gas turbine packages and associated materials and equipment (the "501D Package"), for an aggregate purchase price of up to US$150 million (collectively or in part, the "Purchase"); WHEREAS, ESA believes that acquiring the Purchase is necessary to fulfill expected demand for turbines to be utilized by ESA, one of its affiliates, or other Company projects in South America in the years 2002 and 2003, and, potentially, elsewhere around the world, and that committing to the Purchase prior to the end of 1999 will allow for the delivery of such equipment in time to take advantage of expected gas-fired thermal generation demand and power trading opportunities in the Brazilian market beginning in 2002; WHEREAS, since limited turbine availability in the global turbine market is restricting access to near term turbine delivery dates, any delay by the Company or ESA to commit to the Purchase will jeopardize meeting the schedule requirements of ESA, one of its affiliates, and other Company projects; WHEREAS, it would be in the best interests of the Company to allow ESA, or one of its affiliates, to proceed with and commit to the Purchase; NOW, THEREFORE, IT IS RESOLVED, that the Company, ESA, or any one of its affiliates be, and hereby are, authorized and directed to enter into such contracts, agreements, guarantees and other instruments as are necessary or appropriate in connection with Purchase; RESOLVED FURTHER, that the Chairman of the Board, the Vice Chairman of the Board, the President, any Vice President, the E0004388456 EXH002-02102 ============= Page 94 of 398 ============= Chief Financial Officer, the Treasurer or any Deputy Treasurer of the Company be, and each of them hereby is, authorized in the name and on behalf of the Company, under its corporate seal or otherwise, to take such action and to do all things that may appear to be reasonably necessary, in the sole discretion of any of such officers, to undertake, effectuate and carry out the foregoing resolutions, insofar as such action or things relate to the Company, including without limitation, the authority and power to negotiate, execute, deliver, amend, perform, and consummate any agreements, guarantees, instruments, or documents as such officer may deem necessary or desirable to carry out the purpose and intent of the foregoing premises and resolutions, in such forms as shall be approved by the officer executing the same, such approval to be conclusively evidenced by the execution thereof by such officer; RESOLVED FURTHER, that each such officer be, and each such officer hereby is, authorized in the name and on behalf of the Company to take or cause to be taken such action as such officer may deem necessary or desirable in connection with the performance by the Company of its obligations under such agreement, guarantee, document or instrument related to these transactions to which the Company is a party; RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company, related to or in connection with the transactions contemplated by these resolutions are hereby adopted, ratified, confirmed and approved in all respects; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing premises and resolutions. J:\User\rcarter\a Minutes\121499\Proposed Resolution Turbine Deal 02.doc EOO04388457 2 EXH002-02103 ============= Page 95 of 398 ============= AGENDA ITEM 6(d) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, Enron Engineering & Construction Company, a wholly owned subsidiary of the Company ("EE&CC"), has an opportunity to purchase from General Electric Company and/or one of its affiliates ("GE") major equipment including (A) three Power Island 9FA Turbine Packages, each of which will consist of one (1) 9F Single-shaft Gas Turbine, one (1) Steam Turbine, one (1) Hydrogen Cooled generator, one (1) Heat Recovery Steam Generator, one Distribution Control System, and associated materials and equipment included therein (the "9FA Packages") and (B) two 7FA turbines and one steam turbine (the "7FA Package"), for an aggregate purchase price of $338.5 million (collectively, the "Purchase"); WHEREAS, EE&CC believes that acquiring the Purchase is necessary to fulfill expected demand for turbines to be utilized by EE&CC, one of its affiliates, or other Company projects in Europe and North America in the years 2001 and 2002, and that committing to the Purchase prior to the end of 1999 will allow for the delivery of such equipment to begin in the fourth quarter of the year 2001; WHEREAS, since limited turbine availability during the years 2000 and 2001 in the global turbine market is restricting access to near term turbine delivery dates, and since other parties presently approaching GE for similar equipment can expect to wait until the second and fourth quarter of the year 2002 for delivery of equipment, any delay by the Company or EE&CC to commit to the Purchase will jeopardize meeting the schedule requirements of EE&CC, one of its affiliates, and other Company projects; WHEREAS, it would be in the best interests of the Company to allow EE&CC, or one of its affiliates to proceed with and commit to the Purchase; NOW THEREFORE, IT IS RESOLVED, that the Company, EE&CC, or any one of its affiliates be, and hereby are, authorized and directed to enter into such contracts, agreements, guarantees and other instruments as are necessary or appropriate in connection with Purchase; E0004388458 EXH002-02104 ============= Page 96 of 398 ============= RESOLVED FURTHER, that the Chairman of the Board, the Vice Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Treasurer or any Deputy Treasurer of the Company be, and each of them hereby is, authorized in the name and on behalf of the Company, under its corporate seal or otherwise, to take such action and to do all things that may appear to be reasonably necessary, in the sole discretion of any of such officers, to undertake, effectuate and carry out the foregoing resolutions, insofar as such action or things relate to the Company, including without limitation, the authority and power to negotiate, execute, deliver, amend, perform, and consummate any agreements, guarantees, instruments, or documents as such officer may deem necessary or desirable to carry out the purpose and intent of the foregoing premises and resolutions, in such forms as shall be approved by the officer executing the same, such approval to be conclusively evidenced by the execution thereof by such officer; RESOLVED FURTHER, that each such officer be, and each such officer hereby is, authorized in the name and on behalf of the Company to take or cause to be taken such action as such officer may deem necessary or desirable in connection with the performance by the Company of its obligations under such agreement, guarantee, document or instrument related to these transactions to which the Company is a party; RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company, related to or in connection with the transactions contemplated by these resolutions are hereby adopted, ratified, confirmed and approved in all respects; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing premises and resolutions. J:\User\rcarter\a Minutes\121499\GE TURBINE RESOLUTION.doc 2 E0004388459 EXH002-02105 ============= Page 97 of 398 ============= Turbine Purchase Request m n 0 0 W W 00 a) 0 Enron Corp. Board Presentation December 14, 1999 EXH002-02106 ============= Page 98 of 398 ============= Combined Turbine Purchase Request • Tight global availability of turbines through end of 2002 • Turbines required across business units • Current Turbine long position - 1253MW ($232MM) • Three requests - ENA, EECC, and ESA - 38 turbines 3423 additional MW's - Capital required phased payments from $71 MM to $919MM - Off ramps multiple deals, sale of turbines, cancellation sched's ENA - 24 GE LM6000's - multiple deals w/ layered value - 5 Fiat TG-50C - from ENEL in Italy, convert, use in North America EECC -3 GE 9FA Power Islands - use in Spain, Europe, ME, or India - 2 GE 7FA's wl steam turbine - use in ENA deals in NA or Mexico ESA - 2 MHI 501 F's - use at Rio Gen or Cuiaba II in Brazil - 2 Westinghouse 501 F's - same Confidential E0004388461 EXH002-02107 ============= Page 99 of 398 ============= Combined Current Turbine Position t._. T f_t_...._... .- Total potential Net D661 .., pofentlal teniial Confidential 1A A - 60hz Co-genTech) nrumber ; Aggregate ; of MW Prev ous Payments o a Remaining Capex Name Description Deal Deal Gas Payments Commitment s 1RR NPV Turbines .... .... ._. $MM._ $MM ......_ _........--$MM 3 513 $37.7 $53.1 $90.8 1) Vitro or Lakeworth FL 'Vitro - Mexican PPA for 15% to 22% $23 to $46MM 2) Linden 6 majority of capacity, 3) Ellwood, IL 'steam co-gen. ;Linden 6- Very solid deal following re- structuring - Inside the :fence cogen wl TOSCO Elwood, IL - Tolling PPA, sale of turbine. EPC profit, possible equity inv lB ADO 11Ni - 2 166 $9.0 $17.0 $26 0 1) Sarnia Peaker Project Samia Peaker- 25/ to 556,0: $8MM to 1 60hz -used 2) PetroCanada Oil Sand Co- Merchant plant w/ dual $12MM (Enron Canada) Gen electrical access (Ontario & Michigan), and access to Dawn nat gas hub 1C GE Fr 6 - 2 60 $13.0 $0.0 $13.0 1) ENA deal Machines are NA NA I 50hz - used 2) Enron India "available" and stored in 3) Other €luka Miss. 4) sell ENRON CARIBBEAN ._........ _ ........ ...... ....... ... 2A West 50105A 1 122 $19.2 $4.8 $24.0 1) Xfer to ENA for Electrocibes Purch'edw/ ENA 2000 NA NA 60hz .2) Panama peakers reported on 1 3) Venezuela next sheet '4) Other 29 'GE Fr6 Barges- 3 90 $18.0 $0.0 $18.0 1) Lagos, Nigeria :LagosPPA signed 6 29/ to 301/ : $5MM'to 50 hz -used 2) Taiwan Dec. AA grade security . $8MM ;3) Korea provided by Nigerian 4) Other Govt. 2C I AGE Fr 6 Barges - 6 180 $36;0 $0.0 $36.0 1) Lagos, Nigeria Lagos- Govt has 25% to 32% : $8MM to 150 hz - used 2) Taiwan :requested remaining six ! $20MM j 3) Korea barges. Tariff 4) Other negotiations in process. IEECC ._.. ........ 3A West 501D5A 1 122 $0.0 $24.0 $24.0 1) Panama DASH aped Nov 99. 15% to 25% $3MM to (60hz :2) ENA deal :Panama- 2nd turbine to $25MM 3) Other `anchor the Columbia/Panama PL $47MM to TOTAL 18 1,253 $132.9 $98.9 $231.8 16% to 30% $111MM E0004388462 EXH002-02108 ============= Page 100 of 398 ============= Com bine d Turbi ne Purchase Re uest Number I Aggregate Down Total Potential Deal Name Deal Potential Potential of Gas j MW payment Capex Description Deal Deal ? 3 Turbines Commitm ent ; IRR NPV $MM $MIVI ENA 1A GE LM6000's 24 1164 $16.7 $334.0 1) Electncities - N.Carolma, Electricities Customer ` 20% to $40MM 60hz 2) People's Dwntwn Deal - entry point for 35% to I 13 United Illuminating Dev Fee EPC Profit $60MM I 4) Oglethorpe II (see list in Tolling, Gas Control ........ ......... ............... DASH) .... ....... Area Services 1B _ Fiat.TG-50C - used 5 445 $12 0 $102.0 1)...MAPP...(lowa), MAPP Mercfiant 20% to $20MM.. ' (50 hz conv to 60hz) 2) Entergy Peaking - provide 40% to ( i :3) Florida additional merchant $45MM I 4) Other network coverage I j EECC 2A Pwr Island 9FA 3 780 $18.0 $248.5 1) Arcos Spain Arcos = Eventual 100% 15% to $15MM III 50hz ;2) AbuDhabi - Shuweihat Desal selldown after taking 35% to l 3 3) Egypt power bids IEPC Profit, plus call on $45MM 4) India Mega Projects bids offtake 2B GE 7FA's wT 5tm Turb 2 310 $13.6 $90.0 1) Oxy Chemical Taft, .LA.. Oxy - Inside the fence 25% to $30MM I 60hz 2) Lakeworth Florida Combined Cycle ฐ 45% to I 3) Mexico Baseload $60MM 4) Other ESA j ' 3A MHI 501 F#9 2 362 $7.5 $74.5 1) Rio Gen Brasil Rio Gen - Comb cycle ` 15% to $15M to I 60hz 2) Other ENE Worldwide jNegot'ing 250MW firm 20% $20MM Projects ! to Elektro and 250MW ' I I ... to other LDC's 3B Westinghouse 501 F's 2 362 $3.0 $70.0" 1) `Cuiaba ll' Brasil Cuiaba II Combined 15% to $15M to 60hz 2) Other ENE Latin America ! Cycle - 480MW to 20% $20MM l i j Projects Electrobras - PPA by 3) Remarket to 3rd parties March 2000 ... I ;. $13 M ' TOTAL 8 3 3,423 $70.8 $919.0 ` 17% to : t ... E000438846 3 35% $250MM Confi dential EXH002-02109 ============= Page 101 of 398 ============= Number Aggregate Down Total Potential Deal Name Deal Potential Potential of Gas MW payment Capex Description Deal Deal Turbines Commitment IRR NPV $114114 $114111 ENA 1A GE LM6000's 24 1164 $16.7 $334.0 1) Electricities - N.Carolina, Electricities - Customer 20% to $40MM to 60hz 2) People's Dwntwn Deal - entry point for 35% $60MM 3) United Illuminating Dev Fee, EPC Profit, 4) Oglethorpe II (see list in Tolling, Gas Control DASH) Area Services 1 B Fiat TG-50C - used 5 445 $12.0 $102.0 1) MAPP (Iowa), MAPP - Merchant 20% to $20MM to (50 hz conv to 60hz) 2) Entergy Peaking - provide 40% $45MM 3) Florida additional merchant 4) Other network coverage EECC 2A Pwr Island 9FA 3 780 $18.0 $248.5 1) Arcos Spain Arcos - Eventual 100% 15% to $15MM to 50hz 2) AbuDhabi - Shuweihat Desal selldown after taking 35% $45MM 3) Egypt power bids EPC Profit, plus call on 4) India Mega Projects bids offtake 2B GE 7FA's w/ Stm Turb 2 310 $13.6 $90.0 1) Oxy Chemical, Taft, LA Oxy - Inside the fence, 25% to $30MM to 60hz 2) Lakeworth Florida Combined Cycle 45% $60MM 3) Mexico Baseload 4) Other ESA 3A MH1501 F's 2 362 $7.5 $74.5 1) Rio Gen - Brasil Rio Gen - Comb cycle - 15% to $15M to 60hz 2) Other ENE Worldwide Negot'ing 250MW firm to 20% $20MM Projects Elektro and 250MW to other LDC's 3B Westinghouse 501 F's 2 362 $3.0 $70.0 1) Cuiaba II - Brasil Cuiaba II - Combined 15% to $15M to 60hz 2) Other ENE Latin America Cycle - 480MW to 20% $20MM Projects Electrobras - PPA by 3) Remarket to 3rd parties March 2000 TOTAL 38 3,423 $70.8 $919.0 17% to $135MM to 35% $250MM LUUU4300404 EXH002-02110 ============= Page 102 of 398 ============= LNHON RISK ASSESSMENT AND CONTROL DEAL APPROVAL SHEET . DEAL NAME: ENA 2001 Turbines Date DASH Completed: 12/05/99 Counterparty: West LB RAC Analyst: E. Pedersen Business Unit: Enron North America Investment Type: Enron Guarantee Business Unit Originator: Mike Miller Capital Funding Source(s): Debt OPublic !]Private Expected Closing Date: December 1999 ]Merchant OStrategic Expected Funding Date: December 1999 Conforming I]Nonconforming Board Approval: Pending DReceived Denied ON/A RAC Recommendation: OProceed with Transaction DRetums below Capital Price ODo not Proceed APPROVAL AMOUNT REQUESTED Enron North America ("ENA") seeks approval to purchase twenty-nine (29) turbines to be utilized through an off-balance sheet arrangement with Westdeutsche Landesbank ("West LB") in a series of transactions expected to come on-line by June 15, 2001. , Enron Guarantee $438.0* *ENA will provide an unlimited parent guarantee for the turbines to West LB for all the financial obligations under the development agreement. EXPOSURE SUMMARY LM6000 Assets $336.0 TG-50C Assets** $102.0 Total Turbine exposure*** $438.0 ** Including conversion costs. *** ENA has already committed a non-refundable $17.7 MM for the option to purchase the Turbines from GE. DEAL DESCRIPTION ENA proposes to purchase twenty-four (24) new GE LM6000 and five (5) used Fiat/Westinghouse TG-50C turbines to support a large portion of the total turbine demand of ENA between July 2000 and 2001. The generating capacity of the combined turbines is 1,605 MW and will be utilized in specific customer transactions and the merchant network as outlined in Exhibit A. The strategic benefit behind this transaction is to consolidate the anticipated turbine demand against the available supply. Strong power prices experienced this summer and a bullish forward market have extended market demand for peak generation capability, which has resulted in diminished turbine availability. The latest turbine availability report shows limited availability of new and used turbines until mid-2002. The market for peaking power is expected to remain strong beyond 2001 for several reasons: (1) Capacity additions are coming on line slower than projected due to OEM turbine manufacturing constraints, (2) Continued growth in peak demand, (3) Transmission constraints limits cross-regional power transportation during peak demand, (4) Regulatory constrains prevents peak pricing signals from reaching retail level and curtailing demand. ENA is targeting the GE LM 6000 turbines for customer transactions with municipal and cooperative utilities that want long term ownership of distributed generating capacity. ENA creates value by packaging the turbines and project construction with gas supply agreements, tolling agreements and asset management/control area services agreements. ENA began marketing transactions built around LM 6000 turbines in mid-October. In the two months since, ENA has generated several prospective transactions, which are more fully described in Exhibit A. Based on the market response to date, ENA is confident that it will place all of the LM 6000 turbines in value added transactions in time for Summer 2001 operations. The five TG-50C turbines are targeted for installation in a strategic network plant (merchant) in either MAPP (Iowa) or Entergy. These markets have been experiencing strong peak demand prices and are not easily served by ENA's existing strategic network because of transmission constraints. The addition of the TG-50C turbines to the strategic network will strengthen ENA's network coverage in prime markets of the Eastern interconnect. The total purchase price of these assets will likely be funded through an off-balance sheet arrangement with West LB, one of Enron's tier one lenders. By having West LB purchase these assets, the debt associated with these assets is not on Enron's balance sheet. The West LB arrangement grants Enron a continuous fixed price purchase option for these assets. This financing structure will maintain maximum accounting flexibility, minimize the funding cost while keeping the turbines secured through a parent guarantee provided by Enron. The guarantee runs in favor of West LB and covers all obligations under the loan. E0004388465 EXH002-02111 ============= Page 103 of 398 ============= RAC Deal Approval Sheet The purchase price for the twenty-four LM 6000 turbines is $336 million. West LB, backed by an Enron guarantee, has placed a non-refundable deposit of $16.7 million with GE in order to lock in turbine delivery slots that provide for Summer 2001 operations. West LB's cancellation exposure is limited to $16.7 million until a final purchase and sale agreement has been executed with GE. The purchase and sale agreement is expected to be completed prior to year end. The purchase price for the five TG-50C turbines from Enel, the Italian State utility, will total $52.5 million. The turbines are proposed to be purchased from Enel through a German broker, Lohrmann GmbH. Once purchased, an additional $50 million will be required to disassemble, ship and reconfigure for 60Hz operation and US emissions standards. ENA, through its West LB arrangement, is expecting to execute a detailed Memorandum of Understanding and place a $1 million non-refundable deposit pending completion of defmitive documentation. The deposit is non-refundable unless Enel does not grant its final approval for the deal. The LM 6000's advantages for customer transactions are: (i) its low heat rate of 9,435 Btu/kWh compared to over 11,500 Btu/kWh for larger peaking turbines, (ii) its modular packaged design allows it to be installed quickly and at lower costs relative to larger peaking turbines, and (iii) it has 10 minute quick start capability that meets spinning reserve requirements. These advantages make the LM 6000 an excellent transaction building tool for smaller utilities that have needs for both intermediate as well as peak load capacity, but want smaller, modular and more distributed generation than offered by larger peaking turbines. The chief disadvantage of the LM 6000 turbines is the higher capital cost for the turbines and higher overall installed cost per kW. However, the market for peak and intermediate load power remains strong among smaller utilities who want capacity but did not have the foresight to lock in turbines during 1998 or early 1999. Options for owning installed capacity prior to late 2002 are highly limited and no cheaper than the LM 6000 option. The TG-50C turbines are approximately 15 years old and were manufactured by Fiat for the 50Hz market under license from Westinghouse for the 501D model design. The TG-50C turbines were installed as peaking units and have very low run hours. ENEL maintained the turbines to the highest standards with the result being used machines in excellent condition. While the TG-50C turbines need to be reconfigured to operate in the US market, they do not need to be rebuilt and refurbished. The advantage of the TG-50C turbines is that they can be deployed in a larger scale strategic project with lower installed capital costs that the LM 6000. In addition, the TG-50C turbines come with black-start capability and the ability to sell MVAR's (for transmission system support) as well as MW's. RAC review of ENA's past management of long turbine positions demonstrates a proven track record of managing and maximizing the value of turbines it has acquired. TRANSACTION SOURCES AND USES OF FUNDS Sources Uses Enron Guarantee $438.0 Turbine Purchase $438.0 Total $438.0 $438.0 RETURN SUMMARY - N/A CASH FLOW SUMMARY - N/A TRANSACTION UPSIDES/OPTIONALITY - N/A EXIT STRATEGY (Merchant investments only) - Referenced above and in exhibit A E0004388466 H:\Deals - Current\Turbines\DASH Turbines 120599.doc Page 2 EXH002-02112 ============= Page 104 of 398 ============= RAC Deal Approval Sheet RISK MATRIX (Maximum 5) DESCRIPTION MITIGATION/COMMENTS Long turbine position If anticipated client Projects do not come to fruition, ENA could Risk that ENA will not be able to sell the turbines sell the turbines or use them in the Genco portfolio to expand the or use them in ENA projects. Enron Network. Risk that ENA will not be able to assign the warranty on the GE turbines ENA believes strongly that the long position is justified based on the current marketing efforts and review of the market by the deal team. ENA is currently working on specific customer transactions, which