IN RE ENRON CORPORATION SECURITIES LITIGATION

MELINDA HARMON, District Judge

WHEREAS, consolidated class actions are pending before this Court, including In re Enron Corporation Securities Litigation, Civil Action No. H-01-3624, which includes, among others, cases entitled Newby, et al. v. Enron Corp., et al.; The Regents of the University of California, et al. v. Kenneth L. Lay, et al.; Washington State Investment Board and Employer-Teamsters Local Nos. 175 and 505 Pension Trust Fund, et al. v. Kenneth L. Lay, et al.; and Nathaniel Pulsifer, Trustee of The Shooters Hill Revocable Trust, Individually and On Behalf of All Others Similarly Situated v. Kenneth L. Lay, et al.; and

WHEREAS, the Settling Parties have applied to the Court, pursuant to Rule 23 of the Federal Rules of Civil Procedure, for an order approving the settlement of the Actions as to them in accordance with the Stipulation of Settlement among them dated as of January 12, 2005 (the "Stipulation"), which, together with the Exhibits annexed thereto, sets forth the terms and conditions for a proposed settlement of the Actions as to the Outside Directors and Harrison (the "Settlement") and for dismissal of the Actions with prejudice as to the Outside Directors and Harrison;

WHEREAS, the Stipulation provides for the conditional certification of the Settlement Class solely for purposes of the Settlement; and

WHEREAS, the Court has read and considered the Stipulation and the Exhibits annexed thereto and has read and considered all other papers filed and proceedings had herein, and is otherwise fully informed in the premises, and with good cause appearing therefore;

NOW, THEREFORE, IT IS HEREBY ORDERED:

1. This Order (the "Preliminary Approval Order") incorporates by reference the definitions in the Stipulation and the Agreement Regarding Insurance Proceeds and Interpleader Action ("Insurance Proceeds Agreement"), and all capitalized terms used herein shall have the same meanings set forth in the Stipulation and the Insurance Proceeds Agreement.

2. The Court preliminarily approves the Stipulation, including the releases contained therein, and the Settlement as being fair, reasonable, and adequate to the Settlement Class.

3. The Court approves the distribution from the Insurance Proceeds to those Non-Settling Defendants listed on Exhibit A to the Insurance Proceeds Agreement, severally and not jointly, of the amounts provided on Exhibit A. Each Non-Settling Defendant listed on Exhibit A shall be entitled to receive up to fifty percent (50%) of his Set Aside Amount ten (10) calendar days from the date of this Preliminary Approval Order. Each Non-Settling Defendant listed on Exhibit A shall be entitled to receive up to the remaining fifty percent (50%) of his Set Aside Amount on the earlier of (a) ten (10) calendar days after the entry of the Interpleader Judgment by this Court substantially in the form attached to the Insurance Proceeds Agreement as Exhibit C or (b) April 15, 2005. Further, the Court approves the distribution from the Insurance Proceeds to the Non-Settling Defendants (as defined in the Insurance Proceeds Agreement) of the total sum of three million, five hundred thousand dollars ($3,500,000). The Non-Settling Defendants (as defined in the Insurance Proceeds Agreement) shall be entitled to receive up to fifty percent (50%) of the Arrearage Payment ten (10) calendar days from the date of this Preliminary Approval Order. The Non-Settling Defendants (as defined in the Insurance Proceeds Agreement) shall be entitled to receive up to the remaining fifty percent (50%) of the Arrearage Payment on the earlier of (a) ten (10) calendar days after entry of the Interpleader Judgment by this Court substantially in the form attached to the Insurance Proceeds Agreement as Exhibit C or (b) April 15, 2005.

4. Solely for purposes of the Stipulation and the Settlement, the Court now finds and concludes that:

(a) With respect to all Released Claims, particularly in light of the Settlement: (1) the members of the Settlement Class are so numerous that joinder of all class members in the Actions is impracticable; (2) there are questions of law and fact common to the Settlement Class; (3) the claims of the Representative Plaintiffs are typical of the claims of the Settlement Class; and (4) in negotiating and entering into the Stipulation, the Representative Plaintiffs and their counsel have fairly and adequately represented and protected the interests of all Settlement Class Members; and

(b) With respect to all Released Claims: (1) the questions of law and fact that are common to the Settlement Class predominate over any individual questions; and (2) a class action is superior to other available methods for the fair and efficient adjudication of this controversy, considering (i) the interests of the Settlement Class Members in individually controlling the prosecution of separate actions, (ii) the extent and nature of any litigation concerning the controversy already commenced by Settlement Class Members, (iii) the desirability or undesirability of concentrating the litigation of these claims in this particular forum, and (iv) the difficulties likely to be encountered in the management of the Actions.

