LJM2 APPROVAL SHEET Approval Sheet should he used to approve Enrons parocspaoon in mv transacnons involving LJM Cavrrun. L.P (LfMI') or L.~12 Colnvesonent. L.P. (11MTh LTMl and LTM2 will collecnvelv be referred to as LJNf. Thu Approval Shees is in addition to (not in lieu of) any other Enron a~,provals that may be required. GENEI~A~L Deal name: Fishtail Date Aoproval Sheet comnk~e~: December 18. 2000 Enron person cornplenng this forin Nicole Alvino Expected closing date: December [9. 2000 Business Unit: Enron Corp. Business Unit Onginaror Barry Schnapper This transaction relates to ~LJMl and/or 8LJM2. This oans.acnon is D a sale by Enron Oa purchase by Enron ~a co-sale with Enron Da co-purchase with Enron and/or 0other formation of a Joint Venture (Fishtail). Person(s) negotiating for Enron: Barry Schnapper Person(s) negotiating for LJM: Michael Hinds Legal counsel for Enron: Vinsoci & Eiklns Le2al counsel for LIM: Kirkland & Ellis DEAL DESCRIPTION -all LLC is an off-balance sheet parmership formed by a conveyance of the economic benefits associated with the Pulp and Paper aess by ENA and a SSOMIvI commitment by Annapurna LLC, a special purpose entity. Annipurna is capitalized with S8MM equitY from LJM and a S42Mlvi revolver fl-am Chase which matures on June 30, 2001. In exchange for its conveyance, ENA receives a Class A and Class C interest. The Class A is the managing member interest, and the Class C represents 79.99% economics. Annapurna. with LJM as its managing member, receives 20% of the economics and the right to remove Enron as the managing member without cause. TPA.NSACTION SUMMARY LJM2 will set up a wholly owned, ban~upccv remote entity, UM2 - Amnpato LLC. LJM2 - An~ato LLC will purchase 100% of the equity of Annapurna for SB million. Enron will set up Fishtail LLC with Class A. B and C interests. The Class A interest is the managing member interest. The Class B interest receives: * Libor - 7% on its entire commitment (550 million) * 20% ownership of the Business, * at any nine, the ability to appoint. without cause. tv'o members to a 4 member board of directors which will control Fishtail. * after six months, the ability to sell all of the vehicle's interests, including the Class A and C interests, * consent rights for any refinancing of FishimiPs interests. The Class C interest will rec::ve aLl cash flows after exoenses of Fishtail, tax disuibutiocis for any unrealized income allocated to Annapurna. .knnapurna s prsferred return of Libar - 7% and any capital connibunon above the initial SB million. Eriron will convey and transfer the Business to Fishtail for a term of five years. With LJM2's ecuirv and Chase's coturnitineriL Anna~uma will cono-ibute S8 million and make a S42 million capital c~mnn'urmnent to Fishtail. AFi 00250 ~ ~ .r~-;~eo6q "FOIA CONFIDENTIAL TREATMENT REQUESTED BY ANDREW FASTOW~ A LIM APPROVAL SHEET Page 2 konaDurna will enter into a Services agretfletit with ~nroo that effectiVely sweepsthe excess of any ailocanon from FiSb~.II to .i~nnaDurna aver the amount necessary to satisfy .knnapurtla's ex~cnses. tax thsmbunons for any umealLzed income allocated to xnaoui-na. Chases con~nrnnent fee or yield on debt and LJMTs 15% return Lnr~;z 10% o~a~hip. Clan A Mana,ni h4a~f V C rdual m~ F&nizil f.T.C Scrvtc~ Afl~~.T~eiķI Giva E~rua d re.t ber~n Nip and PW buammL ~N4M ~'ahae Licor - 1% SSO maltiaa arni: * Annapurna cxpcua *Tax diswibqzuowis SI malhai. 542 mlhan ~cau,uuiu ,~ ~ Clan B P~fey~ Sbar~. 