could use up to 69 turbines in addition to any turbines used for the merchant network. The reconfiguration of the TG-50C turbines (see separate risk discussion below) limits the number of potential buyers on an as-is basis. Void of any proven performance, the TG-50C turbines may be difficult to sell unless they can be assigned to a specific project. In order to transfer the warranty associated with the GE turbines, Enron must use the LM6000 for specific Enron projects. ENA will able to assign the turbines without consent to the following. entities: (i) any party or contractor for which ENA has agreed to construct a facility using the turbines; (ii) a joint venture or partnership in which Enron has an equity stake of at least 19.5%; (iii) any party, which is obligated to indemnify GE; (iv) a lender or financial institution providing financing. Enron may also assign the warranties with GE's consent, which cannot be unreasonably withheld, conditioned or delayed if ENA is providing a bundled product or service, i.e. if ENA is selling a turbine in return for, for example, tolling or gas. Conversion Risk Review of the TG-50C turbines by ENA and EECC engineers Risk of cost overruns during conversion of TG- suggest that refurbishment is not required but conversion from 50C. European standard 50Hz to US standard 60Hz, gearbox design and Risk of not meeting performance requirements performance/environmental testing will be necessary. The generator conversion will be performed and warranted by the original OEM supplier, ABB Morelli. Since the generator design was based on a 60Hz specification, reconfiguration does not present a major technical difficulty. The major cost risk is the additional design and installation associated with adding the gearbox. The alignment of the gearbox poses the most critical technical risk aspect with respect to the gearbox, but the proposed vendor, Cincinnati Gear, has successfully supplied gearboxes for similar units. A $5MM construction cost contingency is included in the total project cost to mitigate this risk. The turbines will have to meet performance guarantees and environmental standards in the US. An EECC report indicates that technical risk are manageable and pose less risk than the refurbishment of the 60Hz Korean GE 7B turbines which were successfully installed in New Albany. ENA has allowed additional time for testing and start-up to modify and tune the combustion system to meet performance requirements. ENA has also added a $2.5 MM contingency budget for cost overruns with regard to removing and shipping the turbines from Italy to the US. H:\Deals - Cun•ent\Turbines\DASH Turbines_120599.doc E0004388467 Page 3 EXH002-02113 ============= Page 105 of 398 ============= RAC Deal Approval Sheet KEY SUCCESS FACTORS NA Poor Excellent Core Business X Strategic Fit X Upside Potential X Management N/A Risk Mitigation X OTHER RAC COMMENTS: APPROVALS Business Originator ENA Management ENA Office of the Chairman Legal EE&CC RAC Management Enron Capital Management ENE Management Name Mike J. Miller Dave Delainey Cliff Baxter / Kevin Hannon Mark Haedicke Fred Kelly Rick Buy / David Gorte Andy Fastow / Jeff McMahon Jeffrey Skilling / Joe Sutton E0004388468 C:\TEMP\DASH Turbine 12-2-99.doc Page 4 Date !L7 n EXH002-02114 ============= Page 106 of 398 ============= RAC Deal Approval Sheet Global Finance Summary (addendum to DASH) 1. Transaction Summary Total Deal/Project Capital Commitment Add: Enron guarantee Less: Financings Less: Syndications 0 Market D Above Market D Below Market Net Enron Investment $438,000 2. Investment terms and pricing: El Market D Above Market D Below Market Describe (if necessary): 3. Financing terms and pricing: Describe (if necessary): 4. Legal or practical liquidity restrictions: Describe (if necessary): O Unrestricted D Legally Restricted D Practically Restricted Amount ($000) $438,000 $438,000 -$438,00- -0- 5. Any recourse to Enron (other than investment): E Recourse Describe (if any): ENE guarantee to West LB (Acquisition/financing) 6a. Business unit intent to syndicate: M None D Partial i Describe (if necessary): 6b. Intended Enron hold period: 6c. Likely Syndication Market: 6d. Is this a JEDI 2 "Qualified Global Finance Representative: C:\TEMP'DASH Turbines_120399.doc EXH002-02115 D No Recourse D All D Industry/Strategic Partner D Direct Private Equity D Capital Markets. D JEDI 1 D JEDI 2 D Enserco D LJM 1 or 2 0 Condor I] Other: D Margaux O No tl\ Name (Printed) E0004388469 Page 5 Date ============= Page 107 of 398 ============= RAC Deal Approval Sheet Exhibit A - Potential Turbine Requirements Turbines Transaction Transactions Required Probability Region Las Vegas Coven I High WSCC Total High I Electricities 2 Medium SERC People's Downtown 6 Medium MAIN United Illuminating 6 Medium NEPOOL Oglethorpe II 6 Medium SERC City of Lakeland 4 Medium FRCC Santee Cooper 4 Medium SERC City of Bryan 2 Medium ERCOT Total Medium 28 Northeast Texas Electric Cooperative 3 Low ERCOT Seminole Coop. 4 Low FRCC Madison Gas Electric 2 Low MAIN Lincoln Electric 4 Low MAPP JEA 5 Low FRCC Oxy / FOR Project I Low WSCC Oklahoma Municipal Power Authorit I Low SPP Total Low 20 Grand Total 49 *Proposed locations for ENA merchant plants are: Florida, Entergy and Iowa MAPP E0004388470 C:\TEMP\DASH Turbines_120399.doc Page 6 EXH002-02116 ============= Page 108 of 398 ============= POTENTIAL TURBINE TRANSACTIONS Turbines Transactions Required Region Las Vegas Cogen 1 WSCC Total High Probability 1 Electricities 2 SERC Peoples' Downtown 6 MAIN United Illuminating 6 NEPOOL Oglethorpe II 6 SERC City of Lakeland 4 FRCC Santee Cooper 4 SERC City of Bryan 2 ERCOT Total Medium Probability 30 North Texas Electric Cooperative 3 SPP Seminole Cooperative 4 FRCC Madison Gas Electric 2 MAIN Lincoln Electric 4 MAPP Jacksonville Electric 5 FRCC Oxy / FOR Project 1 WSCC Oklahoma Municipal Power Authority 1 SPP MEAG 2 SERC Rochester Public Utilities 2 MAPP Austin Electric 4 ERCOT CIPCO 2 MAPP Grat River Energy 1 MAPP Indiana Municipal Power Agency 2 ECAR Sacramento Municipal Unitlity District 1 WSCC Northern California Power Agency 2 WSCC SCANA 2 SERC Total Initial Contact 38 Grand Total 69 E0004388471 EXH002-02117 ============= Page 109 of 398 ============= ENRON RISK ASSESSMENT AND CONTROL DEAL APPROVAL SHEET DEAL NAME: ESA Turbine Date DASH Completed: 12/03/99 Counterparty: MHI/Seimens Westinghouse RAC Analyst: E. Pedersen Business Unit: Enron South America Investment Type: Equity Business Unit Originator: Brett Wiggs/Steve Pearlman Capital Funding Source(s): Balance Sheet OPublic OPrivate Expected Closing Date: December 1999 OMerchant OStrategic Expected Funding Date: December 1999 OConforming ONonconforming Board Approval: OPending DReceived ODenied ON/A RAC Recommendation: OProceed with Transaction OReturns below Capital Price ODo not Proceed See Other RAC Comments APPROVAL AMOUNT REQUESTED Enron South America ("ESA") seeks approval for up to $150 million to purchase up to four F technology gas turbines to be utilized for projects in the Brazilian power market. EXPOSURE SUMMARY Mitsubishi Heavy Industries (MHI) $ 74.5 MM Westinghouse (WH)* $ 75.5 MM Total Turbine cost $150.0 MM ESA will have the right to cancel the purchase contract with Westinghouse according to a cancellation schedule to be negotiated (See Exhibit A). DEAL DESCRIPTION Enron proposes to purchase two (2) Mitsubishi Heavy Industries M501F and two (2) Siemens Westinghouse W501FD gas turbine packages to fulfill ESA's expected turbine requirements for projects coming on line in Brazil between 2002 and 2003. The generating capacity of the gas turbines in combined cycle will be 980 MW. The two most advanced projects that could utilize these turbines are RioGen and Cuiaba II. By purchasing the turbines now, Enron is assuming the risk that the identified projects, or alternative projects yet to be identified, will be completed and will be economically viable. The strategic rationale for this transaction is to position ESA to take advantage of the expected demand for gas-fired thermal generation in Brazil and create a platform to take advantage of trading opportunities in the local market. The primary benefit of committing to the turbines now is to ensure turbine availability between 2002 and 2003. The development team believes purchasing the turbines now is critical due to the following: 1. Limited availability in the world turbine market for 2001 and 2002 deliveries. Negotiations with Mitsubishi and Westinghouse indicate the turbines will be sold to third parties if ESA does not commit to purchase them now. 2. Significant turbine demand in the Brazilian power market due to: (a) A government program to install 6,000 MW of generation capacity; and (b) Availability of gas in Brazil due to (i) the BBPL excess pipeline capacity, (ii) Cuiaba pipeline capacity (iii) planned construction of new pipelines, (iv) significant discoveries of Bolivian gas, and (v) expected development of Brazilian gas reserves. 3. Requirement for turbines for two ESA projects currently under development in Brazil (see description below) 4. The addition of cost-competitive thermal power plants will create synergies with hydro-based plants to increase the overall efficiency of the Brazilian system. The MHI and Westinghouse equipment are large-scale advanced technology turbines with similar designs. The turbines will be utilized to construct combined cycle plants to provide base-load power and have the flexibility to not generate during extended periods of excess water availability. The plants will operate at high efficiency with an average heat rate of approximately 7,166 btu/kwhr. RioGen Project RioGen is a gas-fired generating project to be located in the state of Rio de Janeiro with a planned final capacity of approximately 1,000 MW. The initial phase of the project will be 500 MW with 250 MW to be purchased by Elektro Eletricidade e Servigos S.A. ("Elektro"), Enron's wholly owned electric distribution company in the state of Sao Paulo. ESA expects to sell the remaining 250 MW to other LDCs in Rio de Janeiro or Sao Paulo. The project will be located in Rio de Janeiro to take advantage of inexpensive domestic gas and favorable electric transmission pricing. Gas will be supplied to the project by Companhia Distribuidora de Gas do Rio de Janeiro ("CEG"), the gas distribution company for the state of Rio, a 45% owned Enron company. ESA and CEG are currently in negotiations, and CEG has made a firm offer to supply gas for the first 250 MW of capacity. Initial requests for permits have been submitted, and the Region believes the full EIA study should be complete by January. ESA began the permitting process in October, 1999; based on Enron's past experiences in Brazil, timing for final EIA approval has ranged from 10-24 months. The project has received significant political support, and ESA's expectations for success are high. E0004388472 EXH002-02118 ============= Page 110 of 398 ============= RAC Deal Approval Sheet Cuiaba 11 Project Cuiaba II is a prospective gas-fired generating project to be located in the state of Mato Grosso on the site of Enron's existing Cuiaba generating station with a planned final capacity of approximately 480 MW with a potential expansion to 1500 MW. The economic viability of the 480 expansion will need to be confirmed/validated by a transmission grid study and analysis. ESA is negotiating with Eletrobras, the national electricity company, to purchase the project's off-take, and a Power Purchase Agreement ("PPA") is expected to be finalized by March 2000. The project expects to capitalize on current pipeline capacity paid for by the initial project and operating synergies resulting from the existing plant, Cuiaba I. Enron will supply gas to the project. Enron will likely source the gas from Bolivia, where significant reserves recently have been discovered. Initial requests for permits have been submitted, and the Region believes the full EIA study should be complete and submitted shortly. ESA expects to receive the environmental permits for the site by the end of April 2000. The project has received significant political support, and ESA's expectations for success are high. TRANSACTION SOURCES AND USES OF FUNDS Sources (million) Uses (million) Enron $150.0 Turbine Purchase $150.0 RETURN SUMMARY Substantial due diligence and development remains on the prospective projects described below; therefore, no quantitative RAC analysis was performed. Consequently, RAC is not in a position to provide a recommendation on the transaction. The expected returns of these projects have not been determined, and RAC believes that there is a reasonable probability that the project returns will be below the capital price at that time. Also, because Enron is purchasing the turbines in advance of the projects, Enron may be forced into a position to pursue a below market project in order to utilize the turbines or to pursue other exit strategies as outlined below. Generally, due to competitive pressures, gas-fired IPPs serving a PPA in Brazil are likely to yield an IRR of approximately 15%-18%. If certain upsides can be achieved and/or Enron's role in the plant can be expanded beyond traditional development, the actual return would be higher. RAC estimates the current capital price for such a project in Brazil would be approximately 18%. CASH FLOW SUMMARY Payment schedule based on milestone progress and industry standards to be negotiated (See Exhibit B). TRANSACTION UPSIDES - N/A EXIT STRATEGY In the event the'proposed projects do not transpire, the Region intends to (i) use the turbines either for other projects in Brazil, South America, or, in the case of the Mitsubishi turbines, in other markets around the world; (ii) pay termination fees. H:\turbines\esa turbine dash.doc - Page 2 E0004388473 EXH002-02119 ============= Page 111 of 398 ============= RAC Deal Approval Sheet RISK MATRIX DESCRIPTION MITIGATION/COMMENTS Long turbine position • Elektro's obligation to purchase energy to supply its Risk that ESA will not utilize the turbines in its distribution region. Brazilian projects. • Continued development of targeted ESA projects. • Opportunity to utilize turbines in multiple other gas-fired generating projects that are likely to be developed in Brazil given the shortage of turbines for such projects. • For the Westinghouse turbines, Enron has the flexibility to move turbines to other projects in Latin America, to re-market turbines, or to pay a cancellation fee. • For the MHI turbines, Enron has the flexibility to move the turbines to alternate Enron projects throughout the world or to sell the turbines to third parties subject to MHI's consent (the specific provision has yet to be negotiated). • The economic viability of the 480 expansion at Cuiaba will need to be confirmed/validated by a transmission grid study and analysis and the addition of incremental transmission capacity in the region. Regulatory risk • The economics of building a power plant with a long term PPA Risk that the Electricity Law will not be changed in Brazil are questionable under the current legal regime. The to allow full pass through of costs. current legal framework caps the amount that electric LDC's can pass-through related FX, inflation, and gas prices. • The government has indicated that they are willing to modify the law to reflect full passthrough of costs (subject to no cap). In particular, the government has indicated that such treatment would be given to facilities with a commercial operation date prior to December 31, 2003. Such changes are key to the implementation of any thermal project in Brazil and the need for additional capacity is critical to Brazil's energy matrix. KEY SUCCESS FACTORS NA Poor Excellent Core Business X Strategic Fit X Upside Potential X Management N/A Risk Mitigation X OTHER RAC COMMENTS: It should be noted that the region currently only has two prospective projects in the advanced stages of development that could utilize these turbines. Other projects may be developed or be presented by other companies as opportunities for Enron. However, there is no guarantee that any of these projects will be completed. If these projects are not completed, the region will be forced to find an alternative use for the turbines. The region is assuming a substantial amount of risk because the Brazilian economy, the Brazilian regulatory environment, and the worldwide supply and demand of turbines may adversely influence the value of the turbines. Market sentiment suggests that worldwide turbine demand should remain strong through the term of the purchase agreements for these turbines. E0004388474 H:\turbines\esa turbine dash.doc Page 3 EXH002-02120 ============= Page 112 of 398 ============= RAC Deal Approval Sheet APPROVALS Region Management Region Legal EE&CC Management RAC Management Enron Capital Management Office of the Chairman Office of the Chairman Name Jim Bannantine or Diomedes Christodoulou Randy Young Larry Reynolds or Fred Kelly Rick Buy or David Gorte Andy Fastow or Jeff McMahon Joe Sutton Jeffrey Skilling E6F tOC -- DU, h >yii b~ ri ' C ytz i4 ) ~ G ~7 ~i ~ Date 2 0 c /''? A 4, 'a4(SS. E0004388475 H:\turbines\esa turbine dash.doc Signature Page 4 EXH002-02121 ============= Page 113 of 398 ============= - - .. - = , .v-r u I v~ C) r . rJJ 12/02/99 T1 13:32 FAX ENRON DO BRASIL Lej uu, RAC Deal Approval Sheet APPROVALS Name Signature Date Region Managcment Jim Bacnantinc or Diomedes Christodoulou ly Region Legal Randy Young BE&CC Management Larry Reynolds or Fred Kelly PAC Management Rick Buy or David Gorte Baron Capital Management Andy F3-stow or Jeff McMahon Office of the Chairman Joe Sutton Office of the Chairman Jeffrey Slcilling _ E0004388476 Q\W LNI)0WS\TFMPW04-4SW.doc Pssc 4 =XH002-02122 ============= Page 114 of 398 ============= RAC Deal Approval Sheet Global Finance Summary (addendum to DASH) 1. Transaction Summary Total Deal/Project Capital Commitment Add: Enron guarantee Less: Financings Less: Syndications Net Enron Investment Amount ($000) $150,000 $150,000 2. Investment terms and pricing: Market 0 Above Market 0 Below Market Describe (if necessary): 3. Financing terms and pricing: 0 Market O Above Market Blow Market Describe (if necessary): 4. Legal or practical liquidity restrictions: 0 Unrestricted 0 Legally Restricted practically Restricted Describe (if necessary): 1 vm~ 5. Any recourse to Enron (other than investment): "ecourse 0 No Recourse Describe (if any): 4 LL E~ ct e 5 6a. Business unit intent to syndicate: 0 None martial 0 All Describe (if necessary): .. tl a 6b. Intended Enron hold period: LIP, 5 6c. Likely Syndication Market: 0 Industry/ rategic Partner Capital Markets O JEDI 2 OLJM1 or 2 0 Other: 6d. Is this a JEDI 2 "Qualified Global Finance Representative: H:\turbines\esa turbine dash.doc 0 Direct Private Equity El JEDII O Enserco 0 Condor O Margaux 1= rglol Gay lame (Printed) ~y1 _.2 -cm Date Page 5 EXH002-02123 E0004388477 ============= Page 115 of 398 ============= RAC Deal Approval Sheet Global Finance Summary (addendum to DASH) 1: Transaction Summary Total Deal/Project Capital Commitment Add: Enron guarantee Less: Financings Less: Syndications Net Enron Investment Amount ($000) $150,000 f ybeU ~ ~j oGv $150.000 ~Lkt 7 E 2. Investment terms and pricing: 'G Market 0 Above Market 0 Below Market Describe (if necessary): 3. Financing terms and pricing: Market 0 Above Market 0 Below Market Describe (if necessary): / ~wrcn 4. Legal or practical liquidity restrictions: 0 Unrestricted ally Restricted Practically Restricted Describe (if necessary): S 15 I 5. Any recourse to Enron (other than investment : 0 Recourse 0 No Recourse Describe (if any): 1 5 L~ 51~?"`'`c=r1f 6a. 740 Business unit intent to syndicate: 0 None a"Partial 0 All Describe (if necessary): 6b. Intended Enron hold period: 6c. Likely Syndication Market: 0 Industry/Strategic Partner 0 Direct Private Equity 0 Capital Markets 0 JEDI 1 z'C ~`"'2 0 JEDI 2 0 Enserco IwC--5r, t1 (2.1. f 7 4 0 LJM 1 or 2 0 Condor F-r= i3`c~ 0 Other: _ i OESY LR 0 Margaux 6d. Is this a JEDI 2 "Qualified Investor ? 