From: Sent To: Cc: Subject: LA11D PARlY ThANSACIIONS. 10. 05/09/2003 18:32 FAX ALSTON BIRL LLP l~ 005 Lance Schuler-Legal Tuesday, May01, 2001 11:09 PM Kenneth Lay~ Jeff Skilling James Derrick Project Aura; draft disclosures re LJM2 At the request of Jim Derrick, attached are the latest draft disclosures for a 10-0 Quarterly Report and for the 2002 Proxy Statement in connection with LJMZs proposed acquisition of Enron Renewable Energy Corp. Please do nat hesitate to contact me If you have any questions. Lance. W. Lance Schuler Enron.North America Corp. 1400 Smith Street, ES 3828 Houston, Texas 77002 Phone: 7131853-6419 Fax: 713/640-3393 Email: Iance.schuler-legal@eriron.com I I EN071569S9 DP0EX00029316 ~NT EXHIBIT 20903 I'~oI I~-j.o-8SU 05/0?/2003 18:32 FAX ALSTON BIRL LLP l~OO6 -S DRAFT #2 Related Party Transactions (1O-Q Proposed Disclosure - Enron Wind Sale) In 2001 and 2000, Enron entered into transactions with a limited partnership (the 1tRclated Party") whose general partner's managing member is a senior officer of Enron. The limited partners of the Related Party are unrelated to Enron. Management believes that the terms of the transactions with the Related Party were reasonable compared to those which could have been negotiated with unrelated third parties. In 2001, after seeking a sale to unaffihiated third parties, Enron sold all of the outstanding capital stock in Enron Renewable Energy Corp., an indirect subsidiary, to the Related Party in exchange for $____ million in cash and $_____ million in a P1K- preferred security and warrants. Enron recognized nonrecurring gain of $________ on the sale. The terms of such sale were reviewed and approved by Enron's Board of Directors, who received a fairness opinions off I, who acted as financial advisor to Em-on in connection with the transactions. EN07156970 DPOEXOOO293 17 O5,(OP/2003 18:33 FAX ALSTON BIRL LLP l~1OO7 DRAFT #4 Proposed (2002) Proxy Disclosure (Enron 'Wind Sale) During 2001, certain Enron subsidiaries and affiliates (defined collectively for purposes of the following paragraphs as "Enron") entered into a number of transactions with LJM2 Co-Investment, L.P., a private investment company that primarily engages in acquiring or investing in energy and communications-related investments ("LJM2"), and its affiliates involving either assets Enron had previously decided to sell or risk management activities intended to limit Enron's exposure to price and value fluctuations with respect to various assets. Andrew S. Fastow, Executive Vice President and Chief Financial Officer of Enron, is the managing member of LJM2's general partner. The general partner of LJM2 is entitled to receive a percentage of the profits of LJM2 in excess of the general partner's portion of the total capital contributed to LJM2, depending upon the performance of the investments made by LJM2. In one such transaction, I.JM2 purchased from Enron all of the outstanding capital stock of Enron Renewable Energy Corp ("BREC"), an indirect subsidiary of Enron, for $__________ in cash and $________ in a P1K-preferred security and warrants of EREC. [Describe reimbursement of expenses, If any, and payment of work fee to LJM2 to the extent EIIZC is sold to a party other than LJM2.J [Describe the amount of Mr. Fautow's financial Interest In the transaction.] The terms of the purchase were negotiated on Enron's behalf by senior officers of Enron, other than Mr. Fastow, and approved by Enron's Board of Directors, who received an opinion of 1, its financial advisor, that the transaction was fair to Enron and its stockholders from a financial standpoint. Enron acquired EREC (then Zond Energy Systems) in 1996. EREC is a global wind power company that engages in the manufacturer, sale and installation of wind turbines with third parties, as well as the development, financing and operations/maintenance of wind projects. Enron determined to dispose of EREC and discussed a possible sale with a number of parties. including industzy competitors and financial investors. As a result of --ibis-process; Enron dete ied-that-z-potential-sale-to-LJM2-vffered--the inos -favorable prospects for completing a transaction on terms acceptable to Enron. [Insert discussion of other transactions entered into with LTMZ during 2091, induding-If practicable to determine (see abo've)-finandal quantification of the amount of Mr. Fastow's interest in transactions between Enron and LJM2.J Management believes that the terms of the transaction were reasonable and no less favorable than the terms of the similar agreements with unrelated third parties. ENO7I 66971 DPOEXOOO2931 8