LJM2 APPROVAL SHEET This Approval Sheet ~nouid be used to aPprove Enro&s participation in any transactIons involving UM Cayrnan. L.P (~UM~7) or Co.lnvestment. L.P. ('UM~). LJM 1 and UM2 will collectively be reiened to as ~UM. This Approval Snee: LI in addition * ..~t in lieu of) any ocher Enron approvals that may be required. GENERAL Deal name: Raptor II Date Aoproval Sheet completed: June 26. 2000 Enron person completing this form: Trushar Pate! Expected clos;ng date: June 30. 2000 Business Unit: Enron Corp. Business Unit Originator: Ben Glisan This transacuon relates zo OLJMI and/or 0UM2. This transaction is D a sale by Enron Da purchase by Enron Da co-sale with Enron Da co-purchase with Enron and/or 0orher:__creation of hedging struCture_________ Person(s) negotiating for Enron: Ben Glisan Person(s) negotiating for LJM: Michael Kopper Legal counsel for Enron: Vinson & Elkins Leial counsel for UM: Kirkland & Ellis DEAL DESCRIPTION Timberwoif I LLC CTimbcrwolF) is a special purpose entity organized for the purpose of entering into certain derivative transactions. UM2. through its 100% voting control of Timberwolf. has the unilateral ability to make the investment decisions for erwolf and is not contractually obligated to execute any derivative transactions with Enron. LJM2 will execute derivative tr..,.~actions with Grizzly I LLC (Grizzly"). a wholly-owned subsidiary of Enron. to the extent those investment decisions are aligned with LJM2's investment objectives. Enron. through Grizzly, will offer LJM2 the opportunity to execute derivative instruments relating to both public and private energy and telecommunication investments made by Enron. ECONOMICS Timberwolfs distributions to equity holders will be limited by earnings at Timberwoif. To the extent there are earnings and sufficient cash to discrioute. distributions will be made according to the following waterfall: * First. 341 million tQ UM.2 * Second. distributions as necessary until LJM2 receives a 30% IRR over the term of the structure (unless the IRR was achieved tnrough the S41 million distribution above) * Third. 100% to the special limited partnership interest. Grizzly I LLC. a wholly-owned subsidiary of Enron DASH See attached. A.F 100 189 "FOIA CONFIDENTiAL TREATMENT REQUESTED 9Y ANDREW FASTOW' LJM APPROVAL SHEET Paie 2 ISSUES CHECKLIST Sale Options a. If this transaction isa sale of an asset by Enron. which of the following options were considered and rejected: DCondor OJEDI II OThird Party ~Direct Sale. Please explain: Not a sale of an asset by Enron b. Will this transaction be the most beneficial alternative to Enron' BYes ~No. It no. please explain c. Were any other bids/offers received in connection with this transaction? DYes ~No. Please explain: Pnvate structured finance transaction -. P7ior Obligations a. Does this transaction involve a Qualified Investment (as defined in the JEDE II partnership agreement)? EYes 8No. If yes, please explain how this issue was resolved: ___________________________________________________________ b. Was this transaction required to be offered to arty other Enron affiliate or other party pursuant to a contractual or other obligation? DYes ~No. If yes. please explain: _____________________________________________________ 3. Terms of Transaction a. What are the benefits (financial and otherwise) to Enron in this transaction? OCash flow DEarnings 0Other: Ability to hedge mark-to-market exposure on investments in publicly and privately held companies b. Was this transaction done strictly on an arm's-length basis7 0Yes ONo. If no. 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-pocket costs (including legal fees) being paid by LJM? DYes ~No. 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 ONo. 4 Compliance a. Will this transaction require disclosure as a Certain Transaction in Enron'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 employees' 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? EYes ONo. If no, please explain. d. Was this transaction reviewed and approved by Enron's Chief Accounting Officer? 0Yes ~No. e. Was this transaction reviewed and approved by Enron's Chief.Risk Officer? 0Yes DNo. f. Has the Audit Committee of the Enron Corp. Board of Directors reviewed all Enron/LJM transactions within the past twelve months? DYes 0No. (The Audit Committee has not held a meeting since LJM2't formation.) Have all recommendations of the Audit Committee relating to Enron/LJM transactions been taken into account in this transaction? DYes ONo. '~' 'i~ 7'~'~j a1 '7'iPD'~ 4E-l ~C'4 -, 4,..d~ ~'-'C f'~ ..~ - ~c (~c' (~!D-?-i~4~ t-a-"'t1~ -~ CPA" C AFIOOj90 "FOIA CONFIDENTIAL TREATMENT REQUESTED BY ANDREW FASTOW" L.JM APPROVAL SHEET Page 3 A bPROVALS - .~aness Unit Business Unit Legal Enron Corp. Legal Global Finance Legal RAG Ac:ounting E~ecunve Name Ben Glisan Siviazure / A' Rex Roeers 1.'