0 Yes No ob Gay /.1 ---3 `' Global Finance Representative: Signature Name (Printed) Date C:\windows\TEMP\esa turbine dash.doc E0004388478 Page 5 =XH002-02124 ============= Page 116 of 398 ============= Exhibit A - Cancellation Schedule WESTINGHOUSE Terms of Cancellation % Amount 12/30/99 3.97% 3,000,000 01/30/00 3.97% 3,000,000 02128/00 10% 7,550,000 03/30100 15% 11,325,000 04/30/00 20% 15,100,000 05130/00 25% 18,875,000 06/30100 30% 22,650,000 07/30/00 30% 22,650,000 08/30/00 30% 22,650,000 09/30100 30% 22,650,000 10/30/00 30% 22,650,000 11130/00 30% 22,650,000 12/30/00 30% 22,650,000 01/30/01 30% 22,650,000 02/28/01 30% 22,650,000 03/30/01 30% 22,650,000 04/30/01 30% 22,650,000 05/30/01 30% 22,650,000 06/30/01 30% 22,650,000 07/30/01 100% 75,500,000 08/30/01 100% 75,500,000 E0004388479 MITSUBISHI Terms of Cancellation % Amount Cancellation schedule with Mitsubishi is currently being negotiated =XH002-02125 ============= Page 117 of 398 ============= Exhibit B - PAYMENT SCHEDULE WESTINGHOUSE Terms of Payment Payment % Cumulative 12/30/99 Reservation 3,000,000 3.97% 3,000,000 01/30/00 1 3,000,000 02128/00 2 7,550,000 10% 10,550,000 03/30/00 3 775,000 1.03% 11,325,000 04/30/00 4 3,775,000 5% Manufact. Release 15,100,000 05/30/00 5 3,775,000 5% 18,875,000 06/30100 6 3,775,000 5% 22,650,000 07/30/00 7 3,775,000 5% 26,425,000 08/30/00 8 3,775,000 5% 30,200,000 09/30/00 9 3,775,000 5% 33,975,000 10/30/00 10 3,775,000 5% 37,750,000 11/30/00 11 3,775,000 5% 41,525,000 12/30/00 12 3,775,000 5% 45,300,000 01/30/01 13 3,775,000 5% 49,075,000 02/28/01 14 3,775,000 5% 52,850,000 03/30101 15 3,775,000 5% 56,625,000 04/30/01 16 .3,775,000 5% 60,400,000 05/30/01 17 3,775,000 5% 64,175,000 06/30/01 18 3,775,000 5% 67,950,000 07/30101 19 3,775,000 5% 71,725,000 08/30/01 20 3,775,000 5% 75,500,000 MITSUBISHI Terms of Payment Payment % Cumulative 12/30/99 Order/Fee 7,450,000 10% 7,450,000 01/30/00 1 7,450,000 02/28/00 2 - 7,450,000 03/30/00 3 - 7.450,000 04/30/00 4 11,175,000 15% 18,625,000 05/30/00 5 - 18,625,000 06/30/00 6 - 18,625,000 07/30/00 7 - 18,625,000 08/30/00 8 11,175,000 15% 29,800,000 09/30/00 9 - 29,800,000 10130100 10 29,800,000 11/30/00 11 - 29,800,000 12/30/00 12 14,900,000 20% 44,700,000 01/30/01 13 - 44,700,000 02/28/01 14 - 44,700,000 03/30/01 15 - 44,700,000 04/30/01 16 - 44,700,000 05/30/01 17 14,900,000 20% 59,600,000 06/30/01 18 - 59,600,000 07/30/01 19 - 59,600,000 08/30/01 20 - 59,600,000 09/30/01 21 - 59,600,000 10/30/01 22 14,900,000 20% 74,500,000 E0004388480 =XH002-02126 ============= Page 118 of 398 ============= ENRON RISK ASSESSMENT AND CONTROL DEAL APPROVAL SHEET DEAL NAME: EECC GE Turbines Date DASH Completed: 12/03/99 Counterparty: General Electric RAC Analyst: E. Pedersen Business Unit: Enron Engineering & Construction Co. Investment Type: Equity Business Unit Originator: Larry Izzo Capital Funding Source(s): Balance Sheet OPublic ]Private Expected Closing Date: Various ElMerchant OStrategic Expected Funding Date: Various OConforming 1]Nonconforming Board Approval: /Pending DReceived ODenied ON/A RAC Recommendation: ElProceed with Transaction OReturns below Capital Price ODo not Proceed APPROVAL AMOUNT REQUESTED Enron Engineering and Construction Company, Inc. ("EECC") requests approval to purchase three (3) Power Island Turbine Packages ("PI"), two (2) 7FA turbines and one (1) Steam turbine from General Electric Company, Inc. ("GE"). Turbine Purchase $338.5 *EECC will have the option to cancel the turbine contracts with GE according to the cancellation schedule set out in Exhibit A. EXPOSURE SUMMARY Power Island 9FATurbines $248.5 7FA's & Steam Turbine** $ 90.0 Total Turbine Exposure $338.5 E0004388481 ** EECC received prior approval to make payments to GE through December 1999 totaling $7.7 million DEAL DESCRIPTION EECC proposes to purchase three Power Island 9FA Turbine Packages ("PI"), two 7FA and one Steam turbines to fulfill its expected demand for turbines to be utilized in EECC or EECC affiliated projects in Europe and North America between 2001 and 2002. If approved, Enron will begin making installment payments in February 2000 on the PI and continue making payments on the steam + 7FA turbines. Delivery for all turbines is scheduled for fourth quarter 2001. Please refer to Exhibit B for detailed payment schedules. The strategic benefit of this transaction is to position EECC to have the necessary turbine availability for projects that EECC is in the process of negotiating. EECC believes that failure to commit to the purchase until 2000 will jeopardize meeting the schedule requirements of the Arcos project, a Spanish power project, and the Oxy Chemical Project in Taft, Louisiana. Additionally, acquiring these turbines will provide other high probability opportunities to win future projects in the European, Indian or Middle Eastern markets. Currently, Enron is in the initial stage of bidding on the Shuweihat #1 Power and DeSalination in Abu Dhabi. This is a proposed 1500MW plant requiring six 9F turbines in June 2002. Another bid project which may use two 9F turbines in June 2002 is the proposed Cairo North plant in Egypt. Limited turbine availability during 2000 and 2001 in the global turbine market is restricting access to near term turbine delivery dates. Other parties approaching GE today, in particular, for "9F" class and "7F" turbines can expect to wait until the second and fourth quarter of 2002, respectively, for delivery of equipment. EECC is pursuing the alternatives of funding through the balance sheet or via an off-balance sheet funding vehicle, consistent with North America's approach to its proposed turbine acquisition through an arrangement with Westdeutsche Landesbank ("West LB"), to maximize accounting flexibility and minimize the funding cost while keeping the turbines secured through a parent guarantee provided by Enron for the purchase price. The PI turbines are currently allocated for the Arcos project in Cadiz, Spain, in which EECC has been evaluated as the lowest life cycle cost vendor. To comply with accounting rules regarding gain recognition on the sale of its ownership interest, the EPC contract competition will remain open between EECC and at least one alternate bidder until EE has sold down its ownership interest. EE will likely sell down 50-100% its interest in the project in first quarter of 2000. The PI purchase price will include: three (3) packages consisting of one (1) 9F Single-shaft Gas Turbine, one (1) Steam Turbine, one (1) Hydrogen Cooled generator, and one (1) Heat Recovery Steam Generator. In addition, one Distribution Control System will be included. These turbines are rated for 50 HZ applications (Europe, India, Middle East) and are expected to be allocated to a project in Arcos De La Frontera, Cadiz, Spain, which Enron Europe ("EE") is developing for merchant sales. The 7FA and Steam turbine purchase price is currently allocated to Enron North America's ("ENA") 800MW Oxy Chem project in Taft, Louisiana. This particular "F" model is in high demand presently, due to its low Nitrogen Oxide ("NOx") EXH002-02127 ============= Page 119 of 398 ============= RAC Deal Approval Sheet Deal Name: EECC GE Turbines emission capabilities. It is a multi-use G/T that can be used in peaking or combined cycle mode and can be retrofitted for various special purpose applications and is comparable with various steam turbine sizes. Management for Enron North America's ("ENA") turbine inventory book agrees with EECC's view on the turbine market and agrees that these turbines would represent valuable assets for Enron. TRANSACTION SOURCES AND USES OF FUNDS Sources Uses Enron Equity $338.5 Capital Expenditure $338.5 Total $338.5 $338.5 RETURN SUMMARY - CASH FLOW SUMMARY - N/A TRANSACTION UPSIDES/OPTIONALITY - N/A EXIT STRATEGY (Merchant investments only) In the event the proposed projects do not transpire, EECC intends to use the turbines for other anticipated but presently unidentified projects in Europe, India or the Middle East. E0004388482 H:\Deals - Current\Turbines\DASH EECC 120399r.doc Page 2 EXH002-02128 ============= Page 120 of 398 ============= RAC Deal Approval Sheet Deal Name: EECC GE Turbines RISK MATRIX (Maximum 5) DESCRIPTION MITIGATION/COMMENTS Long position in 50 HZ Turbine Market EECC and EE believe procuring the right to the turbine would (Europe, India, Middle East) provide strategic trading and merchant opportunities. They are Risk that EE does not complete development of confident that the turbines could be used to win future projects in the Arcos project or choose EECC as the EPC the European, Indian or Middle Eastern markets. Currently, Enron contractor. is bidding on the Shuweihat #1 Power and DeSalination in Abu Dhabi. This is a proposed 1500MW plant requiring six 9F turbines in June 2002. Another bid project which may use two 9F turbines in June 2002 is the proposed Cairo North plant in Egypt. It is expected that the terms and conditions for these acquisitions of turbines will be consistent with other recent acquisitions from GE. EECC will have the right to cancel the turbine contract based on a cancellation cost payment schedule. Cancellation costs escalate monthly during the 27-month construction schedule. Termination charges payable to GE equal 10% ($24.8MM) of the total contract value after 3 months. Long position in 60 HZ Turbine Market Enron's construction businesses are confident that the turbine can (North/South America) be deployed on a future construction project as these turbines are a Risk that Enron does not finalize an agreement on common size used on many North American and South American the Oxy Chem project. power projects. These turbines could possibly be utilized by NEPCO, an affiliate of EECC. NEPCO has received a Letter of Intent ("LOI") to proceed with construction of a power project for National Energy Systems Company ("NESC") in Fredricksburg, Washington subject to NEPCO's substantiation of its capability to provide two "F" class turbines for this project. It is expected that the terms and conditions for these acquisitions of turbines will be consistent with other recent acquisitions from GE. EECC will have the right to cancel the turbine contract based on a cancellation cost payment schedule. Cancellation costs escalate monthly during the 25-month construction schedule. Termination charges payable to GE equal 4% ($3.6 mill.) of the total contract value after 3 months. Assignment It is expected that the terms and conditions for these acquisitions of Risk that EECC will not be able to use the turbines turbines, including transfer and assignment rights, will be if the current projects do not close, or to assign the consistent with other recent acquisitions from GE. EECC will warranty on the GE turbines negotiate with GE to use the turbines on other Enron projects and to resell the turbines to another user in the event that Enron is unable to utilize the turbines in a project. EECC expects to have the right to assign the warranties to any projects that Enron owns or builds. KEY SUCCESS FACTORS NA Poor Excellent Core Business X Strategic Fit X Upside Potential X Management N/A Risk Mitigation X C:\WINDOWS\TEMP\DASH EECC I20399.doc E0004388483 Page 3 EXH002-02129 ============= Page 121 of 398 ============= RAC Deal Approval Sheet OTHER RAC COMMENTS: Deal Name: EECC GE Turbines E0004388484 C:\WINDOWS\TEMP\DASH EECC 120399.doc EXH002-02130 Page 4 ============= Page 122 of 398 ============= RAC Deal Approval Sheet Deal Name: EECC GE Turbines APPROVALS Regional Mgmt. Legal RAC Management Enron Capital Management ENE Management ENE Management Name Larry Izzo John Schwartzenburg Date op C- .e qq Z J Rick Buy / David Gorte 4~yc- /S-75 Andy Fastow / Jeff McMahon ~ U Jeffrey Skilling Joe Sutton ILI E0004388485 C:\WINDOWS\TEMP\DASH EECC 120399.doc Page 5 EXH002-02131 ============= Page 123 of 398 ============= RAC Deal Approval Sheet Deal Name: EECC GE Turbines Global Finance Summary (addendum to DASH) 1. Transaction Summary Amount ($000) Total Deal/Project Capital Conunitment $338.,500 Less: Financings -0- Less: Syndications -0- Net Enron Investment $338,500 2. Investment terms and pricing: W'Market 0 Above Market 0 Below Market Describe (if necessary): 3. Financing terms and pricing: 0 Market 0 Above Market 0 Below Market Describe (if necessary): _ ~~ tj~ ~7/4Qtice c/ 7V AA t~' ~T2~ t 5i1.` 4. Legal or practical liquidity restrictions: 0 Unrestricted ally Restricted 0 Practically Restricted Describe (if necessary): c L C~ hn o-~ ~~,i 1~ ",51. j 7 7 tr > v~L> ~~ ~~ s, 6r-L W 44W V4.,4 4 i I4ft,VL7jY 1 i'1SWCJc% , ~ cJ~ 1=f Market Amount ($000) /20 000 L / Z O, o oo) 0 Above Market 0 Below Market 0 Above Market 0 Below Market Unrestricted O Legally Restricted 0 Practically Restricted 0 Recourse ONone OPartial bAll C1 No Recourse 0 Industry/Strategic Partner 0 Direct Private Equity l' apital Markets 0 JEDI 1 0 JEDI 2 0 Enserco 0 UM 1 or 2 0 Condor OOther: 0 Margaux 0 Yes 8No JosE(k J2 FF//e e lZ- -9 Name (Printed) Date E0004388501 EXH002-02147 ============= Page 139 of 398 ============= N 0 V) co O c+7 O O U W EXH002-02148 ============= Page 140 of 398 ============= interottice Memorandum I To: The Finance Committee of the Board of Directors From: Jeff Skilling and Rick Buy Subject: Changes to the Risk Management Policy Department: Risk Assessment and Controls Date: December 13, 1999 The following changes to the permanent limits in the Risk Management Policy have been requested: separate European Electricit Commodity Group into three individual Commodity Groups and allocate permanent limits to those commodity groups, as follows: Current Temporary Proposed II. European Electricity Net Open Position Limit 15 MM Mwh 42 MM Mwh N/A Rolling 12-Month Open Position Limit 15 MM Mwh 15 MM Mwh N/A VAR Limit $9 MM $12 MM N/A UK Electricity Net Open Position Limit None None 35 MM Mwh Rolling 12-Month Open Position Limit None None 15 MM Mwh VAR Limit None None $10 MM Nordic Electricity Net Open Position Limit None None 10 MM Mwh Rolling 12-Month Open Position Limit None None 10 MM Mwh VAR Limit None None $3 MM Continental Electricity Net Open Position Limit None None 10 MM Mwh Rolling 12-Month Open Position Limit None None 10 MM Mwh VAR Limit None None $3 MM The following changes to the temporary limits have been requested: European Natural Gas Net Open Position Limit 60 Bcf Rolling 12-Month Open Position Limit 90 Bcf VAR Limit $7.5 MM Ill. Proposed Eastern Transaction 260 Bcf -until 12/31/99 260 Bcf -until 12/31/00 90 Bcf 120 Bcf - until 12/31/00 $7.5 MM No change In addition to the above trading limit requests to accommodate our normal activity, we are requesting that the Board delegate the authority to the COO and CRO to authorize a temporary (12 month) increase to the UK Electricity limits of an additional 101 to accommodate a potential deal with Eastern expected by year end. E0004388503 Respect Form 000-469.1 (7/92) Integrity Communication Excellence EXH002-02149 ============= Page 141 of 398 ============= The Finance Committee of the Board of Directors December 13, 1999 Page 2 IV. The following new product has been approved under the Interim Policy provisions within the Risk Management Policy (Appendix Lumber Net Open Position Limit 22 MM Board Feet Rolling 12-Month Open Position Limit 22 MM Board Feet VAR Limit $0.25 MM E0004388504 Your Personal Best Makes Enron Best Communicate- Facts Are Friendly Form 000.469-1 (5/92) Better, Faster, Simpler EXH002-02150 ============= Page 142 of 398 ============= O 00 aD M O O U 6 (S) w EXH002-02151 ============= Page 143 of 398 ============= AGENDA ITEM 6(g) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, it is in the Company's best interest to provide financing and liquidity for affiliates of the Company; and WHEREAS, it is anticipated that the Company and/or its affiliates, may engage in a financing transaction through the sale of up to $2,200,000,000 of securities to an investor or investor group not affiliated with the Company (the "Investor") and (such action, together with all other actions to be taken in connection therewith, the "Transaction"); and NOW THEREFORE, IT IS RESOLVED, that the Company hereby authorizes the implementation of all actions appropriate to accomplish the purpose of the Transaction, as deemed necessary and appropriate to the Transaction and approved and executed by officers or representatives of the Company acting on the advice of counsel, which is hereby authorized and which shall be conclusively evidenced by their. signatures on such contracts and agreements; RESOLVED FURTHER, that the Transaction and all arrangements relating to them in a form acceptable to the officers and representatives of the Company acting on the advice of counsel, be, and hereby are, approved; RESOLVED FURTHER, that the Chairman of the Board, the President, any Senior Vice President, any Vice President, the Treasurer and any Deputy Treasurer of the Company be, and each of them hereby is, authorized and empowered on behalf of the Company to take such actions necessary or appropriate to effectuate the intent of these resolutions; RESOLVED FURTHER, that all actions heretofore taken by any officer or representative of the Company related to or in connection with the E0004388506 EXH002-02152 ============= Page 144 of 398 ============= Transactions and the matters described in these resolutions, including without limitation the execution and delivery of any related documents or instruments, are hereby adopted, ratified, confirmed, and approved in all respects; and RESOLVED FURTHER, that the officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action to amend, execute, and deliver all such further instruments and documents for and in the name and on behalf of the Company, and to cause the Company to pay all such costs and expenses as are in the judgment of such officer or counsel necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. J:\User\rcarter\a Minutes\121499\revres.doc J:\User\rcarter\a Minutes\121499\revres.doc 2 EC 004388507 Page :XH002-02153 ============= Page 145 of 398 ============= co 0 U) 00 00 M d' O O U W EXH002-02154 ============= Page 146 of 398 ============= AGENDA ITEM 6(h) (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, on November 17, 1998, the Board of Directors of the Company approved the acquisition by Enron Internacional Panama S.A. ("EIPSA") of a 51% equity interest in Empresa de Generacion Electrica Bahia Las Minas, S.A. ("Bahia Las Minas") and such acquisition has occurred; and WHEREAS, as a central element of making this acquisition, the Company planned to sell a portion of its interest in Bahia Las Minas; and NOW, THEREFORE, IT IS RESOLVED, that the Board of Directors of the Company hereby confirms that the delegations of authority to the Office of the Chairman stated in the resolutions of the Board of Directors of the Company dated November 17, 1998, include the authority to authorize and approve the sale of a portion of the Company's ownership interest in Bahia Las Minas. RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. J:\User\rcarter\a Minutes\121499\BLM.doc E0004388509 EXH002-02155 ============= Page 147 of 398 ============= O 00 00 M O O U w EXH002-02156 ============= Page 148 of 398 ============= Enron Transaction Approval Summary Merchant Transactions Board of Directors Meeting: TODAY'S DATE: December 14, 1999 December 1, 1999 Tab No. Region/ Business Investment Class Date Approved Transaction Name Transaction Size Approval Authority* Net Amount M-1 EE&CC Conforming 02-Nov-99 Accro Line of Credit $ 10,000,000 ENE-OOC $ 10,000,000 M-2 EE&CC Conforming 17-Nov-99 CA-AC-4 Offshore Hookup** $ 4,600,000 ENE-OOC $ 4,600,000 M-3 EE&CC Conforming 03-Nov-99 GE 7FA Turbines (2) $ 17,704,000 ENE-OOC $ 17,704,000 M-4 Europe Conforming 08-Nov-99 Octagon $ 16,200,000 ENE-OOC $ 12,150,000 M-5 Europe Conforming 19-Nov-99 OPET $ 17,050,000 ENE-OOC $ 17,050,000 M-6 EE&CC Conforming 17-Nov-99 Pemex EPC 4, Atasta, Cuidad** $ 18,500,000 ENE-OOC $ 18,500,000 M-7 North America Conforming 15-Oct-99 Project FM $ 46,170,000 ENE-CEO/COO $ 46,170,000 M-8 North America Conforming 29-Sep-99 Quanta, Investment II*** $ 5,000,000 ENE-OOC $ 5,000,000 Total Funded Capital Approved: $ 135,224,000 $ 131,174,000 Divestitures Tab No. Region/ Business Investment Class Date Approved Transaction Name Transaction Size Approval Authority Net Amount M-9 North America Divestiture 18-Nov-99 Hubble Disposition $ 7,000,000 ENE-OOC $ 3,500,000 Guarantees Tab No. Region/ Business Investment Class Date Approved Transaction Name Transaction Size Approval Authority Net Amount M-10 EGF Guarantee 27-Sep-99 ETOL Equity Placement $ 5,100,000 ENE-OOC $ 5,100,000 * Approved under authority granted at the August 1999 Board meeting. Included for information purposes only ** Deals related to Demar Investment Total Exposure $23.10MM *** Total Exposure $35.84MM E0004388511 Hnm-0217 ============= Page 149 of 398 ============= Board of Directors Meeting: TODAY'S DATE: ron Transaction Approval Sun Strategic Transactions December 14,1999 December 1, 1999 Tab No. Region/ Business Investment Class Date Approved Transaction Name Transaction Size Approval Authority* Net Amount S-1 North America Conforming 08-Nov-99 Columbia Energy Services $ 35,500,000 ENE-CEOICOO $ 35,500,000 S-2 Europe Conforming 29-Sep-99 Estonia Storage $ 9,320,000 ENE-OOC $ 9,320,000 S-3 India Conforming 02-Nov-99 Gas Authority of India Limited ("GAIL") GDRs $ 75,000,000 ENE-CEOICOO $ 75,000,000 S-4 EES Conforming 05-Oct-99 General Cable II $ 9,928,000 ENE-OOC $ 9,928,000 S-5 India Conforming 29-Nov-99 ICO Acquisition Loan $ 75,000,000 ENE-CEO/COO $ 75,000,000 S-6 North America Conforming 24-Nov-99 Maple Leaf $ 55,000,000 ENE-CEO/COO $ 55,000,000 S-7 Enron Wind Corp. Nonconforming 14-Oct-99 Owenreagh Wind $ 2,116,000 ENE-OOC $ 2,116,000 S-8 EES Conforming 12-Nov-99 Polaroid $ 16,408,000 ENE-OOC $ 16,408,000 S-9 AP/A/CHI Conforming 18-Oct-99 Project Eclipse $ 56,000,000 ENE-CEO/COO $ 56,000,000 S-10 EE&CC Conforming 11-Nov-99 Siemens/Westinghouse 501 DA Turbine $ 24,087,000 ENE-OOC $ 24,087,000 S-11 EES Conforming 12-Oct-99 SIMON $ 72,847,000 ENE-CEO/COO $ 72,847,000 S-12 EES Conforming 11-Oct-99 TORPY $ 5,200,000 ENE-OOC $ 5,200,000 Total Funded Capital Approved: $ 436,406,000 $ 436,406,000 * Approved under authority granted at the August 1999 Board meeting. Included for information purposes only. EC004388512 ~r~r~~ nn4 GO ============= Page 150 of 398 ============= M T- 00 00 M NT O O U W EXH002-02159 ============= Page 151 of 398 ============= Dr. Robert K. Jaedicke, Chairman Mr. Richard A. Causey Mr. James V. Derrick, Jr. Agenda Year 2000 Oversight Committee Meeting December 13, 1999 10:00 a.m. (C.S.T.) 50M Dining 1. Approve minutes 2. Progress update a. Project status b. Business unit statistics c. Contingency planning update d. Remaining concerns 3. Business unit representative comments 4. Legal update 5. Questions and answers Oversight Committee Richard Causey All Clark Martin Dr. Jaedicke E0004388514 EXH002-02160 ============= Page 152 of 398 ============= L 9 U GUUHXd m 0 0 CA) 00 0 /!. VI ============= Page 153 of 398 ============= ENRON CORP. OFFICE OF THE CHAIRMAN BUSINESS UNITS December 6, 1999 CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER Ken Lay PRESIDENT & CHIEF OPERATING OFFICER Jeff Skilling VICE CHAIRMAN Joe Sutton OFFICE OF THE CHAIRMAN AZURIX Rebecca Mark-Jusbasche' Colin Skellett OFFICE OF THE CHAIRMAN ENRON EUROPE LTD Mark Frevert John Sherriff Dan McCarty OFFICE OF THE CHAIRMAN ENRON ENERGY SERVICES Lou Pal Tom White OFFICE OF THE CHAIRMAN ENRON COMMUNICATIONS INC. Joe Hirko Ken Rice CHAIRMAN & CEO ENRON GAS PIPELINE GROUP Stanley C. Horton CHIEF EXEC OFFICER INDIA BANGLADESH SRI LANKA Sanjay Bhatnager CHIEF EXEC OFFICER OFFICE OF THE CHAIRMAN OFFICE OF THE CHAIRMAN CARIBBEAN ASIA PACIFIC SOUTH AMERICA MIDDLE EAST AFRICA, CHINA LNG Rebecca McDonald Jim Bannantine David Haug Jim Hughes Diomedes Christodoulou E0004388516 OFFICE OF THE CHAIRMAN NORTH AMERICA Cliff Baxter Kevin Hannon CHAIRMAN & CEO PORTLAND GENERAL ELECTRIC & CHAIRMAN/NON-EXECUTIVE OF ENRON