============= Page 1 of 3 ============= I a- LJM2 APPROVAL SHEET ['his Approval Sheet should be used to approve Enron's participation in any transactions involving UM Cayman, L.P. ("IJMI") or JM2 Co-Investment, L.P. ("LJM2"). LJMI and LJM2 will collectively be referred to as "LJM". This Approval Sheet is in tddition to (not in lieu of) any other Enron approvals that may be required. GENERAL -_ Deal name: EECC Blue Dog Turbine Purchase r Date Approval Sheet completed: as of 05/12/00 Enron person completing this form: GehleIMarlow/I(elly Expected closing date: 05/12100 Business Unit: Enron Engineering & Construction Business Unit Originator. Fred Kelly This transaction relates to C]LJM1 and/or ®LJM2. This transaction is 13 a sale by Enron Ga purchase by Enron Qa co-sale with Enron Era co-purchase with Enron and/or )other:-An option agreement to purchase turbines. Person(s) negotiating for Enron: Fred Kelly Person(s) negotiating for LJM: Michael Hinds Legal counsel for Enron: David Bargainer Legal counsel for LJM: Mike Edsall, Amy Harvey *, DEAL DESCRIPTION +rr/ ill enter into a Letter of Agreement with General Electric Company to acquire the rights to purchase two PG712IEA Gas Generator Sets, LJM2 will appoint EECC as its Agent to negotiate the Purchase Agreement and EECC will enter an Option agreement with UM2 to acquire LJM2's rights to purchase the two Gas Turbine Generator Sets. c1 1 In consideration of LJM2s role in facilitating this transaction. EECC will pay UM2 a non-refundable option payment of $846,378. In :onsideration far EECC acting as Agent for LJM2 in negotiating this transaction, LJM2 will pay EECC a pro-rated Agency Fee of 1100,000 for each six months the Agency agreement is in effect. [n the event that EECC fails to complete negotiation of the Purchase Agreement by May 31, 2000 and the letter agreement is terminated by either party, EECC shall pay LJM2 as liquidated damages all amounts paid by LJM2 to GE under the Letter Agreement including the $2.000,000 initial payment. EECC will also reimburse LJM2 for the amount of the Agency fee payable by LJM2, and for all transaction costs incurred by LJM2 as a result of such failure- The Purchase Agreement is substantially complete, however, and it is definitely expected that it will be executed by May 31, 2000. EECC will have the option to acquire the turbines until November 10, 2000. It is anticipated that by that date EECC will identify a ?rofitable power project opportunity within Enron or with a third party in which to utilize the turbines and will exercise its option to purchase the turbines from LJM2, althouith there is no obligation for EECC to exercise such option. ECONOMICS This transaction will require EECC to pay the above-mentioned amounts to LJM2. Additionally, if EECC elects to exercise its option. it will acquire LJM2's rights to acquire the turbines, for the then Fair Market Value of the turbines. This transaction will allow EECC to potentially secure these turbines off balance sheet until it is clear on which project opportunity tnd under which structure they will be employed. DASH Please reference the approved DASH dated 04/14100 and the approved Amendment dated 04/28/00. Please note that the LJM2 option premium and the commitment fee, combined, is higher than $200,000 anticipated in the original DASH. Please also note the .iquidated damages that will apply in the event EECC is unable to complete the negotiation of a Purchase Agreement by May 31.2000. Is CHECKLIST 1. Sale Options 44, D--AUi'lAppn,.a, ,,,K,: do, EC 749Q414 ~ EXH022-00010 GOVERNMENT EXHIBIT 919 Crim. No. H-04-25 (S-2) ============= Page 2 of 3 ============= A- J ?ROVALSHEET age a. If this transaction is a sale of an asset by Enron, which of the following options were considered and rejected: OCondor DJEDI II OThird Party DDirect Sale. Please explain: this transaction involves the purchase of an asset (the option). b. Will this transaction be the most beneficial alternative to Enron? BYes DNo. If no, please explain: c. Were any other bids/offers received in connection with this transaction? DYes ONo. Please explain. in view of time constraints LJM2 is considered the itiost expeditious vehicle for this transaction. Enron accounting and finance staff agree that the terms of the agreements with LJM2 arc fair and at market for LJM2's role in this transaction. Prior Obligations a_ Does this transaction involve a Qualified Investment (as defined in the JEDI II partnership agreement)? DYes ONo. If yes, please explain how this issue was resolved: b. Was this transaction required to be offered to any other Enron affiliate or other party pursuant to a contractual or other obligation? DYes ONo. If yes, please explain: Terms of Transaction a. What arc the benefits (financial and otherwise) to Enron in this transaction? OCash flow DEarnings 1 1Other: Since there is not a specific identified use for the turbines at this time, this transaction will provide accounting flexibility and will avoid the need to carry the transaction on Enron's balance sheet b. Was this transaction done strictly on an arm's-length basis? DYes DNo. 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 ONo. If yes, please explain: d. Are all UM expenses and out-of-pocket costs (including legal fees) being paid by UM? DYes ONo. 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? Yes DNo. Compliance a. Will this transaction require disclosure as a Certain Transaction in Enron's proxy statement? ®Yes DNo. b. Will this transaction result in any compensation (as defined by the proxy rules) being paid to any Enron employee? DYes ONo. c. Have all Enron employees' involvement in this transaction on behalf of UM been waived by Enron's office of the Chairman in accordance with Enron's Conduct of Business Affairs Policy? ®Yes DNo. If no. please explain: d. Was this transaction reviewed and approved by Enron's Chief Accounting Officer? ®Yes DNo. e. Was this transaction reviewed and approved by Enron's Chief Risk Officer? li3Ycs DNa. f. Has the Audit Committee of the Enron Corp. Board of Directors reviewed all Enron/LJM transactions within the past twelve months? DYes ONo. (The Audit Committee has not held a meeting since LJM2's formation.) Have all recommendations of the Audit Committee relating to Enron/LTM transactions been taken into account in this transaction? DYes DNo. is EC 74980190M EXH022-00011 ============= Page 3 of 3 ============= PPROV a AL SHEET APPROVALS Business Unit Business Unit Legal Enron Corp. Legal Global Finance Legal RAC Accounting Executive 0 %My rhxw -%LJMArq-...heea'_ ,4. Name 1 Fred Kel l y/Lany Izzo tL John Schwartzenburg Rex Rogers Scott Sefton Rick Buy 4 CA Rick Causey j Jeff Skilling Date z` 1 t ~ Bs a - 5.23 cD EC5074980100284 EXH022-00012