5. Solely for the purposes of the Stipulation and the Settlement, the Settlement Class is hereby certified pursuant to Rule 23 of the Federal Rules of Civil Procedure in accordance with the following definitions as set forth in the Stipulation:

"Settlement Class" means all Persons (and their beneficiaries) who purchased or acquired any publicly traded equity or debt securities of Enron between September 9, 1997 and November 27, 2001, inclusive, and including purchasers of all securities issued by Enron-related entities during the Settlement Class Period, the value or repayment of which was dependent on the credit, financial condition, or ability to pay of Enron Corporation (collectively, the "Publicly Traded Securities"). Excluded from the Settlement Class are Defendants, the officers and directors of Enron, and members of their immediate families or their successors, heirs, and legal representatives. Also excluded from the Settlement Class are those Persons who timely and validly request exclusion from the Settlement Class, to the extent that they are able to do so under Rule 23 of the Federal Rules of Civil Procedure, pursuant to the Mailed Notice. Notwithstanding anything in the Stipulation or any other document to the contrary, the Settlement Class shall not exclude Defendants to the extent they purchased or acquired any publicly traded equity or debt securities of Enron in a representative capacity, such as trustee, agent, custodian or otherwise, on behalf of Persons who are or were neither Defendants, officers or directors of Enron, nor members of their immediate families or their successors, heirs and legal representatives.

6. Solely for purposes of the Stipulation and the Settlement, the Representative Plaintiffs are hereby certified as the class representatives pursuant to Rule 23 of the Federal Rules of Civil Procedure.

7. The Court approves, as to form and content, the Notice of Pendency and Partial Settlement of Class Action annexed hereto as Exhibit F-1 (the "Mailed Notice").

8. The Court approves, as to form and content, the Summary Notice for Publication annexed hereto as Exhibit F-2 (the "Summary Notice").

9. The date and time of the Settlement Hearing shall be added to the Mailed Notice and the Summary Notice before they are mailed and published, respectively, in accordance with paragraph 10, below.

10. The Court finds that the mailing, publication and distribution of the Mailed Notice and Summary Notice substantially in the manner and form set forth in paragraph 10, below, constitutes the best notice practicable under the circumstances, including individual notice to all Settlement Class Members who can be identified through reasonable effort, and constitutes valid, due and sufficient notice to all persons entitled thereto, complying fully with the requirements of Rule 23 of the Federal Rules of Civil Procedure and due process.

11. The Notice and Claims Administrator is empowered to supervise and administer the notice procedure, as set forth below:

(a) Commencing on or before February 14, 2005, the Notice and Claims Administrator shall mail or cause to be mailed, by first class mail, postage prepaid, copies of the Mailed Notice to all Settlement Class Members who can be identified by Plaintiffs' Settlement Counsel with reasonable effort at each such Settlement Class Member's last known address; and

(b) On or before February 28, 2005, the Notice and Claims Administrator shall cause the Summary Notice to be published twice in the Investor's Business Daily and twice in the Houston Chronicle.

12. At or prior to the Settlement Hearing (as defined below), Plaintiffs' Settlement Counsel shall file with the Court and serve on counsel for the Outside Directors and Harrison proof by declaration or affidavit of the mailing and publication described in paragraph 10, above.

13. Settlement Class Members who wish to exclude themselves from the Settlement Class must do so in accordance with the instructions contained in the Mailed Notice.

14. All Persons who fall within the definition of the Settlement Class and who do not timely and validly request to be excluded from the Settlement Class in accordance with the instructions set forth in the Mailed Notice shall be subject to and bound by the provisions of the Stipulation, the releases contained therein, and the Judgment with respect to all Released Claims, regardless of whether such Persons seek or obtain by any means, including, without limitation, by submitting a Proof of Claim and Release or any similar document, any distribution from the Gross Settlement Fund or the Net Settlement Fund.

15. A hearing (the "Settlement Hearing") shall be held onApril 11, 2005 at 10.00 a.m./p.m., before the Honorable Melinda Harmon, United States District Judge, at the United States District Court for the Southern District of Texas, Bob Casey United States Courthouse, 515 Rusk Avenue, Houston, Texas 77002, to determine: (a) whether the proposed Settlement as set forth in the Stipulation is fair, reasonable and adequate and should be approved by the Court; (b) whether an Order of Final Judgment and Dismissal, substantially in the form of Exhibit B to the Stipulation, should be entered herein; (c) whether the establishment of the Expense Fund should be approved; and (d) whether the allocation of the Gross Settlement Fund between the Newby Action and the WSIB Action, on the one hand, and the Creditors Committee Action, on the other, should be approved.