20% a~~ahup It and Feei oa~ Zeot SSOinIIwncml L7%~ii~Iccmu,um~.Ua(550nuII,at 45% ennion UM s nv~una5i Artnapunri. LI C 00% debt. 7Y. bo5ai 4 5bps ~a u,dzuwu 100% ~qwcy. 3% r~i 1100000Cm 542 MM Cmmimmau V L.Z% itdrawit SIMM fT lS%ruuuonm~i,.u LJ\12 ~rrpatn El C ~x~l,~lh ~ ECONOMICS Annapurna receives a preferred distribution equal to L--7% annually on its SSOMM comxmmient. As the administrative services agent for Annapwna, ENA can sweep any cash in excess LJIvVs agreed upon return and Chase's revolver fees. The fist S200MM of net realized losses from the Pulp and Paper business is allocated to ENA. and then to Annapurna unttl its~capiral account is extinguisbed. ISSUES CHECKLIST 1. Sale Options a. If tb.is transaction is a sale of an asset by Enroti, which of the following options were considered and rejected: ~Condor WEDI fi ~Third Party ODirect Sale. Please explain: Not a sale of an asset by Enron b. Will this transaction be the most beneficial alternative to Enron? 0Yes DNa. If no, please ~'tolain:_____________ Were any other bids/offers received in connection with this transaction? DYes 0No. Please explain: Strucoired deconsolidanon transaction Prior Obliginons a. Does this transacnon involve a Qualified Investment (as defined in the IEDI II parmership a~eerIent)? DYes 0No. If yes, piea.se exnlain how this tssue was resolved: ___________________________________________________________ b. Was this transaction re~wred to be offered to any other Enron affiliate or other parry pursuant to a contractual or other obli~anon? DYes ~No. If yes. please explain: _____________________________________________________ emma of Transaction a. What are the beneflis tfinanc:al and otherwise) to Enron tn~his transaction? OCash flow DEarnings 0Other Provide potential Uquidity for a commodity risk management business. ~. Was this transaction done suicdv on an arins-len2th basis? 0Yes DNa. If no. niesse explain: "FOIA CONFIDENTiAL TREATMENT REQUESTED BY ANDREW FASTOYr F I LJM APPROVxL SHEET Page 3 c. Was Enron advised by any third parr~' that this eansacnon was not :ai.r. from a fina~zaJ per~pect~ve. to Enron' DYes ~No. If yes, picase explain:_______________________________________________ & Are all UM expenses and out-of-pocket costs (including legal fees) being paid by UM? ~ ~~o. if 00. is this market standard or has the economic impact of paying any exncnses and ouc-of-pocker cos~ been ~onszdcred when responding to ite~ I .b. and 3.b above? 0Yes ~No. 4. Camoliance a. Will this transacoon require disclosure as a Certain Transaction in Enroos proxy statement? EYes DNo. b. Will this transacnon result in any compensation (as deiined by the proxy ruies) being paid to any Enron errvlovee? DYes ~No. c. Have all Enron employees' involvement in this trznsacnon on behalf of LJM been waived by Enroris Office of the Chairman in accordance with Enron's Conduct of Business Affairs Policy? EYes DNa. if no. please explain d. Was this transacnon reviewed and approved by Earon's Chief Accounong Officer? EYes DNa. e. Was this t~nsacdon reviewed and approved by Enrons Chief Risk Officer? 0Yes DNa. ~ Has the Audit Committee of the Enron Corp. Board of Directors reviewed all Enron/UM transacuons within the past twelve months? 0Yes DNa. Have all recomxnendattoris of the Audit Committee relann~ to EnmonfLJN{ transactions been taken into account in this transacuon? EYes DNa. M100252 - *DOC.Mi- ~ "FOJA CONFIDENTIAL TREATMENT REQUESTED 8Y ANDREW FASTOW" LJ.M APPROVAl S~{EET Page 4 'PROVAIS Business Unit Business Unit Legal Enron Corp. Legal Global Finance Legal RAC Aceoun~ng Eancurive Name Ben Glisan Siguarure - Rex Roges Jordan Mine Rick Buy Rick Causcv JefrSkillin~ Dize ~~22 'I ~ Z. -r-2.( AF ~ 002z 3 *FOIA CONFrOENTIAL TREATMENT REQUESTED BY ANOREWFASTOW.