COMMUNICATIONS, INC. Ken Harrison PRESIDENT PORTLAND GENERAL ELECTRIC Peggy Fowler ============= Page 154 of 398 ============= ENRON CORP. CORPORATE STAFF & GLOBAL FUNCTIONS December 6, 1999 CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER Ken Lay PRESIDENT & OPERATING OFFICER Jeff Skilling VICE CHAIRMAN Joe Sutton CORPORATE STAFF EXEC VICE PRESIDENT & GENERAL COUNSEL LEGAL Jim Derrick EXEC VICE PRESIDENT HR & COMMUNITY RELATIONS Cindy Olson EXEC VICE PRESIDENT RISK ASSESSMENT & CONTROL Rick Buy EXEC VICE PRESIDENT CORPORATE DEVELOPMENT Mark Metts EXEC VICE PRESIDENT CHIEF ACCTG OFFICER ACCOUNTING Rick Causey EXEC VICE PRESIDENT & CHIEF OF STAFF Steve Kean EXEC VICE PRESIDENT INVESTOR RELATIONS Mark Koenig I GLOBAL FUNCTIONS CHIEF EXEC OFFICER TECHNOLOGY Mike McConnell CHIEF EXEC OFFICER RISK MANAGEMENT Greg Whalley PRESIDENT & CEO ENRON EXPLORATION & PRODUCTION Jeff Sherrick CHIEF EXEC OFFICER EE&CC Larry Izzo CHIEF EXEC OFFICER ASSET OPERATIONS Kurt Huneke EVP & CFO FINANCE Andy Fastow -FINANCE & TREASU Jeff McMahon E0004388517 r vlJ nr)') n')1 C4 ============= Page 155 of 398 ============= ENRON CORP. CORPORATE STAFF December 6, 1999 VICE PRESIDENT & CONTROLLER ACCOUNTING & REPORTING Bob Butts VICE PRESIDENT Y2K INITIATIVE Alberto Gude EXEC VICE PRESIDENT CHIEF ACCTG OFFICER ACCOUNTING Rick Causey VICE PRESIDENT TAX Bob Hermann EXECUTIVE ASSISTANT Sharron Westbrook SECRETARY Amv Flores VICE PRESIDENT FINANCIAL INITIATIVES Melissa Becker E0004388518 CURRENT POSITION Executive Vice President Chief Accounting Officer Accounting Rick Causey PRIOR ENRON EXPERIENCE 1997 SVP Chief Acctg. & Info Officer 1996 Managing Dir ECT Retail Risk Mgmt 1996 VP Comm ECT Retail Risk Mgmt PRIOR NON-ENRON EXPERIENCE 1982 Audit Mgr Arthur Andersen EDUCATIONAL BACKGROUND 1982 BBA Accounting -University of Texas CERTIFICATES 1983 Certified Public Accountant - Texas MANAGING DIRECTOR ACCOUNTING TRANSACTION Wes Colwell ============= Page 156 of 398 ============= ENRON CORP CORPORATE STAFF December 6, 1999 Mark Koenig EXEC VICE PRESIDENT INVESTOR RELATIONS Mark Koenig VICE PRESIDENT VICE PRESIDENT DIRECTOR INVESTOR RELATIONS INVESTOR RELATIONS INVESTOR RELATIONS AZURIX NORTHERN BORDER Paula Rieker Liz Ivers Ellen Konsdorf CURRENT POSITION Executive Vice President Investor Relations PRIOR ENRON EXPERIENCE 1998 SVP Investor Relations 1992 VP Investor Relations 1991 Assistant Treasurer PRIOR NON-ENRON EXPERIENCE 1978 Assistant Treasurer Peter Kiewit Sons, Inc. EDUCATIONAL BACKGROUND 1980 MBA Finance - Univ of Nebraska 1977 Accounting - Univ of Nebraska CERTIFICATES 1989 CFA E0004388519 ============= Page 157 of 398 ============= ENRON CORP. ENRON ENERGY SERVICES December 6, 1999 CURRENT POSITION Chairman & Chief Executive Officer Enron Energy Services PRIOR ENRON EXPERIENCE 1999 CEO EES 1998 Chairman & CEO EES 1995 President & COO EES PRIOR NON-ENRON EXPERIENCE Economist Corp Planning - Conoco EDUCATIONAL BACKGROUND 1973 MA Economics - Univ of Maryland Lou Pai ENRON ENERGY SERVICES CHAIRMAN & CHIEF EXECUTIVE OFFICER Lou Pal VICE CHAIRMAN Tom White Tom White i MANAGING DIRECTOR MANAGING DIRECTOR MANAGING DIRECTOR CONSUMER SVCS GROUP ACCOUNT DELIVERABILITY SALES MANAGEMENT Jim Badum Dan Leff Marty Sunde MANAGING DIRECTOR MANAGING DIRECTOR & PRESIDENT & MERGERS & GENERAL COUNSEL CHIEF EXECUTIVE OFFICER ACQUISITIONS LEGAL ENRON FACILITY SERVICES Mark Muller Vicki Sharp Joe Earle VICE PRESIDENT EUROPE CURRENT POSITION Vice Chairman Enron Energy Services PRIOR ENRON EXPERIENCE 1997 Chairman & CEO EVC 1994 Co-Chairman EOC 1993 President & CEO EPC PRIOR NON-ENRON EXPERIENCE 1989 Exec Asst to Chrmn, Joint Chiefs of Staff US Army 1989 Deputy Dir of Oper, Joint Chiefs of Staff US Army 1988 Dir Armor/Anti Armo, Office Chief of Staff US Army EDUCATIONAL BACKGROUND 1974 MS Oper Res/Sys Anal - US Naval Post Grad . School 1967 BS - US Military Academy MANAGING DIRECTOR & CHIEF FINANCIAL OFFICER MANAGEMENT SUPPORT John Echols MANAGING DIRECTOR MARKETING, COMMUNICATIONS & EMPLOYEE RELATIONS Beth Tilney Ron Bertasi ' E0004388520 ============= Page 158 of 398 ============= ENRON CORP. ENRON GAS PIPELINE GROUP December 6, 1999 CURRENT POSITION Chairman & Chief Executive Officer Enron Gas Pipeline Group PRIOR ENRON EXPERIENCE 1996 Chairman & CEO GPG/Enron Operations 1996 Pres & COO Enron Operations -DP PRIOR NON-ENRON EXPERIENCE N/A EDUCATIONAL BACKGROUND 1977 MS Mgmt - Rollins College 1973 BS Fin & Accting - Univ of Central Florida E0004388521 CURRENT POSITION President Citrus/Florida Gas PRIOR ENRON EXPERIENCE 1996 Pres. - Citrus Corp/Florida Gas 1994 VP Regulatory Affairs & Gen. Council - Transwestem Pipeline 1984 Corp. Legal-NNG PRIOR NON-ENRON EXPERIENCE 1976 Deputy County Atty. EDUCATIONAL BACKGROUND 1976 J. D. -Creighton Univ. 1973 BA Political Science - Univ Nebraska Stan Horton Rock Meyer ============= Page 159 of 398 ============= ENRON CORP. CORPORATE STAFF December 6, 1999 EXECUTIVE VICE PRESIDENT HUMAN RESOURCES & COMMUNITY RELATIONS Cindy Olson EXECUTIVE ASSISTANT Bobbie Power rr..r_. VICE PRESIDENT HUMAN RESOURCES Drew Lynch MANAGING DIRECTOR INTELLECTUAL CAPITAL Charlene Jackson VICE PRESIDENT EXEC COMPENSATION & MERGERS/ACQUISITIONS Mary Joyce GAS PIPELINE GROUP Mary Ann Long EOTT Mary Ellen Coombe ENRON COMMUNICATIONS Rocky Jones PORTLAND GENERAL ELECTRIC Arleen Barnett ASSET MANAGEMENT TECHNOLOGY, FINANCE EE&CC Robert Jones CARIBBEAN/MIDDLE EAST INDIA Ranen Sengupta EGEP ENRON ENERGY SERVICES Ray Bennett NORTH AMERICA, EUROPE, GLOBAL TRADING David Oxley SOUTH AMERICA Miguel Padron ....................... Portland General Electric CURRENT POSITION Executive Vice President Human Cindy Olson Resources & Community Relations PRIOR ENRON EXPERIENCE 1999 SVP Corp Affairs 1997 VP Corp Affairs 1996 VP Corp Affairs Energy Ops PRIOR NON-ENRON EXPERIENCE n/a EDUCATIONAL BACKGROUND 1975 BS Bus Admin - Wichita State University DIRECTOR VICE PRESIDENT COMM RELATIONS GLOBALIZATION & EMPLOYEE SERVICES Terrie James Jeff Bucher AZURIX Phil Bazelides CORPORATE Gwen Petteway AFRICA/ASIA Scott Gilchrist E0004388522 Janie Bonnard I I Gerry Chatham I I Arleen Barnett ============= Page 160 of 398 ============= ENRON CORP. TECHNOLOGY December 6, 1999 E0004388523 CURRENT POSITION Chief Executive Officer Technology Mike McConnell PRIOR ENRON EXPERIENCE 1998 Managing Dir Domestic Gas ============= Page 161 of 398 ============= ENRON CORP. GLOBAL FUNCTIONS December 6, 1999 CURRENT POSITION Chief Executive Officer Risk Greg Whalley Management PRIOR ENRON EXPERIENCE 1998 Managing Dir Executive Trading 1998 Managing Dir IES Crude Trading CHIEF EXEC OFFICER RISK MANAGEMENT Greg Whalley ADMINISTRATIVE COORDINATOR Liz Taylor MANAGING DIRECTOR FINANCIAL & PHYSICAL GAS TRADING Jeff Shankman VICE PRESIDENT RESEARCH Vince Kaminski VICE PRESIDENT WEATHER - SO2 TRADING Lynda Clemmons VICE PRESIDENT EAST/WEST POWER/ EMISSIONS TRADING/GENCO Jim Fallon VICE PRESIDENT GLOBAL TRADING & TRANSPORTATION Wade Doshier VICE PRESIDENT GLOBAL BANDWIDTH TRADING Tom Gros PRESIDENT CANADIAN RISK MANAGEMENT & TRADING John Lavaroto VICE PRESIDENT ALTERNATIVE RISK PRODUCT Jerry Overdyke PRIOR NON-ENRON EXPERIENCE 1984 Armor Officer US Army EDUCATIONAL BACKGROUND 1992 MBA - Stanford University 1984 BS - US Military Academy VICE PRESIDENT INTEREST RATE AND CURRENCY TRADING Gary Hickerson VICE PRESIDENT COAL George McClellan E0004388524 ============= Page 162 of 398 ============= ENRON CORP. GLOBAL FUNCTIONS December 6, 1999 CURRENT POSITION Chief Executive Officer Risk Management PRIOR ENRON EXPERIENCE 1998 Managing Dir Executive Trading 1998 Managing Dir IES Crude Trading PRIOR NON-ENRON EXPERIENCE 1984 Armor Officer US Army EDUCATIONAL BACKGRC 1992 MBA - Stanford University 1984 BS - US Military Academy Greg Whalley E000433t35Z Louise Kitchen CURRENT POSITION Vice President European Gas PRIOR ENRON EXPERIENCE 1998 VP London Gas Trading UK 1997 VP London Gas Trading Director London Gas & Power East Europe NON-ENRON ENCE s Trader Powergen Pic. ergy Analyst Powergen Pic. TIONAL BACKGROUND Languages, Economics & litics - Kingston Polytechnic onomics - Univ. de Rennes ============= Page 163 of 398 ============= ENRON CORP. CORPORATE STAFF December 6, 1999 Rick Buy EXECUTIVE VICE PRESIDEN RISK ASSESSMENT & CONTROL Rick Buy SR ADMINISTRATIVE COORDINATOR Karen Heathman VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DIRECTOR RISK MANAGEMENT RISK ANALYTICS RESOURCE EVALUATION GLOBAL CREDIT Ted Murphy Mark Ruane Monte Gleason Bill Bradford SR DIRECTOR VICE PRESIDENT DUE DILIGENCE UNDERWRITING Rick Carson David Gorte CURRENT POSITION Executive Vice President Risk Assessment & Control PRIOR ENRON EXPERIENCE 1999 SVP Risk Assessment & Control 1998 Managing Dir Risk Assessment & Control 1997 VP ECT Risk Control PRIOR NON-ENRON EXPERIENCE 1992 VP Banker Trust 1991 VP Chase Manhattan 1985 VP Banker Trust EDUCATIONAL BACKGROUND 1983 MS Petroleum Engineer - University of Houston 1976 MS Industrial Admin - Rensselaer Polytechnic Inst. 1974 BS Mechanical Engineer - Rensselaer Polytechnic Inst. CERTIFICATES NASD Series Professional Engineer E0004388526 ============= Page 164 of 398 ============= ENRON CORP GLOBAL FUNCTIONS December 6, 1999 CURRENT POSITION Executive Vice President & Chief Financial Officer Finance PRIOR ENRON EXPERIENCE 1997 SVP Enron Capital Mgmt - Treasury 1996 Managing Dir ECT Treasury 1995 VP Enron Energy Services PRIOR NON-ENRON EXPERIENCE Sr Director Asset Securitization Continental Bank EDUCATIONAL BACKGROUND MBA Finance - Kellogg Graduate School of Mgmt - Northwestern Univ. BA Economics and Chinese - Tufts University Andy Fastow MANAGING DIRECTOR PORTFOLIO MANAGEMENT Michael Kopper Jeff McMahon EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER FINANCE Andy Fastow EXECUTIVE ASSISTANT Bridget Maronge GENERAL COUNSEL GLOBAL FINANCE EXEC VICE PRESIDENT- FINANCE & TREASURER Scott Sefton Jeff McMahon E0004388527 CURRENT POSITION Executive Vice President-Finance & Treasurer PRIOR ENRON EXPERIENCE 1999 SVP Finance & Treasurer Treasury 1998 Managing Dir Corporate Finance 1998 Managing Dir London Treasury PRIOR NON-ENRON EXPERIENCE 1989 VP and CFO MG Natural Gas Corp 1982 Audit Manager Arthur Andersen EDUCATIONAL BACKGROUND 1982 BS Accounting - University of Richmond CERTIFICATES 1984 Certified Public Accountant ============= Page 165 of 398 ============= ENRON CORP. GLOBAL FUNCTIONS December 6, 1999 Jeff McMahon CURRENT POSITION Executive Vice President-Finance & Treasurer PRIOR ENRON EXPERIENCE 1999 SVP Finance & Treasurer Treasury 1998 Managing Dir Corporate Finance 1998 Managing Dir London Treasury PRIOR NON-ENRON EXPERIENCE 1989 VP and CFO MG Natural Gas Corp 1982 Audit Manager Arthur Andersen EDUCATIONAL BACKGROUND 1982 BS Accounting - University of Richmond CERTIFICATES 1984 Certified Public Accountant E0004388528 ============= Page 166 of 398 ============= rn N U) 00 00 M ~t O O EXH002-02175 12 U W ============= Page 167 of 398 ============= AGENDA ITEM 12 (SUGGESTED FORM OF RESOLUTIONS) WHEREAS, in conjunction with the presentation of the Enron Corp. 2000-2002 Operating and Strategic Plan to the Board of Directors of the Company (the "Plan"), the Company will need to implement various financings with respect to certain aspects of the Plan; WHEREAS, the Company contemplates that financings under the Plan will be implemented through the issuance from time to time of, incremental, unsecured senior debt in an aggregate principal amount not to exceed $588,000,000 (at exchange rates current at the date of issuance, if and to the extent all or any portion of such senior debt is denominated in a currency other than United States Dollars), at interest rates, durations, and such other terms (including whether the debt will be publicly offered in the United States, in Europe or elsewhere or will be placed privately) as are approved by the Chairman of the Board, the Vice Chairman of the Board, the President, the Chief Financial Officer or the Treasurer (collectively, the "Debt Instruments") NOW, THEREFORE, IT IS RESOLVED that in order to implement financings in accordance with the Plan, that the Company be, and it hereby is, authorized to issue, from time to time, incremental, unsecured senior debt in an aggregate principal amount not to exceed $588,000,000 (at exchange rates current at the date of issuance, if and to the extent all or any portion of such senior debt is denominated in a currency other than United States Dollars), at interest rates, durations, and such other terms (including whether the debt will be publicly offered in the United States, in Europe or elsewhere or will be placed privately) as are approved by the Chairman of the Board, the Vice Chairman of the Board, the President, the Chief Financial Officer or the Treasurer of the Company (collectively, the "Debt Instruments"); RESOLVED FURTHER, that the issuance of such Debt Instruments whether issued domestically or abroad or privately placed shall be exclusive of amounts previously approved by the Board of Directors of the Company at a meeting held on June 22, 1999; RESOLVED FURTHER, that the Company is authorized and directed to execute and deliver any agreements evidencing such Debt Instruments and to observe and perform in full all of the obligations, conditions, covenants, and other terms set forth in or contemplated by any E0004388530 cvunn')_n717C, ============= Page 168 of 398 ============= agreements evidencing the Debt Instruments as the same may be amended from time to time; RESOLVED FURTHER, that each such officer be, and each such officer hereby is, authorized in the name and on behalf of the Company to take or cause to be taken such action as such officer may deem necessary or desirable in connection with the performance by the Company of its obligations under any agreement, document, or instrument contemplated by these resolutions to which the Company is or will become a party; RESOLVED FURTHER, that the Chairman of the Board, the Vice Chairman of the Board, the President of the Company, the Chief Financial Officer or the Treasurer of the Company be, and each of them hereby is, authorized in the name and on behalf of the Company, under its corporate seal or otherwise, to negotiate, execute, deliver, amend, perform, and consummate such other agreements, instruments, or documents as such officer may deem necessary or desirable to carry out the purpose and intent of the resolutions herein, in such forms as shall be approved by the officer executing the same, such approval to be conclusively evidenced by the execution thereof by such officer; RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company, in the name and on behalf of the Company, related to or in connection with the transactions contemplated by these resolutions, including without limitation the execution and delivery of any instruments or other documents as any officer shall have deemed necessary, proper, or advisable, are hereby adopted, ratified, confirmed, and approved in all respects; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. J: \User\rcarter\a Minutes\ 121499\r 141 coa. doc E0004388531 2 EXH002-02177 ============= Page 169 of 398 ============= 13 (a) EXH002-02178 U W ============= Page 170 of 398 ============= AGENDA ITEM 13 (a) (SUGGESTED FORM OF RESOLULTIONS) RESOLVED, that the proposed formation, capitalization and offering of securities of EMW Energy Services Corp. ("ResCo") by Enron Energy Services, LLC ("EES"), an indirect majority-owned subsidiary of Enron Corp. (the "Company"), for the purpose of engaging in, among other things, the retail marketing and retail sale of natural gas and electricity to small commercial and residential customers in the United States (the "Proposed Transaction") be, and hereby is, authorized, approved, ratified and confirmed; RESOLVED FURTHER, that the Company, EES and their respective affiliates are authorized and empowered to negotiate, execute and deliver such agreements with and to ResCo and with and to DLJ Merchant Banking II, Inc. and/or its affiliated investment funds, GE Capital Equity Investments, Inc. and/or its affiliates, the California Public Employees' Retirement System, the Ontario Teachers' Pension Plan Board ("OTP"), and any other proposed investors in ResCo, as may be necessary or appropriate to consummate the Proposed Transaction; RESOLVED FURTHER, that the Company, EES and their respective affiliates are, in furtherance of the Proposed Transaction, authorized and empowered to: (a) assist ResCo in any applications to the Federal Energy Regulatory Commission, state public utility commissions and to any other governmental or regulatory authorities necessary or appropriate in connection with the Proposed Transaction; (b) contribute to ResCo contracts of EES relating to the sale of natural gas and electricity to residential customers in the United States; (c) contribute to ResCo certain rights to EES proprietary risk management systems; E0004388533 EXH002-02179 ============= Page 171 of 398 ============= (d) contribute to ResCo and provide ResCo with certain risk management consulting services, governmental and regulatory support services, corporate support services and other services; (e) enter into agreements with ResCo relating to the purchase and sale of natural gas, electricity and other commodities and products; (f) execute and deliver to ResCo a non-competition agreement prohibiting the Company or any of its controlled affiliates from contracting with any natural person (or any other person or entity approved by one member of the Company's Office of the Chairman) for the retail sale of natural gas or electricity to such person for his or her personal consumption (i, e., not for resale or further distribution) in the United States for a period of up to five years, with such exceptions or other changes as may be approved by the officer or officers executing such agreement; (g) execute and deliver to ResCo a business opportunity agreement that would define the rights and obligations of the Company and ResCo with respect to business opportunities that may arise in areas of competing lines of business; and (h) enter into any agreements with respect to the amendment, modification, or restatement of the Amended and Restated Limited Liability Company Agreement of EES, dated December 31, 1997, as amended, among the Company, OTP and Joint Energy Development Investments II Limited Partnership, as a result of, or in furtherance of, the Proposed Transaction; RESOLVED FURTHER, that in connection with the Proposed Transaction, the Chairman of the Board, any Vice Chairman of the Board, the President or any Vice President (including any Executive Vice President or Senior Vice President), the Treasurer or any Deputy Treasurer of the Company (each an "Authorized Officer") be, and each of them hereby is, authorized to form and capitalize ResCo and any other entities which may be necessary or desired in connection with the Proposed Transaction; RESOLVED FURTHER, that the Authorized Officers be, and each hereby is, authorized, empowered and directed (and any one of them acting alone) to take such further actions as such officer deems 2 E0004388534 .XH002-02180 ============= Page 172 of 398 ============= necessary or desirable to carry into effect the Proposed Transaction, including, without limitation, the preparation and issuance of press releases; RESOLVED FURTHER, that a Committee of the Board consisting of Kenneth Lay and Jeffrey Skilling (with Kenneth Lay to serve as chairman) be, and hereby is, constituted under Article IV, Section 3 of the Company's Bylaws with full power and authority on behalf of the Board to: (a) settle and approve the final terms of the Proposed Transaction; (b) settle and approve the terms and authorize execution on behalf of the Company of such additional documents relating to the Proposed Transaction as may be required or necessary in order to enable the Company and its affiliates to fulfill their respective obligations in connection with the Proposed Transaction; (c) pay or authorize the payment of all fees, expenses or charges incurred by or on behalf of the Company or its affiliates in connection with the Proposed Transaction or the transactions contemplated thereby, including (but without limitation) the fees and expenses of the Company's and its affiliates' financial and professional advisers; and (d) take any and all such further action as they shall deem necessary or desirable in connection with the Proposed Transaction or the transactions contemplated thereby; RESOLVED FURTHER, that the Authorized Officers of the Company and its counsel be, and each of them hereby is, authorized, empowered and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary or desirable to carry into effect the purposes and intentions of this and each of the foregoing resolutions; and E0004388535 XH002-02181 ============= Page 173 of 398 ============= RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company related to or in connection with the transactions contemplated by these resolutions be, and hereby are, adopted, ratified, confirmed and approved in all respects. RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for and in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their discretion appear to be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. J:\User\rcarter\a Minutes\121499\enron-board-resols 1.doc 4 E0004388536 :XH002-02182 ============= Page 174 of 398 ============= TO: Ivy Bradberry - 853-7940 (fax); phone 646-4029 FROM: Kelly Johnson - 853-6485 (phone); 853-2534 (fax) Standard Style - Palatino Roman, 10-point Upper & Lower Case Tabs for December 14, 1999 Board of Directors Meeting Position Title 1 Agenda 2 Minutes 3 Executive Committee Minutes 4 Compensation Committee Agenda 5 3(b) 1 3(c) 2 Audit Committee Agenda 3 Joint Audit & Finance Committee Agenda 4 Finance Committee Agenda 5 6(a) 1 6(b) 2 6(c) 3 6(d) 4 6(e) 5 6(f) 1 6(g) 2 6(h) 3 6(i) 4 Year 2000 Oversight Agenda 5 Presenter Bios 1 General Corporate Matters 2 13(a) 3 15(a) 4 15(b) 5 15(c) 1 15(d) 2 15(e) Charge: Company #0011, RC 100140 We need 1 sets of tabs - RUSH E0004388537 