MM APPROVAL SHEET .:i:s AOOrO'aI Shec~ snould be used to approve Enrons par~Ici~anon in any cansacuons involving UM Cavman. L.P (~UN{V~ ~ Th-Invesm~nt. LY rL-fM2fl. UMI and UM2 will collecovely be erred to as UM~ This Approval Snect ~s in addition in iieu of) any other Enron anorovals that may be required. GENERAL Deli narne2 EEX are Approval 5hee~ :omoie:ec: ~ece~riber 23. 1999 ~iron pe:son :cmoienng this form: Chris Loehr Ex~e~:ed closing date: Dec~iber 29. 1999 Business Unit: Eru'nn North America Business Unit Originator: Joe DetTner, Tim Proffsrr This ~ansaction rejares to ~UM1 and/or OUM2. * nis oansacnon is 0 a sale ~y Enron Da purchase by Enran Da co-sale with Enron Da co-purchase with Enron and/or Dother:___________________________________________ Person(s) negotiating for Enron: Joe Deffner, Tim PrafFitt Person(s) negotiating for LJM: Michael Kopper. Greg Caudell Legal counsel for Enron: Andrews & Kurth (Wes Doret~.n) Legal counsel for LTM: Kirkland & Ellis (Rob Marks) DEAL DESCRIPTION LJM2 will purchase from Enron ?ioreh America a 90% equity interest in Bob West Treasure, LLC. for S2.9S3.l25. Bob West Treasure is a special purpose vehicle created to be the counterparry for a prepay with EEX involving S 105 million for up to 63 Bcfe of na gas. ECONOMICS UM2 will purchase the equity with the expectation of receiving a 25% IRR on its investment LIM2 and ENA will enter into a marketing agreement under which ENA agrees-to useits best efforts to sell the equity on LJMTs behalf and under which ENA receives 90% of any gains exceeding a 25% renirn to 1JM2. DASH Attached. AFiQO 167 ~ ~.Ai5rE~.O.sx UM "FOlA CONFIDENTtAL TREATMENT REQUESTED BY ANDREW FASTOW l~~fM APPRO'.AL SHEET Page ISSUES CHECKLIST Sale Opuons a. If this transaction ts a sale of an asset by zrlron. which of the following options were considered and rejected: ~Condor DIED! II DTbird Parry DOirect Sale. Please exolain: A sale to Condor would achieve de:or'.solzdatzon of;he debt but would Dot allow Enron to book earnings. b. Will this transaction be the most beneficial alternative to Enron? EYes ONo. If no. please explain:_____________ c Were any other bids.'otTers received in connecrion with this ~-an.sacnon? 0~es DNa. Please explain: The debt an~ e~ti1ty were marketed to several banks tncluuing Chase, Deutsche and Paribas. 2. Prior Obligations a. Does this transacttori involve a Qualified [nvesn"nent (as defined in the JEDI II parmership agreement)? DYes 0No. If yes, please explain how this issue was resolved: _______________________________________________________________ b. Was this transaction recuired to be offered to any other Enron aflili.ate or other party pursuant to a con~acnzal or other obligation? DYes 0No. If yes, please explain: _________________________________________________________ Terms ofTransaction a. What are the benefits (financial and otherwise) to Enron in this transaction? DCash flow 0Eartungs 0Other: Funds flow of approximately SIOS million. b. Was this transaction done snictly on an arm's-length basis? 0Yes DNa. Woo, please explain:__________________ c. Was Enron advised by any third party that this transaction was not fair, from a financial perspective, to Enron? - DYes 0No. If yes, please explain: d. Are all UM expenses and out-of-pocket costs (including legal rees) being paid by UM? DYes 0No. If no. is this market standard or has the economic impact of paying any expenses and out-of-pocket costs been considered when responding to items l.b. and 3.b. above? EYes DNa. 4. Compliance a. Will this transaction require disclosure as a Certain Transaction in Enroti's proxy statement? BYes DNa. b. Will this transaction result in any compensation (as defined by the proxy nales) being paid to any Enron employee? DYes 0No. c. Have all Enron employees' involvement in this transaction on behalf of UM been waived by Enran's Office of the Chairman in accordance with Enron's Conduct of Business Affairs Policy? 0Yes DNo. If no, please explain: d. Was this transaction reviewed and approved by Enron's Chief Accounting Orncer? ~Yez DNa. e. Was this transaction reviewed and approved by Enron's Chief Risk Oflicer? EYes DNa. f. Has the Audit Committee of the Enron Corp. Board of Directors reviewed all Enron/UM transacnons within the past twelve months? DYes ~No. Have all recommendations of the Audit Committee relating to Enron/LJM transactions been taken into account in this transaction? DYes DNo. AFLQO 168 ~ CL tX'.E,,OASI4 L~'M~ "FOIA CONFIDENTIAL TREATMENT REQUESTED BY ANDREW FASTOW LJM APPROVAL SHEET Page 3 * PROVA.LS Business Unuit Business Untt Legal Extron Corp. Legal Clobai Finance L~gai RAC Ac:ounung Eu~ecuttve Signature Name fiJi 1' Scan Sefton Rick Buy Rick Causev Date / ~./, r1~5 Li.ZL~ /5 LLLL2~ IZ/ZG 4'7 /2. ~ Jeff SkillinK AFiQO 169 FOIA CONFIDENTIAL BY A?4OREW FASTOW