ENDESA Board of Directors' Proposed Resolutions at Extraordinary General Shareholders' Meeting to Take Place March 20, 2007, at First Call.

NEW YORK -- This Report is formulated in compliance with the provisions of article 144.1.a) of the Spanish Corporations Law (Ley de Sociedades Anonimas), in order to justify the proposal for amendment of the Corporate Bylaws upon which E.ON Zwolfte Verwaltungs GmbH ("E.ON") has conditioned the effectiveness of its Public Tender Offer on the Company's shares.

This proposal is submitted to the consideration and, as the case may be, approval of the Extraordinary General Shareholders' Meeting convened for March 20, 2007, at 11:00 a.m., at first call, and on March 21, 2007, at second call. In consideration of the Company's present shareholder composition, it is foreseeable that the General Meeting shall be held at first call.

1.-GENERAL CONSIDERATION

Upon convening the Extraordinary General Shareholders' Meeting, the Board of Directors is doing so in order that Endesa shareholders may have the opportunity to pronounce on the bylaw amendments upon which E.ON has conditioned its Public Tender Offer and, therefore, on the effectiveness thereof. In fact, the intent of the directors to call, "at the appropriate time," this Extraordinary General Shareholders' Meeting was already announced in the Report by Endesa's Board of Directors on the Public Tender Offer formulated by E.ON on November 21, 2006.

In effect, E.ON's Public Tender Offer, which was authorized by the Spanish Securities Market Commission (Comision Nacional del Mercado de Valores; CNMV) on November 16, 2006, and which offers (following the sealed envelope price enhancement presented by E.ON on February 2, 2007) cash consideration of 38.75 euros per Endesa share, is conditioned on obtaining a minimum of Endesa shares representing 50.01% of the capital stock, as well as on the amendment of Endesa's Corporate Bylaws, which is what is submitted to the consideration of the Company's Extraordinary General Shareholders' Meeting (section 2.7 of the Prospectus).

2.-SPECIFIC AMENDMENTS PROPOSED

The specific amendments to the current Corporate Bylaws contemplated by E.ON as a condition of its offer and which the Board of Directors is submitting to the General Meeting are as follows:

a) Elimination of the limitation of voting rights (article 32 of the Bylaws)

Article 32 of Endesa's current Corporate Bylaws provides that no shareholder may exercise a number of votes grater than what would correspond to 10% of the voting Capital existing from time to time, even though the shares owned thereby may exceed such percentage, as well as an aggregate of accessory rules aimed at clarifying the operability and application of said limitation.

E.ON conditions the effectiveness of its Public Tender Offer on "the amendment of this article of the bylaws and on the subsequent registration of said amendment with the Mercantile Registry, in such a manner that any limitation or restriction with regard to the number of votes exercisable by Endesa shareholders (individually or collectively) is eliminated. The Offeror will consider the condition relative to the amendment of this article to have been satisfied, no matter the wording given thereto, provided that it reflects the meaning of the proposed amendment, and provided that the pertinent resolution has been duly registered with the Mercantile Registry" (section 2.7.2 of the Prospectus).

It is expressly stated for the record that the amendment of this article of the bylaws requires "the favorable vote of more than 50% of the subscribed voting capital, both at first as well as at second call," in accordance with the provisions of article 32 itself of the Bylaws.

b) Elimination of the typology of the directors and composition of the Board of Directors (articles 37 and 38 of the Bylaws)

Article 37 of Endesa's current Corporate Bylaws, apart from providing for the minimum and maximum number of directors to form the Board of Directors and acknowledging the competency of the General Meeting with regard to appointment and removal of directors, regulates the typology of the Directors and the composition of the Board of Directors.

In relation to the typology of the Directors, article 37 establishes three types of Directors: (a) those who are associated, professionally and permanently, with the Company; (b) those whose association with the Company is circumscribed to their status as a Board member; and (c) those who belong to the Board of Directors as a consequence of their stakeholding in the Company's capital. And in relation to the composition of the Board, the said article provides that the Directors referred to in section (b), supra, shall be the majority with respect to the total Directors who, from time to time, form the Board, provided that this is permitted by the number of Directors elected in exercise of the shareholders' right to have representation on the Board in proportion to their stake in the Capital Stock.