Gnolan/BODTabs.doc =XH002-02183 ============= Page 175 of 398 ============= 3D c7 10 co 00 M O O U w EXH002-02184 ============= Page 176 of 398 ============= rn M LC) OD OD M d' O O U W EXH002-02185 ============= Page 177 of 398 ============= AGENDA ITEM 15(a) (SUGGESTED FORM OF RESOLUTIONS) RESOLVED, that the meeting date, location, and time of the 2000 Annual Meeting of Shareholders be, and it hereby is, set for May 2, 2000, at the Doubletree Hotel at Allen Center, 400 Dallas Street, Houston, Texas, at 10:00 a.m., C.D.T.; and RESOLVED FURTHER, that the close of business on March 3, 2000, be, and it hereby is, approved and fixed as the record date for determining shareholders entitled to vote at the 2000 Annual Meeting of Shareholders. J:\User\rcarter\a Minutes\121499\annmtgres.doc E0004388540 =XH002-02186 ============= Page 178 of 398 ============= EXH002-02187 m C) 0 0 w 00 0 ============= Page 179 of 398 ============= AGENDA ITEM 15(b) 2000 SCHEDULE BOARD OF DIRECTORS' MEETINGS Date February 7 - 8 May 1-2 (Annual Meeting on May 2) August 7 - 8 October 8 - 9 December 11 - 12 *Spouses included J:\User\rcarter\a Minutes\121499\bod2000.doc Location Houston Houston Houston South America* (with site visits in Brazil and Argentina October 6 - 12) Houston* E0004388542 XH002-02188 ============= Page 180 of 398 ============= M 194- LO 00 3 00 15 (c) o 0 U W EXH002-02189 ============= Page 181 of 398 ============= AGENDA ITEM 15(c) (SUGGESTED FORM OF RESOLUTION) RESOLVED, that a dividend of $71.50 per share on the Mandatorily Convertible Junior Preferred Stock Series B of the Company (for an aggregate dividend payment of $17,875,000), covering the dividend period from and including September 24, 1999 through the period ending December 31, 1999 be, and it hereby is, declared payable on January 9, 2000 to stockholders of record of said stock at the close of business on December 31, 1999. \\ENE1\DATA1\User\rcarter\a Minutes\121499\JrPrefDivRes.doc E0004388544 =XH 002-02190 ============= Page 182 of 398 ============= AGENDA ITEM 15(c) (SUGGESTED FORM OF RESOLUTION) RESOLVED, that a dividend of $66.444 per share on the Series A Junior Voting Convertible Preferred Stock of the Company (for an aggregate dividend payment of $16,611,111.11), covering the dividend period from and including October 1, 1999 through the quarter ending December 31, 1999 be, and it hereby is, declared payable on January 12, 2000 to stockholders of record of said stock at the close of business on December 31, 1999. \\ENEI\DATA1\User\rcarter\a Minutes\121499UrPrefDivRes.doc E0004388545 :XH002-02191 ============= Page 183 of 398 ============= c0 aD 00 () d 0 0 C) W EXH002-02192 ============= Page 184 of 398 ============= AGENDA ITEM 15(d) (SUGGESTED FORM OF RESOLUTION) RESOLVED, that the following person be, and hereby is, elected to the position set forth opposite his name, of Enron Capital Management, a division of the Company, to serve for the ensuing year and until his successor is duly elected and qualified, effective date of his election be, and hereby is, July 15, 1999. Michael J. Kopper Managing Director J:\User\rcarter\a Minutes\ 12 1499\election. doc E0004388547 :XH002-02193 ============= Page 185 of 398 ============= co 00 00 M d O O U W EXH002-02194 ============= Page 186 of 398 ============= AGENDA ITEM 15(e) (SUGGESTED FORM OF RESOLUTION) WHEREAS, the Company wishes to comply with, and assist its officers and directors in complying with, the requirements of Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations thereunder; WHEREAS, Section 16(a) of, and Rule 16a-3 under, the Exchange Act require "officers" of the Company to file certain reports with the Securities and Exchange Commission, securities exchanges, and the Company; and WHEREAS, Rule 16a-1(f) under Section 16 of the Exchange Act and Item 401(b) of Regulation S-K under the Exchange Act and the Securities Act of 1933 provide that a corporation may identify those persons performing policy-making functions for the corporation who constitute "executive officers" and thus are officers for purposes of Section 16 of the Exchange Act; NOW, THEREFORE, BE IT RESOLVED, that the Company hereby designates the following persons as "executive officers" and as "officers" for purposes of Section 16 of the Exchange Act and as the only officers or employees of the Company or its affiliates who are subject to Section 16 of the Exchange Act with respect to the Securities of the Company, Enron Capital Resources, L.P., and Enron Capital L.L.C.: Name Position Kenneth L. Lay Chairman and Chief Executive Officer Jeffrey K. Skilling President and Chief Operating Officer Joseph W. Sutton Vice Chairman J. Clifford Baxter Chief Executive Officer, Enron North America Mark A. Frevert Chief Executive Officer, Enron Europe Joseph M. Hirko Co-Chief Executive Officer, Enron Communications, Inc. Stanley C. Horton Chairman and Chief Executive Office, Enron Gas Pipeline Group Kenneth D. Rice Co-Chief Executive Officer, Enron Communications, Inc. E0004388549 XH002-02195 ============= Page 187 of 398 ============= Lou L. Pai Richard B. Buy Richard A. Causey James V. Derrick, Jr. Andrew S. Fastow Steven J. Kean Mark E. Koenig Michael S. McConnell Jeffrey McMahon J. Mark Metts Cindy K. Olson Pbm\5499\SEC 16OFFICERS.doc. Chairman, President and Chief Officer, Enron Energy Services, Inc. Executive Vice President and Chief Risk Officer Executive Vice President and Chief Accounting Officer Executive Vice President and General Counsel Executive Vice President and Chief Financial Officer Executive Vice President and Chief of Staff Executive Vice President, Investor Relations Executive Vice President, Technology Executive Vice President, Finance and Treasurer Executive Vice President, Corporate Development Executive Vice President, Human Resources and Community Relations E0004388550 :XH002-02196 ============= Page 188 of 398 ============= BOARD OF DIRECTORS' MEETING December 14, 1999 E0004388551 EXH002-02197 ============= Page 189 of 398 ============= Enron Year 2000 Status E0004388552 EXH002-02198 ============= Page 190 of 398 ============= Year 2000 Update '~* Cost remains at $ 73.8 Million Mission-critical applications, embedded systems, and third party evaluations complete ~• Detailed contingency planning essentially complete ` Rollover weekend preparations near completion '~ Legal documentation review near completion r Rollover communications testing underway E0004388553 :XH002-02199 ============= Page 191 of 398 ============= Enterprise Readiness by Project Phase N C 0) 0 0 O N a) >I Conversion' Correct Y2K Analysis problem • Create action plan Testing Ensure Y2K issue resolved to correct problem Assessment • Develop contingency plans etermine criticality & Y2K readiness Inventory Itemize computer systems, embedded systems, and external partners Awareness Understand Y2K Risk Year 2000 Project Stages Status of Phase Q Complete Incomplete ontingenc Planning Develop alternate plans in case of failure E0004388554 :XH002-02200 ============= Page 192 of 398 ============= Status of Mission-Critical Items* by Business Unit BUSINESS UNIT SYSTEMS EMBEDDED SYSTEMS THIRD PARTIES % COMPLETION (for all items) # MIC Completed / # MIC Identified AZURIX 1,688/1,698 4,47014,470 100/103 99.8% CORP/ECM 1,45511,458 616 82 / 85 99.6% ECI 66/66 6/6 13/13 100% EES 2,816 1,292 /1,292 33 / 33 100% ENRON EUROPE 4,065 / 4,078 92 / 93 44/48 99.6% EOTT 82 / 82 17 / 17 285 / 285 100% EREC 36 / 36 13/ 13 10/10 100% GPG 2,490 / 2,490 3,580 13,580 717 / 717 100% INTERNATIONAL REGIONS 42 / 42 407 / 407 75 / 75 100% NORTH AMERICA 2,610 1,29211,292 200 / 200 99.9% PGE 2161216 333 / 333 54/54 100% ENRON TOTAL: 15,566 / 15,595 11,502 / 11,503 ) 1,613 / 1,623 99.9% * Inventory figures include 29 application systems and 19 embedded systems shown graphically in prior presentations. r ~.,. E0004388555 XH002-02201 3 ============= Page 193 of 398 ============= Preparations for Rollover Weekend ~f Millennium Management Center (MMC) for roll- over information gathering is ready Testing of MMC operations in progress N-;: 2,985 personnel involved in weekend activities Post - rollover test plans near completion Alternate communications in place with testing underway Public relations plan & materials ready E0004388556 y~ 0 :XH002-02202 ============= Page 194 of 398 ============= MMC Rollover Operations The primary function of the MMC is to capture and disseminate Y2K status information from Enron sites around the world for executive, legal, and PR decision-making purposes. • Over 100 sites will be contacted during rollover weekend. • Critical sites to be contacted 2 hours after site's rollover. A • Sites to contact us ;Last site: if major Y2K ,~ IPorUand 111 problems arise. ~ • Less critical sites to be contacted later on Jan. 1st. • Secondary site status checks to occur on Jan. 4th. :XH002-02203 .4 ........... - 2 CST +2 +4 +6 +8 +10 +12 +14 +16 E0004388557 ~~ ============= Page 195 of 398 ============= Continuity Planning I Each business unit' had to assume: • Communications may fail • IT systems & personnel may be unavailable • Automated operations may fail In response, each business unit: • Sought alternate communications • Identified key processes • Identified key reports to produce prior to rollover • Developed manual workarounds for key processes supported by IT • Developed manual workarounds for automated operations (where possible) • Ensured technical personnel are available for operational issues E0004388558 =XH002-02204 ============= Page 196 of 398 ============= Continuity Planning (by business unit) Business Unit inv Person I Alternate Ived in ro lover Communications Azurix 300 Inmarsat, Cellular, Radios Corp 67 Inmarsat, Cellular ECI 5 Cellular, Pagers EES 41 Cellular, Pagers Enron Europe 85 Inmarsat, Cellular EOTT 20 American Mobile Satellite, Cellular EREC 2 Cellular GPG 1,215 American Mobile Satellite, Cellular International Regions 600 Inmarsat, Iridium, Cellular North America 250 Inmarsat, American Mobile Sat., Cellular PGE 400 American Mobile Satellite, Cellular EN RON TOTAL: 2,985 E0004388559 f EXH002-02205 ============= Page 197 of 398 ============= Tasks Remaining ,A Complete Crisis Center Testing Finalize Rollover Weekend Logistics r=;' Monitoring into 2000 L, Planning for February 29, 2000 Ongoing Concerns External Entities - Particularly Internationally E0004388560 ~~ EXH002-02206 ============= Page 198 of 398 ============= Enron Year 2000 Status E0004388561 EXH002-02207 ============= Page 199 of 398 ============= Financial and Earnings Report E0004388562 EXH002-02208 ============= Page 200 of 398 ============= $0.01 Diluted E.P.S. Total Year 1999 $1.09 $1.01 0000 .-00 C~"NO ,\aO'oG $1.00 Recurring ฎ Non-recurring $1.17 ! $1.02 $1.15 E0004388563 ' It, 4-"004 EXH002-02209 1998 Actual 1999 Forecast 1999 Plan ============= Page 201 of 398 ============= Fourth Quarter Diluted E.P.S. • 1o,0tr G z $0.24 1998 Actual $0.30 1999 Forecast Recurring $0.30 1999 Plan E0004388564 EXH002-02210 ============= Page 202 of 398 ============= Net Income ($MM) Fourth Quarter Total Year Forecast Plan Forecast Plan Enron Gas Pipeline Group $ 43 $ 67 $ 238 $ 238 Portland General 49 54 128 124 North America 57 44 320 286 Europe 23 48 124 124 International Regions 64 75 265 300 Azu rix -3-y (20) 15 24 22 Enron Energy Services 7 1 (51) (59) Enron Oil and Gas - 9 25 50 Corporate and Other 32 (82) (118) (226) Recurring Net Income $ 255 $231 $955 $859 L t v E0004388565 a EXH002-02211 ============= Page 203 of 398 ============= Earnings by Segment ($ MM) Fourth Quarter 1999 Wholesale Energy Operations 256 Transmission & Distribution 204 Enron Energy Services - 10 Enron Communications 36 Exploration & Production - Corporate and Other (14) Interest, MI, & Income Tax (237) Recurring Net Income $255 1998 $ 186 168 (27) 15 31 26 (228) $171 Total Year A AAA A AAQ $ 1,313 687 (66) 31 64 (35) (1,039) $ 953 637 (119) 15 128 7 (923) $ 955 E0004388566 $ 698 4**0 EXH002-02212 ============= Page 204 of 398 ============= Balance Sheet Debt 1999 Activity ($MM) Estimate Plan Opening Debt Balance $(79357) $(79357) Operating Activities Funds Flow from Operations 2,250 2,100 Changes in Working Capital=a` (922) 40 Investing Activities Expenditures (4,324) (3,380) Sale of Assets 543 319 Financing Activities Common Stock Issued 1,125 821 Subsidiary Equity Issued 500 - Dividends Paid (454) (526) Other Changes 439 (1,223) Ending Debt Balance $(89200) $(91206) E0004388567 ~~ d EXH002-02213 ============= Page 205 of 398 ============= Financial and Earnings Report E0004388568 EXH002-02214 ============= Page 206 of 398 ============= Investor Relations Update E0004388569 EXH002-02215 ============= Page 207 of 398 ============= Total Return to Shareholders YTD Through 11130199 35.2%3 "/~ lY •. v 5 E0004388570 EXH002-02216 Enron S&P 500 Peer Group ============= Page 208 of 398 ============= Relative Valuation (PIE, on 2000 EPS) As of 11/30/99 27.7x E0004388571 EXH002-02217 Enron S&P 500 Peer Group ============= Page 209 of 398 ============= 60% 50% 40% 30% 20% 10% 0% 10% 00 0. Stock Price Appreciation YTD Through 11/30/99 sil i.4%o 3.0%. i.2%o. rn rn rn 0) o) Q) ) 0) rn 0) OD 0) O) a) 0). a) (3) a)` 0) 0) 000' 0 r O t- c- 0 O: N O d' 0 0 ti 0 ) 0 Enron-•- Peer Group - S&P 500 , E0004388572 y~o EXH002-02218 ============= Page 210 of 398 ============= Relative Valuation (PIE, on 2000 EPS) ENRON S&P 500 Peer Group E0004388573 Peer. Group ENRON S&P 500 EXH002-02219 ============= Page 211 of 398 ============= Largest Shareholders* Change From` w Location Shares 9/30/991. Janus Capital Denver Fidelity Management & Research ~+ Boston Dean Witter Intercapital Funds - New York Putnam Investment Management, Boston American Century Investment Management Kansas City Smith Barney Capital Management New York Northern Trust Global Investments Chicago Dresdner RCM Global Investors San Francisco American Express Equinox Capital Management Goldman Sachs Asset Management Rorer Asset Management Provident Investment Counsel Merrill Lynch Asset Management Government of Singapore Oppenheimer Funds *Excluding Index Funds Minneapolis New York New York Philadelphia Los Angeles Princeton Boston New York 57,660,000 16,651,000 12,912,000 12,898,000 11,613,000 11,600,000 8,579,000 7,302,000 6,530,000 5,748,000 5,647,000 5,394,000 5,145, 000 5,137,000 4,866,000 4,419,000 E0004388574 11,660,000 (2,149,000.; 912,000 (1,702,000)\ IV t , 753,000 0 299,000 (8,000) 1,170,000 108,000 357,000 44,000 (175,000) 737,000 (434,000) 129,000 FXH002-02220 ============= Page 212 of 398 ============= Investor Relations Update E0004388575 EXH002-02221 ============= Page 213 of 398 ============= Company Overview E0004388576 EXH002-02222 ============= Page 214 of 398 ============= r. Enron's Stock Has Outpaced EPNG Industry Total return to U 'I shareholders (TRS) (1190-9199) Percent CAGR P/E ratio (1999E) Williams Enron VEBA Endesa British Gas Southern Duke RWE FPL Edison Intl. PG&E TXU 36.2 34.8 118.0 17.1 17.8 13.8 15.5 19.3 12.6 r/ - 12.2 =' f t 13.2 ' 112.0 E0004388577 O EXH002-02223 ============= Page 215 of 398 ============= Market Cap Has Risen To Number One $ Billions EXH002-02224 Market value of equity (1190) British Gas 16.2 RWE 10.8 VEBA 10.1 PG&E 9.4 Southern 9.2 Edison Intl. 8.6 TXU 6.4 Duke - 5.7 Endesa 5.5 FPL 4.9 Enron 2.9 Williams 11.6 E0004388578 Market value of equity (9199) 18.3 ============= Page 216 of 398 ============= Strategic Control Map s 4 l n. a i % v-$25 bn 20 15 10 ~ d W w + + oy ~ ~P ~ ~n r b• eฐau ~wr b p txra .u~ ~ ~ q s 2 0 1 2 3 4 5 6 7 8 9 10 Book equity, $ Billions EO004388579 ~i rvunn' n777G ============= Page 217 of 398 ============= 4 0 3 2 0 Strategic- Control 0, b ` v o,pec~raiisis increase _ ROE ith little loon equity grow e ra tic L - t# a$25 bn a a tegi s tor' -.r. 20 increase -book- _ 15 oquci ratei,~r o coca, . m R:QAff' . 2 0 1 2 3 4 5 6 Book equity, $ Billions E0004388580 7 8 9 10 r EXH002-02226 ============= Page 218 of 398 ============= Strategic Control Map Across Industries $ Millions, Ratio 1999 ฎ1990 14 Coca-Cola 12 Proctor ฎ 10 ~ k u &-Gamble ..~ o x$150 bn $ . b & J rhnson 3-M Pepsico w - ,. - 125 w t'~ A 6 v 100 e Schlumber 4 11 ____ . - T.. `Texaco w_ 50 2 • , - _ ox ~hear~o . .. 25 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Book equity, $ Billions E0004388581 * Based on book value of equity as of 6/99 for US companies (except Enron 9/99) and 12198 for non-US com Source: Compustat; Global Vantage J wunnY_nYY)7 ============= Page 219 of 398 ============= Strategic Control Map for Electric Power and Natural Gas Industry $ Millions, Ratio 1999 S 1990 e r ^~ y a ~' William Enron 8 't4 44 3 .Q Colomb' Coh tal " - ,4 `$25 bn D,jke w 2 Relialit ~ 20 Wg SaUtWrr 5 Edison ฎ = AEP/CSW • . Entergy ~` ฐ10 m 0 1 2 3 4 5 6 Book equity, $ Billions 7 8 9 10 k Based on book value of equity as of 6/99 for US companies (except Enron 9/99) and 12/98 for non-US companie Source: Compustat; Global Vantage E0004388582 ~ฎ EXH002-02228 ============= Page 220 of 398 ============= Shapers Specialists Integrators Enron&49 Incumbents 4.0 2.4 Market-to-Book Ratio (9/99) 2.2 ~' 5 3.5 2.5 E0004388583 EXH002-02229 Market-to-Book Performance Lags Market-to-Book Ratio (9193) 9.8# a n3 8.2 ============= Page 221 of 398 ============= Earnings Growth And PIE Have Been Solid... Net income growth (1993-98) Percent CAGR Shapers Specialists Integrators Enron yqa Incumbents ~ "9 16 21 20 21 PIE ratio (9/99 lagging) mf E0004388584 EXH002-02230 41.7 e;49 ." ~l ============= Page 222 of 398 ============= FXH002-02231 ...But ROE Has Been Low Shapers Specialists Integrators Enron y,~o Incumbents H1 ROE average (1993-98) Percent 24 22 Incremental ROE* (1993-98) Percent E0004388585 r 12 13 3 * Incremental net income = incremental book equity 39 ============= Page 223 of 398 ============= Enron's Growth Has Been Highly Capital Intensive $ ,Million incremental equity Per $25 million of Per $1 billion of incremental earnings incremental market cap FXH002-02232 ============= Page 224 of 398 ============= As A Result, Total Returns To Shareholders (TRS) Have Lagged 281 Specialists Integrators 25 Enron y 18* Incumbents 9 31 Global 150 E0004388587 average * From 1/90 to 9/90 Enron's TRS was 23% 9 GYUnnm_m9gq ============= Page 225 of 398 ============= Disaggregating Enron's Portfolio Capital Enron Growth rate.) Intensity Business Units Shapers High Low ECT EES ECI Integrators High High* El Azurix Low High* GPG~~s{'$ Incumbents PG E- , ECO04388588 EOG ._. 'r Clean. Fuels '; * High capital intensity is often required (e.g., regulated return industries; emerging economies which la infrastructure/liquid markets) p I-Iflf17_f1773d ============= Page 226 of 398 ============= "SHAPER" BUs Have Achieved Less Capital Intensive Growth... MIT Growth (1993 to 1999) Return on equity (9/99) Percent CAGR Percent Shaper BUs •ECT 23 27 e EES • ECI Integrator BUs ` • EI 23 6 •Azurix Incumbent BUs •GPG •PGE • EOG E n ro n total wunn,) n,)7I:kF ============= Page 227 of 398 ============= ...Resulting In Significantly Higher M/b Ratios. . . Shap er BUs • ECT • EES • ECI Integrator BUs • EI • Azurix Incumbent BUs • GPG • PGE • EOG Enron total Market-to-Book Ratio (9/99) 3.5 7.7 E0004388590 EXH002-02236 ============= Page 228 of 398 ============= ...And Essentially All Of Enron's Shareholder Value Creation EXH002-02237 Shaper BUs • ECT • EES •ECI Integrator BUs •EI • Azurix Incumbent BUs •GPG •PGE • Others Enron total TRS (1/90 to 9199) Percent CAGR (: 23 ) 49 -0.9 Shareholder Value Creation (SVC) (1/90 to 9199) $ Billions 14.6 14.8 X4388591 0 ============= Page 229 of 398 ============= Achieving Shaper-Like Expectations Could' Create Significant Value $ Per share of Enron 25 Market 20 expectations for earnings growth Percent 15 10 7 Historical performance 41 61 76 86 95 101 107 34 47 57 64 69 74 77 28 37 43 : ` 48 51 54 57 :, ` p. r44 30 34 36 39 41 42 10 12 14 16 18 r' 20 22 Market expectations for incremental ROIC Percent ECO04388592 Typical shaper FXHflf17- ============= Page 230 of 398 ============= r r .. F. EXH002-02239 Company - - r ..i ~ a e f1 ~ J t Al ------ r f SG r w y + 3 1  Overview E0004388593 D ============= Page 231 of 398 ============= r t c 9 ; ,{ Wl i- 1999 Enron Strategic Goals Status E0004388594 y l-, EXH002-02240 ============= Page 232 of 398 ============= 1999 Enron Strategic Goals Overall Goal: Achieve earnings and funds flow targets included in the 1999 Plan. Status: Complete All items are currently forecast to exceed Plan as shown below: Plan Forecast Recurring Income $ 859 million $ 955 million Nonrecurring Income (98) million (64) million Total Net Income $ 761 million $ 891 million Recurring earnings per share Nonrecurring earnings per share Total earnings per share Funds Flow $1.15 (.13) $1.02 $ 2,100 million $1.17 (.08) $1.09 $ 2,250 million EO004388595 cvunn7)) )A ============= Page 233 of 398 ============= 1999 Enron Strategic Goals Overall Goal: Successfully complete the 1999 activities of the Y2K Plan approved by the Board with the goal of preventing the Y2K event from having a material adverse affect on Enron. Status: Complete The Y2K Plan has been successfully executed and, subject to the impact of third parties outside the control of Enron, it is anticipated that the Y2K event will not have a material adverse affect on the company. EO004388596 D GYUnm_m9a9 ============= Page 234 of 398 ============= 1999 Enron Strategic Goals Overall Goal: Successfully implement SAP financials and procurement for Enron Communications on April 1, Corporate on July 1, Enron Europe on October 1 and Enron Energy Services and Enron International on January 1, 2000. Implement SAP procurement for Portland General and Gas Pipeline Group on July 1. Status: Each of the 1999 implementations described above was completed successfully and on time. We are on track for a successful implementation for Enron's international regions on January 1, 2000. Due to systems strategic planning issues at EES and the Enron reorganization, the EES implementation was rescheduled for July 1, 2000. We remain on track for having initial implementations of each