The Penny King's Free and Clear M&A Fund

[thepennyking]

A Solution for ENRON

PRELIMINARY PROPOSAL
TERM SHEET
FOR THE PURCHASE OF NOTES PAYABLE
OF
ENRON CORPORATION
1400 Smith St.
Houston, TX 77002-7369
Telephone [phone]
Fax [phone]
http://www.enron.com
http://www.bankrupt.com/enron.txt

To: Bank of New York
Attn: Beata Hryniewicka
5 Penn Plaza, 13th Floor
New York, NY 10001
Phone: [phone]

Dear Ms. Hryniewicka:

Please consider this preliminary proposal on behalf of the Free and Clear Bancorporation, in organization, to purchase all of the outstanding principal and interest balances owed by ENRON CORPORATION to the below named unsecured creditors held by the three lead underwriters and trustees of the debt instruments as follows:

Chase Manhattan Bank Institutional Trust Svcs. 600 Travis Street Houston, TX 77002 Phone: [phone] Fax: [phone] Note $1,907,698,000.00 Citibank, N.A. Bank Loan 1,750,000,000.00 Citibank, N.A. Bank Loan 1,250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 500,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 325,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 222,500,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 200,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 200,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 150,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: [phone] Note 100,000,000.00

Total Debt Evidenced by Syndicated Notes: $7,300,000,000
Total Estimated Accrued Interest on Notes: 700,000,000
Purchase Price for All Notes Offered: $8,000,000,000

Method of Payment:
16,000,000 Non-Voting Class B Shares of The Free and Clear Bancorporation (FCB) with par value of $500 per share to be authorized.

Commitment Fee:
1% of the total purchase price of the debt or $80,000,000, whichever is less, payable to Penny King Holdings Corporation, a Delaware Private Investment Holding Company, (PKHC) acting as exclusive agent and financial advisor to The Free and Clear Bancorporation.

Plan of Operation:
If acceptable, Bank of New York shall act as Trustee and Clearing Agent on behalf of the Free and Clear Bancorporation in connection with this private offering to the syndicate of Banks and Institutional Holders in Due Course of the above unsecured debts of Enron Corporation.

PKHC shall enter into an exclusive consulting agreement with Bank of New York and The Free and Clear Bancorporation as joint participants in the offering memorandum to be presented first to the above named unsecured creditors as listed above through their Trustees or Agents.

The commitment fee shall be prorated amongst all holders in due course. All unsecured creditors must accept the Class B Non-Voting Shares of FCB unanimously as method of payment for the outstanding principal and interest on a $500 per share pro-rata basis.

Upon acceptance of a firm and binding Letter of Intent and a Letter of Irrevocable Commitment between all the unsecured creditors and FCB, participants shall deposit funds for the committment fee to Bank of New York as Escrow Agent on behalf of PKHC and FCB. Funds will be drawn from this account to cover legal expenses, mailings, filiing fees with the Supervisory Authority, requisite paid in capital, travel, phone and all expenses related to the execution of the terms of the Letters of Intent and Irrevocable Commitment.

The Letter of Intent and a Letter of Irrevocable Commitment shall incorporate by reference the drafting of a Definitive Debt Purchase Agreement under the proposed terms. Upon reaching a Definitive Agreement, FCB will obtain all necessary approvals of the Supervisory Authority to finalize the foundation, organization and launching of operations for the FCB.

PKHC shall be the initial sole voting stockholder of FCB and own 100% of the outstanding Class A Common Shares Par Value $500 per share. PKHC is the holder in due course of 500 billion bearer shares of PKPI non-voting common shares freely trading between $8.88 and $8.00 per share. PKHC, upon consummation of the proposed Letter of Intent and Letter of Irrevocable Commitment, and the Definitive Agreement shall exchange 1 billion PKPI bearer shares with FCB for the debt purchased by FCB under the Definitive Agreement. PKHC will then enter into a Definitive Agreement to convert the $8 billion debt of Enron into a controlling equity interest in Enron Corporation at a price and value to be determined by the Bankruptcy Court Trustee, and PKHC.

FCB will further enter into a repurchase agreement, prorated over 8.3 years, to buy back all of the 16,000,000 Non-Voting Class B FCB Shares in tranches of 160,000 shares per month for cash @ $500.00 per share as part of the Definitive Agreement.




Penny King Holdings Corporation, a Delaware Investment Holding Company.