Article 38 of Endesa's Corporate Bylaws, for its part, regulates the term of office of Director. For this purpose, it establishes that such term shall be four years, and the Directors may be re-elected for like periods although with the exception of the Directors referred to in section (b), supra, who may only be re-elected for a second mandate.

E.ON conditions the effectiveness of its Public Tender Offer "on the amendment of these articles and the subsequent registration of said amendment with the Mercantile Registry, in such a manner that the requisites of typology of the directors and majority composition of Endesa's Board of Directors are eliminated." Said condition shall be deemed to have been satisfied, no matter the wording given to the articles, "provided that they reflect the meaning of the proposed amendments, and provided that the relevant resolutions have been duly registered with the Mercantile Registry" (section 2.7.2 of the Prospectus).

c) Elimination of conditions for the appointment of Director (article 42 of the Bylaws)

Article 42 of Endesa's current Corporate Bylaws basically establishes the following limitations and incompatibilities of the Directors: (a) the age to be appointed a Director, which may not exceed 70 years or 65 years in the case of the Chief Executive Officer; (b) the performance of positions or duties of representation, management or advice at competing companies or at companies that dominate or control competing companies; (c) the simultaneous membership in more than five Boards of Directors, excluding the Boards of the group companies and of other circumstances; and (d) the performance of positions at entities that are habitual customers or suppliers of goods and services of the Company when this status may lead to a conflict of interest with the Company. Article 42 also establishes that said scheme of incompatibilities must be implemented by the Board Regulations.

E.ON conditions the effectiveness of its Public Tender Offer on the amendment of this article "in such a manner that no condition shall be required in order to be appointed as a member of Endesa's Board of Directors or Chief Executive Officer, other than the non-occurrence of incompatibilities established by law" (section 2.7.2 of the Prospectus), and also specifies that the condition shall be deemed to have been satisfied, no matter the wording given to article 42, "provided that it reflects the meaning of the proposed amendment, and provided that the relevant resolution has been duly registered with the Mercantile Registry."

3.-TEXT OF PROPOSED AMENDMENTS

Attached is a Schedule which contains the present wording and that resulting from the amendments proposed to the articles indicated therein.

4.-COMPLIANCE WITH CONDITIONS CONTEMPLATED IN E.ON'S PUBLIC TENDER OFFER AND CONSEQUENCES OF THE LACK OF APPROVAL THEREOF

This condition refers to Endesa's General Shareholders' Meeting adopting the pertinent resolutions referring to bylaw amendments and that said resolutions be registered with the Mercantile Registry of Madrid, inasmuch as E.ON considers that said registration "is of the essence to determining that the condition has been satisfied, without prejudice to the possibility available to it of waiving said condition."

It is expressly stated for the record that, in the event that the aforesaid bylaw amendments are not approved, the Public Tender Offer would remain null and void, unless the offeror waives the satisfaction of its conditions. Specifically, as results from article 24.2.II of Royal Decree 1197/1991, of July 26, on the scheme of public tender offers, in the case of conditions the satisfaction of which implies the adoption of resolutions by the corporate bodies of the affected company, "the offer shall remain null and void when on the last day of the acceptance period," as extended, as the case may be, in accordance with the provisions of the Royal Decree itself, "the conditions have not been satisfied, unless the offeror waives this satisfaction." In any case, the possibility of waiving the condition relating to the amendment of article 32 of the Corporate Bylaws is subject to certain conditioning factors by virtue of the facility agreements in respect of the bid which E.ON has entered into with certain financial institutions, as reflected in the Prospectus of the Public Tender Offer (section 2.7.3 of the Prospectus).

5.-OPINION OF THE BOARD

In view of the foregoing, and in order that Endesa's shareholders may pronounce on the bylaw amendments upon which E.ON's Public Tender Offer is conditioned and, therefore, on the effectiveness itself of the Offer, the Board of Directors recommends to the shareholders to participate in the Extraordinary General Shareholders' Meeting and to vote in favor of the approval thereof.

Madrid, February 6, 2007

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