major business unit complete by July 1, 2000. E0004388597 EXH002-02243 9y 0 ============= Page 235 of 398 ============= 1999 Enron Strategic Goals Overall Goal: Lower the weighted average cost of capital by 25 basis points while maintaining BBB+ credit rating. Status: Complete Enhanced a BBB+ credit rating 12/31/98 ENE 10-year spread 12/3/99 ENE 10-year spread Spread Savings Application of Spread Savings to New Debt: 1999 Incremental Debt 2000 Plan for Incremental Debt Value Created (PV 7%)* * Assumes 10 year average term for new debt. Spreads are over US Treasury of corresponding term 1.77% 1.45% 0.32% $ 1,000 MM $ 588 MM $ 37.1 MM EC004388598 Fuunm_m7aa ============= Page 236 of 398 ============= 1999 Enron Strategic Goals Overall Goal: (A) Maintain premium valuation multiples for Enron. (B) Achieve total return to Enron's shareholders in excess of its peer group and the S&P 500 index. (C) Develop and deliver coordinated and targeted investor communication that clearly identifies Enron's core strengths and superior earnings growth prospects. Status: Complete (A) Enron Corp. relative valuation versus the market and peer group is as follows: PE Multiple PIE Multiple 12/31/98 11130/99 Enron Corp. 20.9x 27.7x Peer Group 15.2x 17.4x S&P 500 24.1x 24.8x E0004388599 EXH002-02245 ============= Page 237 of 398 ============= 1999 Enron Strategic Goals Overall Status: Continued (B) Enron's total return to shareholder for 1999 year to date has significantly exceeded all comparative indexes. Total Return 1999 (YTD through 11/30) Enron Corp. 35.2% Peer Group 8.4% S&P 500 14.2% Dow Jones Industrials 20.1% Dow Jones Utilities (6.4%) (C) The objective of providing coordinated and targeted investor communications was carried out aggressively in 1999 which contributed to the total returns and increased valuation levels mentioned above. E0004388600 0 EXH002-02246 ============= Page 238 of 398 ============= 1999 Enron Strategic Goals Overall Goal: Improve wholesale electricity transmission access through federal legislation or FERC regulation. r Status: Complete Federal legislation passed House Subcommittee FERC initiated Regional Transmission Organization (RTO) rulemaking Established Enron control areas and retained commercial advantages 140, 120, 100, 80, 60, 40, 20, ./1A s,uuu 2,500 2,000 1,500 1,000 500 0 1995 1996 1997 1998 1999 TJ Wholesale Trading Volume E0004388601 ~~ FXH002-02247 1999 2000 2001 2002 2003 o Retail Revenues Open to Competition, 1999 2000 2001 2002 2003 0 Merchant Generation Base ============= Page 239 of 398 ============= 1999 Enron Strategic Goals Overau y Goal: Reinforcement of ou,r Vision and Values a Enron to create a competitive advantage in terms o recruiting and retaining employees and attracting customers and partners. Status: Complete Values restated two years ago and Task Force established to inculcate them into our company. These values are bringing real change to Enron as evidenced by improved survey results: -- • My company does a Vgood job of"treatin~po a with respect and dignity - 58% agreed in 1996 vs 74% in 1999 • 1 can generally, believe the information I get from top management - 59% agreed in 1996 vs 74% in 1999 • My immediate supervisor deals fairly with everyone - 62% agreed in 1996 vs 75% in 1999 Employees feel a commitment to their operating company as more than "just a place to work" - 44% agreed in 1996 vs 65% in 1999 E0004388602 ~0 i EXH002-02248 ============= Page 240 of 398 ============= 1999 Enron Strategic Goals Overall Status: continued Three key initiatives: The "Excellence through Communication" intranet survey The Chairman's Award was an enormous success in 1999 Fortune magazine's "Best 100 Companies" rankings placed Enron at #73 last year. EO004388603 ~~ FxHnm-02249 ============= Page 241 of 398 ============= 1999 Enron Strategic Goals Overall Goal: Show immediate results in Enron's Diversity Program: • All underutilized job groupings corrected and target placement rates achieved. • Increase percentage of minority/women representation in recruiting at the entry level. ' Increase the run rate of MWBE (minority or women owned business enterprise) procurement from 1.1% to between 4% and 7%. Status: Complete • Diversity Task Force formed - chaired by Ken Lay. • Underutilitized job groupings corrected and target placement rates achieved. Focus on minority/women recruiting - total work force increase by .5% on women and 1.5% on minorities. • Run rate for MWBE procurement increased from 1.1% to 5.7%. E0004388604 O EXH002-02250 ============= Page 242 of 398 ============= Enron Gas Pipeline Group 1999 Goals E0004388605 FXH002-02251 ============= Page 243 of 398 ============= 1999 Enron Strategic Goals Gas Pipeline Group Goal: Complete the certification process for Northern Border Pipeline Company's Project 2000 and Florida Gas Transmission Phase IV that results in the projects being placed into service in December 2000 and May 2001, respectively. Status: FGT's Phase IV Certificate should be issued in February, 2000 which is on schedule. NBPL's Project 2000 is being held in abeyance pending NBPL's review of the FERC's new order requiring incremental pricing for new projects. Goal: Complete the acquisition(s) of energy transportation assets that are accretive to earnings, have positive cash flow, and have a positive net present value. /Status: Complete EOTT completed the acquisition of Koch's crude oil gathering assets ($245 Million) and the Texas New Mexico crude oil pipeline ($35 Million). E0004388606 EXH002-02252 ============= Page 244 of 398 ============= 1999 Enron Strategic Goals Gas Pipeline Group Goal: Successfully complete a secondary offering of EOTT units in the third quarter of 1999. Extinguish EOTT's term loan with Enron Corp by the end of the third quarter 1999. Status: Complete $235 Million of 10-year notes and 3.5 Million of Common Units were issued in September. The proceeds were used to extinguish all of EOTT's debt with Enron Corp. /Goal: Develop an exit-strategy for Clean Fuels. Status: Several potential deals are being analyzed. The write-down of the MTBE plant has resulted in at least three parties coming forward with varying interest in buying the plants. E0004388607 EXH002-02253 4 1o ============= Page 245 of 398 ============= 1999 Enron Strategic Goals Gas Pipeline Group Goal: Resolve the Northern Natural Gas rate case under terms and conditions that meet or exceed the results included in the 1999 Plan. Status: Complete Settlement agreement was approved by the FERC in 1999. Settlement met all planned goals. Goal: Gain the consent of EOTT's unit holders to: • Authorize the issuance of an additional 10 Million common units • Convert special units to common and list on the NYSE • Approve the listing of units that were issued to Koch on the NYSE Status: Complete Unit holder approval received in February, 1999. E0004388608 ~ EXH002-02254 ============= Page 246 of 398 ============= Portland General Group 1999 Goals E0004388609 EXH002-02255 ============= Page 247 of 398 ============= 1999 Enron Strategic Goals Portland General Electric Goal: Successfully complete asset sale of the Colstrip Plant. If regulation delays the Colstrip sale, be prepared to implement sale of Centralia and Sullivan plants. Status: Colstrip and Centralia plant sales delayed until Q1 2000, but despite delays, the $42.5 million IBIT overview associated with these transactions was achieved through 0&M savings, short-term trading activities and specific regulatory accounting treatment (cost deferral). Sullivan sale delayed indefinitely due to buyer (Smurfit) considering the sale/closure of the existing paper mill on the site. ECO04388610 ~ O wunn'_n0')r1F ============= Page 248 of 398 ============= 1999 Enron Strategic Goals Portland General Electric Goal: Complete a business expansion initiative that contributes at least $30 million in additional earnings beginning no later than 2001. Status: Efforts were turned to supporting the successful sale of PGE (ultimately to Sierra). Goal: Continue to manage regulatory and legislative initiatives in a way that optimizes benefits to customers and shareholders. Support Enron's national strategy for restructuring the electric utility industry. Status: Complete Deregulation Oregon Senate Bill (SB1149) passed, requiring open access to industrial and large commercial customers by 1-0/112001. PGE went to the legislative session with 11-priority bills. All 11 passed the House & Senate. y E0004388611 EXH002-02257 ============= Page 249 of 398 ============= 1999 Enron Strategic Goals Portland General Electric Goal: Meet Trojan decommissioning objectives and successfully manage the Trojan court case. Status: Complete Reactor vessel removal completed on time and under budget. Spent fuel storage project on track for completion by year-end 2000. E0004388612 ~' EXH002-02258 ============= Page 250 of 398 ============= Enron North America 1999 Goals E0004388613 EXH002-02259 ============= Page 251 of 398 ============= 1999 Enron Strategic Goals Enron North America Goal: Generation - • Finalize 1999 peakers to come on line in phases with a minimum of 1200 MW by July 1, 1999. • Finalize development and funding of Year 2000 peakers. • Close Cogen Technologies transaction and integrate into Enron. Status: Complete • 1260 MW commercially available on 7/1 • Project on track (1587 MW) to come on-line in first half of 2000 • Transaction closed in first quarter, operations are integrated E0004388614 y10O '31 EXH002-02260 ============= Page 252 of 398 ============= 1999 Enron Strategic Goals Enron North America Goal: Trading - Fortify our leadership position. Maintain number one position with total energy volumes marketed of 26,000 BBtulday representing a 20% increase from 1998. Status: Complete Enron remains #1 merchant of power and gas in North America YTD volume growth = 21% E0004388615 * *09 EXH002-02261 ============= Page 253 of 398 ============= 1999 Enron Strategic Goals Enron North America Goal: Gas Assets - Total outsourcing of the gas supply and asset management function of a natural gas utility to ECT in a key strategic market (utility annual load in excess of 60 bcf/yr). Status: Complete BUG (-107Bcf) extended for one year Peoples (-160Bcf) closed in third quarter Goal: Finance - $1 billion in new investments without increasing balance sheet limits. Status: Complete YTD October investments exceeded $1 billion with no increase to limits. E0004388616 ~ EXH002-02262 ============= Page 254 of 398 ============= Enron Europe 1999 Goals E0004388617 EXH002-02263 ============= Page 255 of 398 ============= 1999 Enron Strategic Goals Enron Europe Goal: Generate at least $150 million of gross margin outside of the U.K. Status: Generated approximately $100 million of gross margin outside U.K. Goal: Financially close two significant infrastructure projects. Status: Complete • Closed sale of Bitterfeld (125mw plant in Germany) with MEAG. • Expected to complete dry close on Croatia by year end (locked in financing terms with lenders). • Financial close on Arcol is expected Q1 00 due to delays in permitting process. EO004388618 ============= Page 256 of 398 ============= 1999 Enron Strategic Goals Enron Europe Goal: Eliminate remaining financial exposure associated with Eastern positions. Status: Complete Successfully reduced net open positions in both gas and power to within board approved limits with no adverse financial impact. Eastern positions have increased in value by over $120 million, while Eastern credit exposure has been reduced by over $65 million through innovative credit instruments. E0004388619 EXH002-02265 ============= Page 257 of 398 ============= Enron India 1999 Goals E0004388620 EXH002-02266 ============= Page 258 of 398 ============= 1999 Enron Strategic Goals ' Enron India Goal: Expand India business into a gas distribution and electricity franchise evidenced by: • Achieving commercial operation of Dabhol Phase I by the end of the first quarter 1999. • Achieving financial closing of Dabhol Phase II by the end of the first quarter 1999. • Start construction of the Dabhol pipeline and contract for sale and supply of a minimum of 1.2 mm tons of LNG as follow-on volumes for Dabhol by year end. EO004388621 ============= Page 259 of 398 ============= 1999 Enron Strategic Goals Enron India Status: Complete Dabhol Power Plant: Phase I (740 MW) • Achieved commercial operation in May 1999,5 months behind expected schedule, still 2 months ahead of contractual commitments • Significant contractor issues (mainly GE) resulting in: - Downtime due to rotor change out on GE Frame 9FA - Plant performance issues Dabhol Power Plant: Phase 11 (1,440 MW) • Under construction by Enbech (Bechtel and EECC) on the power side and EECC on the marine/LNG side • Maintaining schedule for Phase 11 Metgas Pipeline Development well underway • Terminaling and regas contract with Dabhol Power in place LNG terminal and tanks 12 months into construction • Pipeline ROW acquisition in progress GSAs with gas customers under active negotiation • Joint Venture with SICOM to develop LDCs in Maharashtra ~, EC004388622 ~C-7 ============= Page 260 of 398 ============= Enron Asia Pacific, Africa and China 1999 Goals EO004388623 ============= Page 261 of 398 ============= 1999 Enron Strategic Goals Enron Asia Pacific, Africa and China Goal: Break through into energy business in China as evidenced by closing one pipeline or power project. Status: Complete Developed and closed Chengdu Power Project Goal: Remedy Hainan Island power project payment problem. Status: Triggered prohibited arbitration process - significant progress EO004388624 Q ============= Page 262 of 398 ============= Enron Caribbean /Middle East 1999 Goals EO004388625 ============= Page 263 of 398 ============= 1999 Enron Strategic Goals Enron Caribbean /Middle East Goal: Resolve asset management issues in the Dominican Republic resulting in receipt of timely payments. Status: Complete • Renegotiated PPA • Settled back payment dispute • Received over $30 million from privatization proceeds and special payments • Instituted island-wide Citibank escrow account to ensure future payments EO004388626 *4- r:vwnn,)-n'?')7') ============= Page 264 of 398 ============= Enron Southern Cone 1999 Goals EO004388627 Hnn7-n777 ============= Page 265 of 398 ============= 1999 Enron Strategic Goals Enron Southern Cone Goal: Continue to develop Enron International's Southern Cone business into a fully integrated and profitable energy business by year end as evidenced by the following accomplishments: • Closing Cuiaba Power Plant and Pipeline. • Closing one large 450-900 MW power project utilizing gas supply from an Enron gas LDC. • Continuing to develop the Southern Cone trading business to an income positive position. Status: Complete • Closed Cuiaba Power Plant and Pipeline - OPIC financing. • Currently developing three new power stations totaling 700 MWs. • Completed first trade in Brazil in 1999 - growing business in Argentina. E0004388628 EXH002-02274 ============= Page 266 of 398 ============= EECC and Asset Management 1999 Goals EO004388629 ============= Page 267 of 398 ============= 1999 Enron Strategic Goals EECC and Asset Management Goal: Successfully construct and transition to commercial operations all projects currently under construction Status: Complete Eight projects completed. Four nearing completion. Projects completed in 1999 total 3,058 MW. ti~ EO004388630 D rvunll7 nT)7G.` ============= Page 268 of 398 ============= 1999 Enron Strategic Goals EECC and Asset Management Completed Projects Location/ Plant Name Size MWs Guaranteed Completion Date (PPA) Actual Commercial Ops Date YTD Capacity thru 11/99 YTD Availability thru 11/99 India/Dabhol Phase 1 765 07/10199 08113/99 58% 73% Cuiaba 480 05/05/99 04106/99 17% 87% Marmara 493 07113/99 06/05199* 77% 85% Guam 110 03/01/99 01/31/99 75% 94% Sutton Bridge 03/01/99 05/28/99 79% 83% Brownsville, TN** 460 07101/99 05/10/99 N/A 99% Caledonia, MS** 450 07/01/99 06/01 thru N/A 99% 07/08/99 New Albany** 300 07/01/99 6/23 thru N/A 99% 07/08199 * Early generation date of Feb 13,1999 was achieved. Commercial Operation underthe PPA was declared June 5, 1999. ** Merchant peaking plants, only dispatched for summer peak months of June - September. Availability calculation is based on seasonal average. E0004388631 Fuunm_m777 ============= Page 269 of 398 ============= 1999 Enron Strategic Goals EECC and Asset Management In Progress Nicaragua 71 MW Barge Power Plant Italy 511 MW Sarlux Plant Puerto Rico 507 MW EcoElectrica Brazil Cuiaba Plant Phase II and III - 480 MW Completion Date December 1999 June 2000 January 2000 May 2000 EO004388632 FxHnm-02278 ============= Page 270 of 398 ============= Enron Energy Services 1999 Goals E0004388633 EXH002-02279 ============= Page 271 of 398 ============= 1999 Enron Strategic Goals Enron Energy Services Goal: Become net income positive by fourth quarter 1999. Status: Complete 1999 estimated Q4 net income in $5.5 million. 1999 estimated full year net loss is ($61.7) million. Goal: Sign commodity and service contracts with future contract value of at least $8 billion. Status: Complete In 1999, EES estimates signing contracts totaling approximately $9.0 billion in future contract value. EO004388634 ~' S-D ~.,i innn -non ============= Page 272 of 398 ============= 1999 Enron Strategic Goals Enron Energy Services Goal: Gain concurrence on residential strategy. Status: • During Q4 1999, EES will complete a privately-placed equity funding totaling $100 million of interest in a newly-formed entity. • Public offering targeted for 1st half of 2000. Key staffing search underway. Goal: Begin developing and implementing an international strategy. Status: Complete During 1999, EES commenced its international strategy, which has phased approach to commercial development of markets in Europe, the Southern Cone and Asia. EO004388635 0 YHnm_m2R1 ============= Page 273 of 398 ============= 1999 Enron Strategic Goals Enron Energy Services Goal: $650 million of service revenues in 1999 with a margin of $60 million. Status: Complete EES estimates 1999 service revenue contributions as follows: EES Services Subsidiaries $ 540 million Services Component of Bundled Deals $ 155 million Total $ 695 million EES Services will contribute approximately $82 million in margin. E0004388636 EXH002-02282 ============= Page 274 of 398 ============= Enron Communications 1999 Goals EO004388637 r,,, -1 „flfQQ ============= Page 275 of 398 ============= 1999 Enron Strategic Goals Enron Communications Goal: Implement business model to accelerate market entry, obtain alliance agreements from at least four internet service providers (ISP's) and eight local exchange carriers (CLEC's), and obtain contracts from at least four content providers or content aggregators. Status: Complete Closed 20 distribution alliance agreements with ISP's/CLEC's/RBOC's including Bell South, GTE, Verio and RCN Closed 9 content agreements including Warner Bros, Lehman Bros, Roadshow.Com and Digital Entertainment Network E0004388638 ฐ~ O EXH002-02284 ============= Page 276 of 398 ============= 1999 Enron Strategic Goals Enron Communications Goal: Achieve a successful public launch of the business; introduce at least four new products utilizing the intelligent network capabilities, be recognized as a leader in the delivery of rich media content and have a recognized value at least three times invested capital. Status: Complete Successful launch of business with roll out of product offering: eMediacast live event eMediacast store and forward eMedia Transport eConference Recognition of leadership position in delivery of rich media content (Country Music Awards / Drew Carey events) Valuation in excess of three times invested capital based on market comparables E0004388639 ~v EXH002-02285 ============= Page 277 of 398 ============= Enron Economic Development Corp. 1999 Goals E0004388640 EXH002-02286 ============= Page 278 of 398 ============= 1999 Enron Strategic Goals Enron Economic Development Corp. Goal: Close $50 million equity fund by June 30, 1999 for minority owned businesses. Status: Closed a $20 million equity fund in April 1999. Committed to date $9.8 million and funded $8.8 million on 10 separate transactions for a projected weighted average !RR of 40.51%. Received additional commitments of $15 million from banks which should close by December 31, 1999. E0004388641 ,~ EXH002-02287 ============= Page 279 of 398 ============= 1999 Enron Strategic Goals Summary EO004388642 FYHnm_m2RR ============= Page 280 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 1) Earnings & Funds Flow Corp X Targets 2) Y2K Corp X X 3) SAP Corp X X 4) Lower WAC of capital Corp X by 25 basis pts - BBB+ 5) A. Premium valuation Corp X multiple B. Exceed peer group Corp X & S&P total return to shareholders C. Investor relations Corp X communications. E0004388643 ~ฎ EXH002-02289 ============= Page 281 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 6) Improve Wholesale Corp x electricity transmission 7) Reinforce Vision & Corp X Values 8) Improve Enron Diversity Corp X Program 9) FGT & NBP - Project GPG X 2000 10) Acquire energy GPG X X transportation assets - Positive NPV E0004388644 ~49 EXH002-02290 ============= Page 282 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 11) Secondary offering of GPG X EOTT units 12) Exit strategy for GPG X Clean Fuels 13) Northern Natural rate GPG X case 14) EOTT issuance of GPG X common units ' 15) Complete asset sales PGE X X 16) Complete business PGE X expansion E0004388645 EXH002-02291 ============= Page 283 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 17) Manage regulatory & PGE X legislative initiatives 18) Trojan decommissioning PGE X 19) Peakers plants North x transactions America 20) Maintain leadership North x position in trading America 21) Total outsourcing of gas North x supply & asset mgmt America for a natural gas utility 22) $1 billion in investments North X America E0004388646 'POT EXH002-02292 ============= Page 284 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 