Electronic Contracting Initiative

1. Electronic Contracting Initiative Project Why Team #1Legal Team Dick Shepherd Tony Pryor Rick Dietz Eva Neufeld Shelley Corman Maria Pavlou Susan Scott Staci Holtzman

2. Why is Electronic Contracting Needed? • Foundation for Ecommerce/Ebusiness opportunities • Needed to meet Intraday Capacity Release Turnaround (Order 637) • Eliminate routing/distribution activities • Eliminate negotiation over standard terms

3. How Does Electronic Contracting Fit with Other GPG Ecommerce Initiatives? • We need electronic contracting to make customer bids binding on EnronOnLine for capacity or imbalance transactions. • At first, electronic contracting may only be used for select transactions that occur electronically (I.e capacity auctions on EnronOnLine or capacity release on HotTap). • If we set up the right framework, electronic contracting will be ready for all types of electronic transactions (whether on EnronOnLine, HotTap, or on any new websites we build).

4. Electronic Contracting Goals • Customers complete and submit contracts electronically • Routing of standard contracts is eliminated • No follow-up paper copies • No need to store paper copies • Eliminate multiple types of electronic contracting agreements for different types of transactions • Consistent GPG approach to electronic contracting

5. EnronOnLine Contract Framework • Password Agreement • Electronic Trading Agreement • Buy/Sell Arrangements (under master agreements or under short-form GTCs)

6. What are the Legal Issues? • Enforceability • Original Signatures • Statute of Frauds • Authority • Counterparty authority to bind • Internal Signature Authority Issues

7. What Types of Agreements Do We Have Now? • HotTap Password Agreements • Electronic Contracting Agreement (ET&S) • Electronic Trading Partner Agreements (EDI) • Electronic Trading Agreements (FGT Nominations) • Service Agreements (FT, IT, receipt/delivery points) • Other Agreements (e.g. agency, discount letters, OBAs)

8. Enforceability • EnronOnLine Experience • Decided to have agreements build on original signature • Signature on Password Agreement binds the party to enforceability of subsequent agreements • Decided against “Digital Signature” - Hard to add digital signatures to web pages • Moreover, there wasn’t case law saying a “click” is enough

9. Statute of Frauds • Statutes of Fraud laws require a complete writing (including an original signature) for certain contracts (> 1 yr) to be enforced. • Will the Password Agreement signature suffice to make subsequent electronic agreements satisfy SF? • EnronOnLine only received opinion r.e. NY SF laws.

10. Counter-Party Authority Issues • EnronOnLine Experience with Authority Issues • Legal review prior to issuing password • If Password Agreement is signed by an existing customer, no further inquiry • If signatory is unknown, legal calls company to verify employment/title status • EnronOnLine is comfortable with this level of authority given short duration of transactions • GPG Issues • Our contracts are longer term • However, we have a smaller, less transient universe of counter parties

11. Internal Authority Issues • Current policies specify signature authority based on size/type/term of contract • Authority issues can be addressed in part by limitations in password set-up (i.e. no internal signature issues if counterparty is only set up to engage in capacity release) • Internal authority policies will need to evolve prior to accepting IT/FT agreements electronically

12. Next Steps • If we can mark-up our own EnronOnLine agreement (Tony, Maria, Legal Team) • draft combined password/ETA agreement • have agreement cover all GPG electronic contracting (including both EnronOnline & HotTap) • decide on which state law should apply (Texas or Nebraska) and get SF opinion • develop logistics plan to revise existing password/electronic agreements (except EDI)

13. Next Steps (Cont’d) • If we are required to use the EnronOnLine password agreement & ETA • Verify that agreement is Enron Corp., not ENA • Verify that can accept NY choice of law • Prepare a customer electronic contracting packet/memo explaining types of electronic agreements • Get marketing affiliate legal opinion (Shelley) • Need for separate transportation/trading passwords? • Navigation between EnronOnLine & website