LJM2 APPROVAL SHEET Approval Sheet should be used to approve Enrons ParticipatiOn in any tiansactzons involving LJM Cayman. L.P. ('LJM I ~) or I Co-lnvestrs~nt. L.P. (~UMT'). UM I and LJM2 wiji colIe~t:ve:v be :efe:-red to as IJM. Thts Approval Sheet ts in addition to (not in lieu of) any other Enron approvals that may be required. GENERAL Deal name: Pluto Date Approval Sheet cornpieted: Decerntier 28. 1999 Enron person corr~leting this form: Chrts Loch: Expected closing date: December 29. 1999 Business Unit: Enron North America Business Unit Originator Bna.n Redmond This transaction relates to DUMi and/or OLJM2. This transaction is 0 a sale by Enron Da purchase by Enron Di co-sale with Enron Da co-purchase with Enron and/or Dother:_________________________________________________ Person(s) negonatuig for Enron: Joe Deffner. Greg Caudell. Kathy Lynn Person(s) negotiating for UM: Michael Kopper Legal counsel for Enron: Andrews & Kurth Legal counsel for LJM: Kirkland & Ellis (Mike Edsal) DEAL DESCRIPTION LJM2 will purchase from Enron North America a 90"/~ equitY interest in MEGS. L.L.C. for S743,040. LJM2 will also purchase ENA d&~ it MEGS. L.L.C. with 523.2 million principal amount and 1415% counon for 525.570.569.78. The premium paid on the debt r~ ~ UM2s market view that 9.9% is an appropriate return for the blended Burlington/Mariner credit risk. ECQNON'HCS LJM2 will purchase the equity with the expectation of receiving a 25% IRR on its investment. LJM2 and ENA will enter into a marketing agreement under which ENA agrees to use its reasonable best efforts to sell the equity on LJM2's behalf and under which ENA receives 90% of any gains exceeding UM2s 25% return. Due to the significant premium. LJM2's debt investment will yield a~proxiinately 9.9%. ENA has agreed to bear syndication risk on the debt piece. DASH Artached. The only material changes in the attached DASH are the now executd contracts that were contemplated when the DASH was done. MEGS, Mariner, and Burlington entered into a gathering aereement stipulating the contractual cashflows. MEGS and Mariner entered into an operating aereement under which Mariner and Burlington cover all operating expenses pro rrn. The gathering system has been tested and is currently operational. 0CM~Pi..,..phu,OAsHUM . kFiOO2$8 "FOIA CONFIDENTIAL TREATMENT REQUESTED DY ANDREW FASTDW LCPI APPROVAL SHEET Pare 2 ISSt~ES CHECKLIST Sale Options a. If this transaction is a sale of an asset by Enron. which of the following options were :o~sdered and rejected: ~Condor ~JEDI II ~Th±rd Parry ODirect Sale. Please exolain: A sale to Condor would not allow Enron to boor earnings. JEDI H would have required CJJPER.S consent since the transaction is not a Qualified Investment. Due to the small size of the equity piece and due to lED! Ifs unwillingness to present CaIPER.S' a transaction with more Manner credit exposure. JEDI II declined. b. Will this transaction be the most benefic:al alternative to Enron' EYes ~No. If no. please explain:____________ c. Were any other bidsioffers received in connection with this transaction' EYes DNa. Please explain: The debt was marketed to several banks. including Bank of Amenca. Bank of America was unwilling to accept flirther Manner credit exposure and declined. 2. Prior Obligations a. Does this transaction involve a Qualified Investment (as defined in the lED! II pasmership agreement)7 DYes. ~No. If yes, please explain how this issue was resolved2 __________________________________________________________ b. Was this transaction required to be offered to any other Enron affiliate or other party pursuant to a contractual or other obligation? DYes 0No. If yes, please explain: _______________________________________________________ 3. Terms of Transaction a. W'hat are the tienefits (financial and otherwise) to Enron in this transaction? DCash flow ~Earnings BOther: Funds flow of approximately S24 million. b. Was this transaction done strictly on an arm's-length basis? 0Yes ONo. lEna, 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 LJM expenses and out-of-packet costs (including legal fees) being paid by LJM? 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 I.b. and 3.b. above? EYes ONo 4. Compliance a. Will this transaction require disclosure as a Certain Transaction in Boron's proxy statement? 0Yes ONo. b. Will this transaction result in any compensation (as defined by the proxy rules) being paid to any Enron employee? DYes 0No. c. Have all Enron eniolayecs' involvement in this transaction on behalf of LJM been waived by Enron's Office of the Chairman in accordance with Enron's Conduct of Business Affairs Policy? 0Yes ONo. If no, please explain: d. Was this transaction reviewed and approved by Enron's Chief Accounting Officer? 0Yes DNo. e. Was this transaction reviewed and approved by Enron's Chief Risk Officer? EYes ONo. f Has the Audit Committee of the Boron Corp. Board of Directors reviewed all Enron/LJM transacnons within the past twelve months? DYes 0No. (The Audit Committee has not held a meeting since LJM2's formation.) Have all recommendations of the Audit Committee relating to Enron/I4M transactions been taken into account in this transaction? DYes DNa. *~* i00259 Gj~P~,o,P~.oO~sH UM ~c FOIA CONFIDENTIAL TREATMENT REQUESTED BY ANDREW FASTOW' I LJM APPRO"~A.L SREET Page 3 APPROVALS mess Unit Business Unit Legal Enron Corp. Legal Global Finance Legal RAC Accounnng Executive Same -~ -~ / / Rex Ro~rrs Scott Sefton Rick Buy Rick Causev Jeff Skilling 6 4k~~- ~T 4 - / Date 49 ,z-Lt-t~ AFI 00260 "FOIA CONFIDENTIAL TREATMENT REQUESTED BY ANDREW FASTOV(