23) $150 mm of gross Europe X margin outside the UK 24) Close 2 infrastructure Europe X projects 25) Eliminate exposure of Europe X Eastern positions 26) Expand into gas India X distribution & electricity 27) Close 1 pipeline or APACHI X power project 28) Remedy Hainan APACHI X payment problem E0004388647 49 EXH002-02293 ============= Page 285 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 29) Resolve issues in CALME X Dominican Republic 30) Develop into an Southern x integrated business ... Cone 31) Construct & transition EECC X to commercial operations all projects under construction 32) Net income positive in EES X 4Q 1999 33) Sign contracts with EES X total value of $8 billion E0004388648 N49 EXH002-02294 ============= Page 286 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 34) Gain concurrence EES X on residential strategy 35) Develop an international EES X strategy 36) $650 mm of service EES X revenues with a margin of $60 mm 37) Implement business ECI X model 38) Achieve public launch ECI X of the business E0004388649 y~o EXH002-02295 ============= Page 287 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 39) Sell private/public equity Azurix x at significant premium 40) Win 2 major concessions Azurix x or BOT projects 41) Establish Azurix in Azurix x industrial waste market E0004388650 EXH002-02296 ============= Page 288 of 398 ============= 1999 Enron Strategic Goals Scorecard Goal Business Unit Completed In Progress Not Complete OBE 42) Increase production by EOG X 7% 43) Replace 110% of volume EOG X 44) Develop China gas market EOG X 45) Achieve governmental EOG X approval of Tapti expansion E0004388651 O EXH002-02297 ============= Page 289 of 398 ============= 1999 Enron Strategic Goals Scorecard Summary Completed In Progress Not Complete Overcome by Events Total Goals Number Percent 35 78% 4 9% 1 2% 5 11% 45 100% E0004388652 EXH002-02298 4 ============= Page 290 of 398 ============= 1999 Enron Strategic Goals EO004388653 FxHnm-n22AA ============= Page 291 of 398 ============= 2000 - 2002 Operating & Strategic Plan E0004388654 EXH002-02300 ============= Page 292 of 398 ============= Enron Net Income & Diluted EPS Energy Businesses Enron Communications 1999 ($ millions) $1,144 $1.35 2000 1999 2000 E0004388655 ($ per share) y ~ EXH002-02301 $955 ============= Page 293 of 398 ============= Enron Net Income By Segment ($ millions) 17% 1999 $994 E0004388656 0 EXH002-02302 Wholesale Transportation & Retail Communications EOG Corp. & Distribution Other ============= Page 294 of 398 ============= I21% Wholesale Net Income ($ millions) E0004388657 EXH002-02303 North Europe South Caribbean, India Asia, Pacific, Finance EE&CC Structured America America Middle East Africa & China Transactions & LNG & Other ============= Page 295 of 398 ============= Transportation & Distribution Net Income ($ millions) Enron Gas Pipeline Group $130 Portland General Group 1999 2000 E0004388658 EXH002-02304 ============= Page 296 of 398 ============= Corporate & Other Net Income ($ millions) L to/o $28 Overview E0004388659 $(112) $(124) Corporate Expenses O EXH002-02305 ============= Page 297 of 398 ============= Enron Recurring EPS By Quarter $0.40 4) $0.35 L m m $0.30 $0.25 $0.20 E0004388660 EXH002-02306 IQ 2Q 3Q- 4Q ============= Page 298 of 398 ============= Enron Recurring EPS ($ per share) $1.79 $1.55 15% $1.35 15% $1.17 15% 1999 2000 2001 2002 i E0004388661 EXH002-02307 ============= Page 299 of 398 ============= Enron Debt & Debt to Capital $8,200 * Assumes sale of Portland General December 2000 Debt ($ millions) --•-- Debt to Capital E0004388662 EXH002-02308 1999 2000 ============= Page 300 of 398 ============= Enron Funds Flow & Interest Coverage Funds Flow ($ millions) -!- Interest Coverage $2,300 EXH002-02309 1999 2000 ============= Page 301 of 398 ============= Enron Change in Balance Sheet Debt ($ millions) Cash from Operating Activities $2,340 Strategic Investments Net $(3,781) Gross $(4,324) *Assumes sale of Portland General December 2000. Equity Issuances Dividend Paid (Increase)/ and Other Decrease in Debt E0004388664 $2,012* 4 . 10i49 V / EXH002-02310 ============= Page 302 of 398 ============= EXH002-02311 Enron Net Cash Flow by Busine $620 $(404) North America $402 $(569) Europe $539 $(20) zT,. $539 $79 ss Segment Cash from Operations Strategic Investments, Net $(3) $(126) $164 $(215) International T&D $(295) E0004388665 Retail $(425) I Comm. Corp. &'i Other 42 ============= Page 303 of 398 ============= Enron Cash Flow Assumptions Price Risk Management Activities will be Cash Neutral (Continued monetization of contract portfolio) CO Merchant Equity Investments will be Cash Neutral (Monetize any growth in portfolio, either new commitments or merchant value) `../ Capital Spending Plan based on required "maintenance" expenditures and other known projects. Any additional spending will require incremental funds flow. O Dividends of $0.50 per common share No equity issuances E0004388666 /f EXH002-02312 ============= Page 304 of 398 ============= Enron Return on Book Equity [] Book Equity ($ millions) --S- ROE (%) $8,268 I $6,333 $4,671 11.5% 11.0% 11.0% 1997 1998 1999 $9,831 E - 1 t 2000 E0004388667 EXH002-02313 ============= Page 305 of 398 ============= Wholesale Capital Deployed & ROE North America $1,169 $895 43.2% 622 35.4% 34.4% 1998 1999 2000 $4,110 MM LJ Pipeline Assets M Other Assets M Power Plant Assets Regulated Assets F] Merchant Investments 11 Off B/S Assets Equity ($ millions) --a- ROE (%) E0004388668 EXH002-02314 ============= Page 306 of 398 ============= Wholesale Capital Deployed & ROE Europe $18 $1,119 MM L_I Pipeline Assets GJ Other Assets Power Plant Assets Li Merchant Investments Regulated Assets 11 Off B/S Assets $435 45.0% $350 $265 37.7% 37.6% 1998 1999 2000 0 Equity ($ millions) --0- ROE EXH002-02315 ============= Page 307 of 398 ============= Wholesale Capital Deployed & ROE South America $3,379 MM F1 Pipeline Assets Power Plant Assets Regulated Assets $80 E0004388670 Other Assets Merchant investments Off B/S Assets $2,012 $1,473 $933 6.3% 7.8% 4.5% 1998 1999 2000 Equity ($ millions) --0-- ROE (%) 1 P k i ra r r i s V EXH002-02316 ============= Page 308 of 398 ============= L_i Pipeline Assets CALM E Wholesale Capital Deployed & ROE $935 MM El Power Plant Assets M Regulated Assets E9 Other Assets Merchant investments in Off B/S Assets 49.3% $420 $388 $357 13.4% \.3-6% 1998 1999 2000 [] Equity ($ millions) --ฎ- ROE (%) E0004388671 0io V =XH002-02317 ============= Page 309 of 398 ============= Wholesale Capital Deployed & ROE $613 MM J Pipeline Assets Other Assets H Power Plant Assets N Regulated Assets India $384 $298 $211 9.6% 0.3% , -2.8% 1998 1999 2000 Merchant Investments R Off B/S Assets [ Equity ($ millions) -0 ROE(%) E0004388672 EXH002-02318 ============= Page 310 of 398 ============= Wholesale Capital Deployed & ROE APACHI $635 MM Li Pipeline Assets IN Power Plant Assets Regulated Assets Other Assets F1 Merchant investments Is Off BIS Assets i '•. $280 $238 $259 ; 6.2% 5.7% 1.9% 1998 1999 2000 [] Equity ($ millions) -0- ROE (%) E0004388673 O =XH002-02319 ============= Page 311 of 398 ============= Transportation & Distribution Capital Deployed & ROE G PG L9;f ..~ _fz,: $1,092 $1,027 $961 15.7% 12.6% 13.2% 1998 1999 2000 $3,407 MM F] Pipeline Assets Power Plant Assets Regulated Assets Other Assets Merchant investments Off B/S Assets Equity ($ millions) --0- ROE E0004388674 e*0 EXH002-02320 ============= Page 312 of 398 ============= Transportation & Distribution Capital Deployed & ROE PGE $1,144 $1,079 $1,014 6.7% 5.8% 5.2% 1998 1999 2000 ~ $3,532 MM ] lJ Pipeline Assets Power Plant Assets Regulated Assets N Other Assets F1 Merchant Investments Off B/S Assets Equity ($ millions) --a- ROE (%) E0004388675 0 EXH002-02321 ============= Page 313 of 398 ============= Enron Capital Deployed & ROE N T. , ._ _. Retail . ., _ $270 $231 $192 17.2% A -28.6% -56.0% $634 MM U Pipeline Assets S Power Plant Assets 0 Regulated Assets Other Assets ~~ Merchant Investments Off B/S Assets 1998 1999 2000 Equity ($ millions) -1•- ROE (%) E000438867 y~ 6 ฉ j' EXH002-02322 ============= Page 314 of 398 ============= Enron Capital Deployed & ROE Communications $443 -3.9% $588 MM L._t Pipeline Assets E Other Assets M Power Plant Assets Regulated Assets Merchant Investments 0 Off B/S Assets 1998 1999 2000 [] Equity ($ millions) ,-ฎ-- ROE (%) E0004388677 EXH002-02323 ============= Page 315 of 398 ============= i 5 2000 - 2002 Operating & Strategic Plan E0004388678 EXH002-02324 ============= Page 316 of 398 ============= Enron Energy Se  rvice E0004388679 J EXH002-02325 ============= Page 317 of 398 ============= Situation Review - December 1997 Residential Business Environment Market Size v California only state open Quality of Deregulation v-1 / Regulators focused on stranded cost recovery Customer Value Proposition }-= No customer savings relative to incumbent service '- No value-added services developed Competition Cost Structure Capital Funding Plan 1 -~ Potential entry by numerous utility affiliates/start-ups d Customer acquisition costs high v/ No scale efficiencies on customer care Start-up losses to be absorbed by Enron Corp income statement E0004388680 ltl+~ &19 EXH002-02326 ============= Page 318 of 398 ============= Residential Decision Point First Quarter 1998 4 End efforts to acquire residential customers 4 Develop viable business plan for the future 4 Redirect legislative efforts - Focus on any legislation which opens markets 4 Cultivate strategic relationships \.4s~ Pursue alternate capital funding plans E0004388681 y9 0 V EXH002-02327 ============= Page 319 of 398 ============= Situation. Review - 2000 Market Size - 25% of residential market open Jan 2000 (28MM households) - 75% of residential market projected to be open by 2003 Quality of Deregulation - Regulators turn attention to creating rules which lead to competitive markets Customer Value Proposition - Rules create opportunity to generate savings for consumers Better understanding of customer needs for other products and services Competition - No near-term national competitor on horizon - Early market entrants have exhausted resources Cost Structure - Channel acquisition strategy reduces customer acquisition costs - Larger available market provides scale opportunities for customer care • Outsource solutions for back office requirements being developed • Migration of consumers to the web creates efficiency opportunities Capital Funding Plan - Numerous capital sources actively express interest in participating in residential opportunity A window exists for Enron to leverage its unique competencies to capture first mover advantage in the $124B national residential market E0004388682 EXH002-02328 ============= Page 320 of 398 ============= ResCo Positioned for Success EES has assembled world class players from a number of arenas to launch ,la new stand-alone entity to capitalize on the opportunity . Risk Management/Regulatory Capital GE Capital *Services DLJ Merchant Banking Partners 4~ข~ncaoฐffi p8 n PUffiuu mird CaIPERS Online Distribution E AMERICA R"esc..o E0004388683 4o EXH002-02329 ============= Page 321 of 398 ============= Marketing Strategy Internet (84 M users) S Consumer Buying Media Groups - Aggregation (270 M users) (9.3 M users) Channel-focused acquisition strategy provides scalable access to appropriate customers cost efficiently E0004388684 Telecom Financial Services Retailers (262 M users) (171 M users) (117 M users) EXH002-02330 ============= Page 322 of 398 ============= RESCO Join Resco and get 6 months' FREE XYZ. GAS ELECTRICITY GREEN POWER AIR CONDITIONING/HEATING ELECTRICAL CABLE EMERGENCY & MOVIES ON DEMAND CLEAN-UP SERVICE DIAL-UP INTERNET SERVICE HIGH-SPEED DSL Ti ' Resco simplifies your life. We have conveniences for your home and deliver them to your door online. Learn more ti. about our suite of energy products and services. D PURCHASE HOME SURGE PROTECT Gd UTILITIES REFINANCE INSTALL SMART HOME ADDRESS CHANGE REFI WITH ENERGY BUNDLE FINANCE HOME MESSAGE BOARD COMMUNITY INFORMATION WEATHER INSURANCE REMODELING MORTGAGES SERVICES I YOUR ACCOUNT E0004388685 V EXH002-02331 ============= Page 323 of 398 ============= ResCo Funding Plan Enron Investors Management AOL(2) Public Private Placement $M % (1) $ -- 100 58.1% 29.2 10.0 2.5 $100 100.0% IPO (3,4) $M $ - 100 500 $600 %(1) 43.6% 22.0 7.5 1.9 25.0 100.0% (1) Fully diluted (2) AOL only earns equity on hitting customer acquisition targets (3) Assumes exercise of investor warrants (4) Based on a $2.OB post-money valuation y ECO04388686 ~~ EXH002-02332 ============= Page 324 of 398 ============= Management Staffing Plan Position (Source) Status CEO (External) • Search in final stage Candidates prioritized by :r Enron management • Interviews with outside investors scheduled SVP Operations (External) • Several candidates identified for CEO to consider VP Risk Management (Enron) VP Regulatory (Enron) • Candidates identified • Candidates identified Current ResCo commercial team anticipated to be included in ResCo start-up E0004388687 /+*iO / V EXH002-02333 ============= Page 325 of 398 ============= Summary • Market conditions perfect for national effort aimed at residential market • EES has assembled world class participants to position ResCo for success • Funding plan is in place - Private funding expected to close by year end - Public offering planned during 2000 EC 004388688 ?~ EXH002-02334 ============= Page 326 of 398 ============= Enron Energy Services E0004388689 EXH002-02335 ============= Page 327 of 398 ============= Enron Gas Pipeline Group E0004388690 EXH002-02336 ============= Page 328 of 398 ============= Enron Gas Pipeline Group Florida Gas Transmission Company Expansion Projects - Phase IV -Phase V -Phase VI 4 a.. i E0004388691 EXH002-02337 ============= Page 329 of 398 ============= Florida Gas Transmission Company "Fueling the Growth" Market Area Mainline Capacity (Bbtu/d) 2500 Phase VI (? Phase V 2000 Phase IV Phase III 1500 Phase II 1000 Phase I 500 t: 1985* 1987 1991 1995 2001 2002 2003 * Enron Acquired Florida Gas Transmission E0004388692 EXH002-02338 ============= Page 330 of 398 ============= Florida Gas Transmission Company Growth of Pipeline System • Market Area Capacity (Bbtu/d) • Miles of Pipe* • Compressor HP • Measurement Stations Prior to Phase III Phase IV Phase V Phase III (1995) (512001) (412002) 925 1,540 1,720 2,145 4,460 5,225 183,857 289,657 499 480 4,746* 4,978 332,677 421,647 478* 484 *Miles of Pipe and Meter Stations reduced from Phase III to Phase IV due to divbstiture of non-strategic assets E0004388693 EXH002-02339 ============= Page 331 of 398 ============= Florida Gas Transmission Company Phase IV Market Area Expansion 14 • 250 B btuldl20-Yr Firm Contracts • $270 MM Projected Capital Cost • Filed with FERC December 1, 1998 • Received Preliminary Determination July 1999 • Authorization to Construct 1st Qtr 2000 (Target) • Target In-Service Date May 1, 2001 • Florida Power & Light's Ft. Myers Project "Anchors" Expansion • Establishes Pipeline Presence in Growing SW Florida E0004388694 D EXH002-02340 ============= Page 332 of 398 ============= Florida Gas Transmission Company Phase IV Expansion Facilities • 140 miles of Pipeline including: 6.1 miles of 30" Loop 9.3 miles of 36" Loop in Mississippi Approximately 11 miles of small laterals • One new compressor station will be constructed and additions made to three others for a total of 38,220 HP. ECO043886g5 4~~ ';0941 EXH002-02341 ============= Page 333 of 398 ============= Florida Gas Transmission Company Phase V Market Area Expansion !~ 14 J EA/ • Additional Capacity Needed to Meet Electric Generation Requirements • Open Season Concluded April 1999 • FP&L - Sanford and Southern Company's - Plant Smith Commitments Solidified Expansion • Approx: 400 Bbtu/d incremental capacity supported by 20-Yr firm contracts • Filed with FERC December 1, 1999 Anticipated In-Service April, 2002 • $420 MM Projected Capital Cost E0004388696 D EXH002-02342 ============= Page 334 of 398 ============= Florida Gas Transmission Company Phase V Expansion Facilities 231.1 Miles of Pipeline from 16" through 42" diameter 89,765 HP of compression at nine existing and two new stations E0004388697 ';04 9 EXH002-02343 ============= Page 335 of 398 ============= Florida Gas Transmission Company Phase VI Expansion • Meetings with Customers in Progress • Target Market - IPP Merchant Plants • 200-300 Bbtuld Potential Load TIMING - Open Season Early 2000 Anticipated In-Service 2003 - Capital Requirements $400-600 Million • Analyzing LNG Based Project (ELBA ISLAND) as Pipeline Alternative • Phase VI Markets in Competition with "Alternative" Pipeline projects ECO04388698 EXH002-02344 ============= Page 336 of 398 ============= MISS: ALABAMA GEORGIA woo EXISTING FGT PIPELINE s COASTAL PHASE IV ฎ ฎ DUKE PHASE V . WILLIAMS~~ E0004388699 EXH002-02345 ============= Page 337 of 398 ============= EnronGas Pipeline Group EO004388700 FxHnm-02346 ============= Page 338 of 398 ============= i a Global Recruiting, Retention and Deployment of Enron's Human Capital ECo043aa,o, \a,: EXH002-0234 ============= Page 339 of 398 ============= Enron's Global Resource Pool Japan Tokoyo S j• J Philippines Manila ,d = Philippines ข j dk 'ePinamucan Z ~Sngapor~ ~~ d t _ Indonesia 1~ Jakarta'- c 0 Top 1U Gities by Kesources Houston Texas 6,699 Sao Paulo Brazil 4,784 EXH002-02348 ============= Page 340 of 398 ============= of Strategic Resources ~x f= Sources • 1 56% 19% 13% 12% 20,000 Employees E0004388703 y~oy% r. EXH002-02349 ============= Page 341 of 398 ============= Analysts and Associates Program{ .I  Objective - To have a Global world class program that provides the Intellectual Capital to propel Enron into the New Economy  Current Participants in Program: 659 - Analysts - Associates  Challenges in the Program - Program size - Distinction in thifwo programs - Program management  Recommendations - Recruiting > Refine Priority Schools > Better define skill set tracks Program Management > Migrate to one Global program > Refine structure 323 336 E0004388704 E. y~o U =XH002-02350 ============= Page 342 of 398 ============= MDNP Deployment Compared to 1999 Earnings and Market Capitalization D ECI ฎ South America -'D Emerging Markets Europe ENA GPG SEES E0004388705 C =XH002-02351 ulstrIUUtlon or Qnarc UI IVI Il GL Commercial MDs & Share of 1999 Capitalization VPs Earnings ============= Page 343 of 398 ============= Deployment of Resources Internationally Expatriate to Local National Percentage 6% External Enron Asia India Caribbean/ Enron Benchmark Pacific/ LNG/ North Composite Africa/ Middle America Hewitt China East Associates Europe South America E0004388706 y~d :XH002-02352 ============= Page 344 of 398 ============= Market Cap Contribution per Employee ($MM), EXH002-02353 .r . 1 ENA Europe ECI EES Emerging GPG Markets E0004388707 South America C Cisco Microsoft Merck ENE 99 ============= Page 345 of 398 ============= Challenges that Face Enron (,. Attracting new employees - Development of unique employment proposition in each skill set - Utilization of Enron's equity to attract "high growth" resources in the high technology areas - Staff growth in the tightest job market in the last three decades - Growth of the Analyst I Associate Program ~ Retaining good employees - Culture - Work life improvements Globalization - Utilization of talent world wide - Leverage expatriates to grow new businesses el Increasing Return on Investment of Human Capital - Measurement of outcomes and determination of drivers - Maximize allocation of resources E0004388708 H002-02354 ============= Page 346 of 398 ============= EXH002-02355 ============= Page 347 of 398 ============= October 26, 1999 + Announcement J .. • Holding Page~~ z • Registration Information • Launch Schedule • Video Clip About 35,000 Users visited tie holding page ECO04388710 9 EXH002-02356 ============= Page 348 of 398 ============= f x Producers & Marketers - Aquila - Bank of Montreal - Chevron - Dynegy - EES - Entergy - Goldman Sachs - Koch Industries - Morgan Stanley - Phibro - Shell - Texaco - Toronto Dominion Bank - Williams Energy End Users - Dow Chemicals - International Paper - Lafarge - Pepsico Inc. Who's Looking? • Utilities - British Energy - Detroit Edison - Duke Energy - Electricite de France - Electrobras 40 - Florida Power & Light - PG&E - Reliant Energy - SNAM • Competitors - Altra Energy • - Bloomberg - Nymex • Technologists - UUNet Technologies, Inc. - Compaq - IBM - CISCO Consultants McKinsey - AT Kearney Price Waterhouse Coopers - Arthur Andersen Research - CERA - Columbia - Harvard Business School - Meta Group Analysts - Merrill Lynch - Everen Securities Janus Capital F Brokers,,. t .,,. - All of fhem ......:. E0004388711 a4,1 Sp. =XH002-02357 ============= Page 349 of 398 ============= EXH002-02358 Users by Country (to date) E0004388712 M 0  Argentina • Australia E ]Canada L Switzerland E Germany ฎ Spain 0 Finland France  Greece Croatia Hungary  India Dlran 0 Italy El Japan o Mexico  Netherlands o Norway El Nepal LI Poland  Sweden o. Sinapore D UAE UK USA ============= Page 350 of 398 ============= Customer Response ฐ_ • HelpDesk Enquiries=i :a 1,051 • Total Guest User Ids Issued-r` t Ys u= 3 • Mailink ;, F3,850 g • Unsolicited 278 y • Total Master Transaction Ids requested 386 • Total Master Transaction Ids issued 228 • Numb r of Counterparties transacting 58 f w E0004388713 =XH002-02359 ============= Page 351 of 398 ============= Number of Transactions per day 300 242 250 200 170 180 189 176 165 150 150 131 100 50 56 50- 0 29th 30th 1st 2nd 3rd 6th 7th 8th 9th 10th Nov Nov Dec Dec Dec Dec Dec Dec Dec Dec EXH002-02360 ============= Page 352 of 398 ============= Transactions via EnroriOnline 373 Million MMBtu 56% 19% ฎ Canadian Gas Financial US Gas Financial El US Gas Basis  Canadian Gas Physical ฎ US Gas Physical E0004388715 =XH002-02361 7% 9% ============= Page 353 of 398 ============= Top Ten Counterparties 0 100 200 300 o Delmarva ฎ Koch 0 Coral o CXY Energy Duke Engage Energy Cook Inlet Energy Dynegy Aquila Southern Company E0004388716 EXH002-02362 ============= Page 354 of 398 ============= Compared to Same Period Last Year 300 250 200 150 100 50 0 ., E0004388717 Ail =XH002-02363 Aquila Southern Coral Koch Dynegy Phibro Inc Company ============= Page 355 of 398 ============= New Customers Only transacted with Enron via EnronOnline • Gulf Midstream Services • PetroBank Energy & Resources Limited E0004388718 1:nr EXH002-02364 ============= Page 356 of 398 ============= Revenue Calculated on the basis of settled value to date which includes delivered volumes only: Revenue US Natural Gas Canadian Gas Nov 29 - Dec 12 (2 weeks) $ 14,155,546 $ 5,067,298 Total $ 19,222,845 Revenue Estimates (2000) Assume EnronOnline takes 10% of volume > $1.7bn =XH002-02365 E0004388719 ============= Page 357 of 398 ============= Comparative Statistics Total Gross Notional Value ($) Price x Volume Why use this calculation? Altra~,J r.,. ,r 1998 $6bn 1999 (est) $12bn EnronOnline (first 2 weeks only) $857m Per annum $22.3bn E0004388720 En rca EXH002-02366 ============= Page 358 of 398 ============= Comparative - EnronOnline v NGX & Altrade As On 8th December US Gas Phy Transco Z6NY 09Dec99 US Gas Phy Transco St.65 09Dec99 US Gas Phy NGPL-NIGAS 10-31Dec99 US Gas Phy NGPL-NIGAS 09Dec99 US Gas Phy NGPL-Midcon 09Dec99 US Gas Phy HeHub 09Dec99 CAN Gas Phy NIT Jan00 CAN Gas Phy NIT 09-31Dec99 CAN Gas Phy NIT 08Dec99 a ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 ~/~ N d '~/'~ ' (D co o (0 N d' Volume  Altrade D NGX EnronOnline E0004388721 E 4 IF EXH002-02367 ============= Page 359 of 398 ============= Launch Schedule November 29, 1999 US Natural Gas Canadian Gas Online December 13, 1999 US Power December 15 -16, 1999 Coal Nordic Power Accelerated Plastics Launch Pulp & Paper January 5, 1999 UK Power UK Gas Continental Power Continental Gas Emissions Oil & Refined Products Petrochemicals Weather E0004388722 EXH002-02368 ============= Page 360 of 398 ============= 1 0 EnronOnline E0004388723 EXH002-02369 ============= Page 361 of 398 ============= Global Technology Update on eCommerce Activities E0004388724 f9 EXH002-02370 ============= Page 362 of 398 ============= Global Technology Activities. General Update > Existing eCommerce Initiatives EnronOnline'y energy.en,ron..