16. All papers in support of the Settlement shall be filed at least seven (7) days prior to the Settlement Hearing.

17. Any Settlement Class Member may appear and show cause (if he, she or it has any) why the Court should or should not: (a) approve the proposed Settlement as set forth in the Stipulation as fair, reasonable and adequate; (b) enter the Order of Final Judgment and Dismissal substantially in the form annexed as Exhibit B to the Stipulation; (c) approve the establishment of the Expense Fund; or (d) approve the allocation of the Gross Settlement Fund between the Newby Action, the Pulsifer Action and the WSIB Action, on the one hand, and the Creditors Committee Action, on the other; provided, however that no person shall be heard with respect to, or shall be entitled to contest, the foregoing matters unless on or beforeMarch 28, 2005, that person has served by hand or by first class mail notice of his, her or its intention to appear, setting forth briefly each objection and the basis therefor, together with copies of any papers and briefs in support of said objections and proof of membership in the Settlement Class, upon Keith F. Park, Lerach Coughlin Stoia Geller Rudman Robbins LLP, 401 B Street, Suite 1600, San Diego, California 92101 (on behalf of Lead Plaintiff in the Newby Action and plaintiffs in the WSIB Action), upon Lew LeClair, McKool Smith PC, 300 Crescent Court, Suite 1500, Dallas, Texas 75201 (on behalf of the Creditors Committee); and upon Kathy Patrick, Gibbs Bruns, L.L.P., 1100 Louisiana, Suite 5300, Houston, Texas 77002 (on behalf of the Outside Directors); and upon William F. Martson, Jr., Tonkon Torp LLP, 888 SW Fifth Avenue, Suite 1600, Portland, Oregon 97204 (on behalf of Harrison) and has filed said objections, papers and briefs with the Court. Unless otherwise ordered by the Court, any Settlement Class Member who does not make his, her, or its objection in the manner provided for herein shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the foregoing matters.

18. The Court may adjourn the Settlement Hearing from time to time and without further notice to the Settlement Class. The Court reserves the right to approve the Settlement at or after the Settlement Hearing with such modifications as may be consented to by the Settling Parties and without further notice to the Settlement Class. The Court further reserves the right to enter the Order of Final Judgment and Dismissal, inter alia, dismissing the Actions with prejudice as to the Settling Defendants and against Representative Plaintiffs and the Settlement Class at or after the Settlement Hearing and without further notice to the Settlement Class.

19. Upon the Effective Date, the Representative Plaintiffs and each of the Settlement Class Members, on behalf of themselves, their successors and assigns, and any other Person claiming (now or in the future) through or on behalf of them, and regardless of whether any such Representative Plaintiff or Settlement Class Member ever seeks; or obtains by any means, including, without limitation, by submitting a Proof of Claim and Release or any similar document, any distribution from the Gross Settlement Fund, shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished, and discharged all Released Claims against the Outside Directors and Harrison and shall have covenanted not to sue the Outside Directors or Harrison with respect to all such Released Claims, and shall be permanently barred and enjoined from instituting, commencing, or prosecuting any such Released Claim against the Outside Directors or Harrison.

20. Except as otherwise provided in the Stipulation no person who is not a Settlement Class Member or counsel for one or more of the Representative Plaintiffs shall have any rights to any portion of the Gross Settlement Fund.

21. Banks, brokerage firms, institutions, and other Persons who are nominees that purchased Publicly Traded Securities of Enron for the beneficial interest of other Persons during the Settlement Class Period shall, within ten (10) calendar days of receiving the Mailed Notice (a) send the Mailed Notice to all such beneficial owners, or (b) if they have not already done so in connection with the settlement with Andersen Worldwide Societe Cooperative ("AWSC"), send a list of the names and addresses of such beneficial owners to the Notice and Claims Administrator, in which event the Notice and Claims Administrator shall promptly mail the Mailed Notice to such beneficial owners. The Mailed Notice will advise such nominees that their reasonable costs in providing the Mailed Notice to such beneficial owners, to the extent not already reimbursed in connection with the prior settlement with AWSC, will be reimbursed by Plaintiffs' Settlement Counsel from the Gross Settlement Fund.

22. All reasonable costs and expenses incurred in identifying and providing notice to Settlement Class Members and in administering the Gross Settlement Fund shall be paid as set forth in the Stipulation.

23. The Court retains jurisdiction over all proceedings arising out of or related to the Stipulation and/or the Settlement.

24. If for any reason the Settlement does not become effective in accordance with the terms of the Stipulation, this Preliminary Approval Order shall be rendered null and void and shall be vacated nunc pro tunc, and the provisions of ¶¶ 6.2 and 7.5 of the Stipulation shall apply.

25. Without further order of the Court, the Settling Parties may agree to reasonable extensions of time to carry out any of the provisions of this Preliminary Approval Order or the Stipulation.

26. Pending final determination as to whether the Settlement as set forth in the Stipulation should be approved, no Settlement Class Member shall commence, prosecute, pursue or litigate any Released Claim against the Outside Directors or Harrison, whether directly, representatively or in any other capacity, and regardless of whether or not any such Settlement Class Member has appeared in the Actions.

IT IS SO ORDERED.

Exhibit F-1

Exhibit F-2