~om S I'ch 41 - e upp y ain - eงervices and EnergyDesk.com 3 - Enron trom\m irkt.de- ~ Y , •.. - Other c iVities Technology 9rigination Ro.IeC), ,ry Investments and ~Acquisitions u> i .~t E0004388725 EXH002-02371 ============= Page 363 of 398 ============= Enron's eBusiness Initiatives & Products Enron Online EnronStrommarkt.de r (Current US Gap) rvc~ ~t_e.. ` , CEne rgy.Enron.com ResCo Customer Needs Services . enClear Concept ~~ (Current Gap) eServices Energy Auction Product (Current Gaps) EES Services Lead Generator ResCo E0004388726 EXH002-02372 ============= Page 364 of 398 ============= Global Technology Update on eCommerce Activities EO004388727 FxHnm-n27 ============= Page 365 of 398 ============= 2000 - 2002 OPERATING & STRATEGIC PLAN: Presentation to Board of Directors E0004388728 FXH002-02374 ============= Page 366 of 398 ============= EXH002-02375 Net Income: Energy Businesses Enron Communications Recurring Non-Recurring Fully Diluted Earnings per Share: Energy Businesses Enron Communications Recurring , Non-Recurring Average Shares Outstanding - Diluted Return on Equity Funds Flow Debt to Capital Ratio v ~cp~oovtwnye.ซa eea.ep~n, irons z.m vM ENRON OPERATING & STRATEGIC PLAN EXECUTIVE SUMMARY (In Millions, except as noted) 1999 2000 $ 944 $ 1,180 11 (36) 955 1,144 (64) - w Executive Summary 1999 - 2000 00 vs 99 Growth 25% 20% 28% $ 1.16 $ 1.39 20% 0.01 (0.04) 1.17 1.35 15% (0.08) - $ 1.09 $ 1.35 23% 770 806 10.9% 11.5% $ 2,250 $ 2,300 39.6% 32.3% 1 E0004388729 ============= Page 367 of 398 ============= ENRON Earnings OPERATING & STRATEGIC PLAN 1999 - 2000 NET INCOME (Millions of Dollars, except as noted) 00 vs 99 1999 2000 Growth Wholesale Energy Operations & Services $ 847 $ 994 17% Transmission & Distribution 366 393 7% Enron Energy Services, net of minority interest (51) 47 n/m Enron Communications, Inc. 11 (36) n/m Exploration & Production 25 - n/m Corporate and Other 87 90 3% Financing Related (330) (344) 4% RECURRING NET INCOME $ 955 $ 1,144 20% Recurring Effective Tax Rate 14% 22% G lGfp1000]Plan`~BoaMBOOkals]Netlrc E0004388730 U7/99 2,07 PM 2 EXH002-02376 ============= Page 368 of 398 ============= ENRON OPERATING & STRATEGIC PLAN WHOLESALE ENERGY OPERATIONS & SERVICES (Millions of Dollars, except as noted) North America Europe South America Caribbean, Middle East & LNG India Asia, Pacific, Africa & China Enron Global Finance Enron Engineering & Construction Structured Transactions & Other Total Wholesale Energy Operations & Services G)C1a)OU02P1anVoard Sook.I,Jwholesale (2) 12/7/992'07 PM Wholesale 1999 - 2000 Net Income 1999 2000 Growth $ 320 $ 387 21% 124 168 35% 73 150 105% 27 55 104% (2) 30 n/m - (4) n/m 136 100 -26% 58 55 -5% 111 53 -52% $ 847 $ 994 17% 3 E0004388731 EXH002-02377 ============= Page 369 of 398 ============= ENRON OPERATING & STRATEGIC PLAN OPERATING COMPANY DETAIL (Millions of Dollars, except as noted) Transmission & Distribution Enron Gas Pipeline Group Portland General Group Total Transmission & Distribution Enron Energy Services, net of minority interest Enron Communications, Inc. G 1dp\0002PIanl9oard Book zlsjderail 1217199207 PM 4 Net Income Earnings Detail 1999 - 2000 1999 2000 Growth $ 238 $ 263 11% 128 130 2% $ 366 $ 393 7% $ (51) $ 47 n/m $ 11 $ (36) n/m E0004388732 0 EXH002-02378 ============= Page 370 of 398 ============= ENRON OPERATING & STRATEGIC PLAN CORPORATE AND OTHER (Millions of Dollars, except as noted) Net Income Azu rix Enron Renewable Energy Corp, net of minority interest Clean Fuels Resco Corporate expenses Amortization of prior period costs Structured Transactions & Other Overview Total Corporate and Other Earnings Detail 1999 -2000 1999 2000 Growth $ 24 $ (1) * n/m 38 27 -29% (16) (9) 44% 5 - n/m (75) (79) 5% (37) (45) 22% 148 169 14% - 28 n/m $ 87 $ 90 3% " After consideration of tax deduction on certain preferred shares, Azurix net income to Enron is $48 million and $23 million for 1999 and 2000, respectively. G,CIG1D002P1xngB-d Book.I r-rp 121 E0004388733 12/7/99 2 07 PM 5 0 EXH002-02379 ============= Page 371 of 398 ============= NET INCOME: Energy Businesses Enron Communications Recurring Non-recurring TOTAL NET INCOME DILUTED EPS Energy Businesses Enron Communications Recurring Non-recurring TOTAL DILUTED EPS Avg. shares outstanding - Diluted 2000 VS 1999 GROWTH - EPS from Recurring Earnings G 1CMN002PIm~B.,/ 0.w.SIO .n.n 1]/!5910) PM 1st Quarter 1999 2000 $ 245 $ 321 9 (9) 254 312 (131) - $ 123 $ 312 $ 0.34 $ 0.39 0.01 (0.01) 0.35 0.38 (0.18) - $ 0.17 $ 0.38. 745 787 8% ENRON OPERATING & STRATEGIC PLAN EARNINGS BY QUARTER (Millions of Dollars, except as noted) 2nd Quarter 1999 2 000 $ 236 $ 269 (14) (9) 222 260 $ 222 $ 260 $ 0.29 $ 0.32 (0.02) (0.01) 0.27 0.31 $ 0.27 $ 0.31 772 794 14% 6 3rd Quarter 1999 2000 $ 226 $ 275 (3) (9) 223 266 67 - $ 290 $ 266 $ 0.26 $ 0.32 - (0.01) 0.26 0.31 0.09 - $ 0.35 $ 0.31 781 817 18% 4th Quarter 1999 2000 $ 237 $ 315 19 (9) 256 306 $ 256 $ 306 $ 0.28 $ 0.36 0.02 (0.01) 0.30 0.35 $ 0.30 $ 0.35 780 825 18% Earnings by Quarter 1999 - 2000 Total Year 1999 2000 $ 944 $ 1,180 11 (36) 955 1,144 (64) - $ 891 $ 1,144 $ 1.16 $ 1.39 0.01 (0.04) 1.17 1.35 (0.08) - $ 1.09 $ 1.35 770 806 15% E0004388734 * *C9 EXH002-02380 ============= Page 372 of 398 ============= Net Income: Energy Businesses Enron Communications Recurring Non-Recurring Fully Diluted Earnings per Share: Energy Businesses Enron Communications Recurring Non-Recurring Average Shares Outstanding - Diluted IWA92.07 PM ENRON Income Summary OPERATING & STRATEGIC PLAN 1999, 2000, 01 & 02 INCOME SUMMARY (In Millions, except as noted) 00 vs 99 01 vs 00 02 vs 01 1999 2000 Growth 2001 Growth 2002 Growth $ 944 $ 1,180 25% $ 1,363 16% $ 1,594 17% 11 (36) n/m 10 n/m 40 300% 955 1,144 20% 1,373 20% 1,634 19% (64) - - - $ 891 $ 1,144 $ 1,373 $ 1,634 $ 1.16 $ 1.39 20% $ 1.54 11% $ 1.74 13% 0.01 (0.04) n/m 0.01 n/m 0.05 285% 1.17 1.35 15% 1.55 15% 1.79 15% (0.08) - - - $ 1.09 $ 1.35 $ 1.55 $ 1.79 770 806 844 878 E0004388735 7 ego FXH002-02381 ============= Page 373 of 398 ============= Wholesale Energy Operations & Services Transmission & Distribution Enron Energy Services, net of minority interest Enron Communications, Inc. Exploration & Production Corporate and Other Financing Related RECURRING NET INCOME Recurring Effective Tax Rate * Reflects sale of Portland General Group. G ILrv~oP2PImVB.M B..k.kIwl Ircwn. 1... 2 .7 VM ENRON OPERATING & STRATEGIC PLAN NET INCOME (Millions of Dollars, except as noted) Earnings 1999, 2000, 2001 & 2002 00 vs 99 01 vs 00 01 vs 02 1999 2000 Growth 2001 Growth 2002 Growth $ 847 $ 994 17% $ 1,282 29% $ 1,513 18% 366 393 7% 271 31% " 279 3% (51) 47 n/m 73 55% 110 51% 11 (36) n/m 10 n/m 40 300% 25 - n/m - n/m - n/m 87 90 3% 72 -20% 61 -15% (330) (344) 4% (335) -3% * (369) 10% $ 955 $ 1,144 20% $ 1,373 20% $ 1,634 19% 14% 22% 25% 27% E0004388736 8 yy O EXH002-02382 ============= Page 374 of 398 ============= ENRON OPERATING & STRATEGIC PLAN DEBT ROLL-FORWARD (Millions of Dollars) Sources / (Uses) of Funds 1999 2000 Opening Debt Balance $ (7,357) $ (8,200) Cash From Operating Activities Funds Flow From Operations 2,250 2,300 Changes in Working Capital (922) 40 1,328 2,340 Cash From Investing (3,781) (2,054) Cash From Financing Dividends Paid (454) (450) Stock Issuance 1,625 - Other Financing Activities (516) (424) 655 (874) (Increase)/Decrease in Debt (1,798) (588) Debt of Previously Consolidated Subsidiaries 955 2,600 11 Ending Debt Balance $ (8,200) $ (6,188) Interest Expense Net Interest Expense $ 680 $ 653 Capitalized Interest 54 22 Lease Interest 132 85 Total Interest Expense $ 866 $ 760 Funds Flow / Interest Coverage 3.60 4.03 * Assumes Portland General sold December 2000, proceeds used to retire debt Cash Flow 1999 - 2000 E0004388737 G:1Cfp\0002PIa n\Cash Reportst]CASH F LOW-New2.XLS]DebtRolI 1217/99 2:07 PM 9 9049 ~ EXH002-02383 ============= Page 375 of 398 ============= ENRON 2000 2000 OPERATING PLAN Cash Flow CASH FLOW (Millions of Dollars) Wholesale Trans & Commun- Corp & US Europe Int. Distrib. EES ications Other TOTAL Cash Flow From Opertalons Income from Operations $ 387 $ 168 $ 439 $ 393 $ 47 $ (36) $ (254) $ 1,144 Depreciation Expense 75 39 93 252 40 58 161 718 Other Funds Flow 14 64 84 (28) (17) (111) 432 438 Total Funds Flow 476 271 616 617 70 (89) 339 2,300 Changes In Working Capital 144 131 (77) (78) 9 86 (175) 40 Cash from Operations 620 402 539 539 79 (3) 164 2,340 Cash Flow From Investing Proceeds from Sales 209 - 794 183 - - 121 1,307 Investing Activities (613) (569) (814) (309) (295) (425) (336) (3,361) Total investing (404) (569) (20) (126) (295) (425) (215) (2,054) Cash Flow From Financing Dividends - (2) - (2) - - (446) (450) Other Financing Activities (23) - - (386) - - (15) (424) Total Financing (23) (2) - (388) - - (461) (874) (Increase)/Decrease in Debt $ 193 _1_1169) $ 519 $ 25 $ (216) $ (428) _1__(512) $ (588) G:\Cfp\0002PIan\Ca shReports\/CASH FLO W-New2.XLSICashFromOps 1217199 2:07 PM 10 E0004388738 /+*i49 FXH002-02384 ============= Page 376 of 398 ============= 2000 Strategic Investing Electric Generation Pipelines & Transmission Distribution Assets Consumption/Demand Technology & Infrastructure Other Investing Total Investments Proceeds on Sale of Assets Investment Activities 1999 Strategic Investing Electric Generation Pipelines & Transmission Distribution Assets Consumption/Demand Technology & Infrastructure Other Investing Total Investments Proceeds on Sale of Assets Investment Activities G:1Crp10002PIan%CashReportsgCASHFLOW-Nev2.XLS]ImesEng 1217/99 2:07 PM ENRON Strategic 2000 OPERATING PLAN 1999 & 2000 STRATEGIC INVESTING ACTIVITIES Investing (Millions of Dollars) Wholesale Trans & Commun- Corp & US Europe Int. Distrib. EES ications Other TOTAL $ (421) $ (444) $ (292) $ (30) $ - $ - $ (20) $ (1,207) (48) (44) (98) (122) - - - (312) - - (182) (96) - - (7) (285) - - - - (248) - - (248) (20) (15) (3) (20) (41) - - (99) (124) (66) (239) (41) (6) (425) (309) (1,210) (613) (569) (814) (309) (295) (425) (336) (3,361) 209 - 794 183 - - 121 1,307 $ (404) $ (569) $ (20) $ (126) $ (295) $ (425) $ (215) $ (2 054) , $ (691) $ - $ (692) $ (20) $ - $ - $ (51) $ (1,454) (200) (42) (32) (173) - - - (447) - (641) (96) - - - (737) - - - - (65) - - (65) (22) (49) (15) - (45) - - (131) (53) (17) (43) (58) - (333) (986) (1,490) (966) (108) (1,423) (347) (110) (333) (1,037) (4,324) 1 - 11 294 10 - 227 543 $ (965) $ (108) $ (1,412) $ (53) $ (100) _L_1333) $ (810) $ (3,781) 11 E0004388739 0 EXH002-02385 ============= Page 377 of 398 ============= ENRON OPERATING & STRATEGIC PLAN CAPITALIZATION TABLE & CREDIT RATIOS (Millions of Dollars, except as noted) Obligations Balance Sheet Debt Guarantees (10%) Residual Value Guarantees Total Obligations Equity Minority Interest Perpetual Preferred Stock Shareholders' Equity Total Equity Investments Selected Ratios Debt to Capital Total Obligations to Total Capital Funds Flow/ Interest Pre-Tax Interest Coverage Funds Flow to Obligations 1999 2000 $ 8,200 $ 6,188 97 97 489 489 $ 8,786 $ 6,774 $ 1,822 $ 1,480 1,001 971 9,540 10,310 $ 12,363 $ 12,761 39.9% 32.7% 41.5% 34.7% 3.60 4.03 2.50 2.78 25.6% 34.0% * Assumes Portland General sold December 2000, proceeds used to retire debt G:1Cfpa002PIa n\CashReports/CASH FLOW-New2.XLS)BOARDCapTab le 12/7/99 2:07 PM 12 Capitalization 1999 - 2000 0 E0004388740 FxHnm-n23 ============= Page 378 of 398 ============= ENRON Assumptions OPERATING & STRATEGIC PLAN MAJOR ASSUMPTIONS ENRON NORTH AMERICA * Significant earnings growth in origination businesses including benefits from a new focus on downstream industrials and Qualified Facility restructurings. * Cash plan assumes net price risk management assets will be monetized and turbine acquisition program will be financed off balance sheet. * Power markets continue to deregulate ENRON EUROPE * Significant earnings expected from Continental Europe as deregulated markets further develop. * Moratorium on gas-fired Power Generation is likely to exist for two or more years. Government retains high degree of flexibility/discretion as to end date. ENRON SOUTH AMERICA * Build profitable trading and origination business and begin development of a retail business. * Develop two power plants in Brazil and one in Bolivia. * Monetize assets to generate earnings and cash flow. 13 E0004388741 EXH002-02387 ============= Page 379 of 398 ============= ENRON OPERATING & STRATEGIC PLAN MAJOR ASSUMPTIONS ENRON CARIBBEAN, MIDDLE EAST & LNG * Move from a collection of assets to integrated interconnected businesses in the Caribbean. * Close Venezuela LNG project. * Assumes several acquisitions in Central America. ENRON INDIA & SOUTH ASIA * Plan includes sell down of 20% of Metgas. * Develop communications and retail businesses. * Availability rebates due to outages of Dabhol. ENRON ASIA, PACIFIC, AFRICA & CHINA * Develop Enron Japan - Full array of Enron Products and Services. * Complete SK-Enron acquisitions in South Korea. * Accelerate trading activity in Australia. * Shift China strategy to minimize short term cost. 14 Assumptions E0004388742 * *0 EXH002-02388 ============= Page 380 of 398 ============= ENRON OPERATING & STRATEGIC PLAN MAJOR ASSUMPTIONS GAS PIPELINE GROUP * Create new products and services for Northern Natural Gas to maximize pricing. * Transwestern Pipeline West capacity assumed to be fully subscribed, offsetting lower demand in East. * Transportation volumes (Bbtu/day) - Northern Natural Gas Transwestern Florida Gas Northern Border PORTLAND GENERAL GROUP 1999 2000 3,869 3,770 1,460 1,470 1,429 1,463 2,375 2,385 * Included in plan for full year in 2000. * Sale of Colstrip assumed to occur in first quarter of 2000. * No change to general base rates in any of the plan years. * Portland General Electric operating statistics - Retail Customers (Thousands) Retail Sales (Thousand MWh) 1999 2000 719 736 19,330 20,007 15 Assumptions 0 4 > E0004388743 FXH002-02389 ============= Page 381 of 398 ============= ENRON OPERATING & STRATEGIC PLAN MAJOR ASSUMPTIONS ENRON ENERGY SERVICES * Expand retail business in Europe with significant margin contribution. * Increase Total Contract Value originations from $5.5 billion in 1999 to $11 billion in 2000. * Bundled deals will continue to be the major contributor to earnings. ENRON COMMUNICATIONS * Continued investments to expand the Enron Intelligent Network reach. * Broadband Services, positioning Enron as the delivery platform for broadband content. * Create a bandwidth management business capturing significant market share. CORPORATE & OTHER EXPENSES * Assumes an effective tax rate of 22% in 1999, 25% in 2000 and 27% in 2001. * Assumes no equity issuances in 2000. * Includes overviews in 2000 plan of- $45 million pre-tax ($28 million after tax) income $400 million funds flow 16 Assumptions E0004388744 IV *0 FxHnm-n23An ============= Page 382 of 398 ============= Company Overview E0004388745 EXH002-02391 ============= Page 383 of 398 ============= Enron's Stock Has Outpaced EPNG Industry Williams Enron VEBA Endesa British Gas Southern Duke RWE FPL Edison Intl. PG&E TXU Total return to shareholders (TRS) (1/90-9/99) Percent CAGR 123.7 22.8 7.9 ~ 7.9 P/E ratio (1999E) 36.2 34.8 18.0 17.1 -----~ 17.8 13.8 115.5 19.3 -112.6 12.2 13.2 -]12.0 E0004388746 EXH002-02392 ============= Page 384 of 398 ============= Market Cap Has Risen. To Number One $ Billions Market value of equity (1/90) British Gas - -.-716.2 RWE 10.8 VEBA 10.1 PG&E 9.4 Southern 9.2 Edison Intl. 8.6 TXU 6.4 Duke -5.7 Endesa 5.5 F P L ป_.. 4.9 Enron 2.9 Williams 1.6 27.5 29.3 E0004388747 Market value of equity (9/99) 22.7 20.7 EXH002-02393 ============= Page 385 of 398 ============= Strategic Control Map . • • 4C 8 0 1 o • •, . -, -$150 bn -4 ftft " 135 - 120 soft aft --ft 90 2 `` aft '- --ft aft. 60 '-- Mft - !!- 30 110 0 5 10 15 20 25 30 Book equity, $ Billions E0004388748 EXH002-02394 ============= Page 386 of 398 ============= Strategic Control Map 100 1 , , x Shapers S~dec is irgrelvse` \ increase ROE Rt with l tt/e` ` • and book equity ,C 8 i book a uit1 growth` • `.rapidly O --$150 bn `. S 097-Aphic ' ' 135 inte.~~ors 120 ' increase ibo 90 2 _equity 'rapidl y.. 60 `- areomft"t__, 30 O - - 10 5 10 15 20 25 Book equity, $ Billions 30 E0004388749 FyHnm_n73Q. ============= Page 387 of 398 ============= Market-to-book Performance Lags Shapers Specialists Integrators 3.5 2.5 9.8 8.2 E0004388750 Market-to-Book Ratio (9/93) 4.0 2.4 2.2 Market-to-Book Ratio (9199) EXH002-02396 ============= Page 388 of 398 ============= Earnings Growth And PIE Have Been Solid... Shapers Specialists Integrators Enron y9o Incumbents -9C Net income growth (1993-98) Percent CAGR 21 20 21 16 PIE ratio (9/99 lagging) 37.5 41.7 nmf E0004388751 EXH002-02397 ============= Page 389 of 398 ============= ...But ROE Has Been Low ROE average (1993-98) Percent Shapers Specialists Integrators Enron y9o Incumbents 24 22 * Incremental net income = incremental book equity Incremental ROE* (1993-98) Percent nmf 39 E0004388752 EXH002-02398 ============= Page 390 of 398 ============= Enron's Growth Has Been Highly Capital Intensive $ Million incremental equity Per $1 billion of incremental market cap Shapers Specialists Integrators Enron 4-PO Incumbents n/a - J 85 187 313 270 417 lY /+ 833 E0004388753 EXH002-02399 Per $25 million of incremental earnings ============= Page 391 of 398 ============= As A Result, Total Returns To Shareholders (TRS) Have Lagged TRS (9/93 to 9/99) Percent CAGR * From 1/90 to 9/90 Enron's TRS was 23% E0004388754 EXH002-02400 ============= Page 392 of 398 ============= Disaggregating Enron's Portfolio Capital Enron Growth rate Intensity Business Units Shapers High Low ECT EES ECI Integrators High High* El Azu rix Incumbents Low High* GPG PGE EOG Clean Fuels * High capital intensity is often required (e.g., regulated return industries; emerging economies which lack infrastructure/liquid markets) E0004388755 EXH002-02401 ============= Page 393 of 398 ============= "SHAPER" BUs Have Achieved Less Capital Intensive Growth... Shaper BUs • ECT • EES • ECI Integrator BUs • EI • Azurix Incumbent BUs •GPG • PGE • EOG E n ro n total IBIT Growth (1993 to 1999) Return on equity (9199) Percent CAGR Percent 23 1 I 110 27 16 E0004388 756 EXH002-02402 ============= Page 394 of 398 ============= ...Resulting In Significantly Higher M/b Ratios... Shaper BUs •ECT • EES • ECI Integrator BUs *E1 • Azu rix Incumbent BUs • GPG • PGE •EOG Enron total Market-to-Book Ratio (9/99) 35 7.7 E0004388757 EXH002-02403 ============= Page 395 of 398 ============= ...And Essentially All Of Enron's Shareholder Value Creation Shaper BUs • ECT • EES • ECI Integrator BUs •EI • Azurix Incumbent BUs • GPG •PGE • Others E n ro n total TRS (1/90 to 9199) Percent CAGR 23 49 -0.9 Shareholder Value Creation (SVC) (1/90 to 9/99) $ Billions 14.6 14.8 E0004388758 EXH002-02404 ============= Page 396 of 398 ============= Achieving Shaper-Like Expectations Could Create Significant Value $ Per share of Enron 25 Market expectations 20 for earnings growth Percent 15 - 10 7 Historical performance 41 61 76 86 95 101 107 34 47 57 64 69 74 77 28 37 43 48 51 54 57 4 30 34 36 39 41 42 10 12 14 16 18 20 22 Market expectations for incremental ROIC Percent Typical shaper E0004388759 EXH002-02405 ============= Page 397 of 398 ============= E0004388760 EXH002-02406 ============= Page 398 of 398 ============= AGENDA ITEM 15(c) (SUGGESTED FORM OF RESOLUTION) RESOLVED, that a dividend of $71.50 per share on the Mandatorily Convertible Junior Preferred Stock Series B of the Company (for an aggregate dividend payment of $17,875,000), covering the dividend period from and including September 24, 1999 through the period ending December 31, 1999 be, and it hereby is, declared payable on January 9, 2000 to stockholders of record of said stock at the close of business on December 31, 1999. \\ENE1\DATA1\User\rcarter\a Minutes\121499VrPrefDivRes.doc E0004388766 EXH002-02407