Footnote 8

was a project to assist Enron in recording income and cash flow from operations from its pulp andpaper business.382. The project originally called for Enron to create a joint venture structure (eventually,Fishtail) to which Enron would transfer its existing paper business. However, Enron ended uptransferring to Fishtail only the profits from Enron’s existing and future trading contracts. Fishtailhad a maximum life of five years. Therefore, Enron actually transferred to Fishtail only a five-yearprofit stream of the contracts, at most. Enron valued that profit stream at $200 million.383. Chase had two roles in connection with the Fishtail structure. Its first role was asequity participant in Annapurna, an SPE established to be the joint venture partner with Enron inFishtail. Annapurna was capitalized with $50 million equity. Of that $50 million, LJM2 provided$8 million and Chase provided an unfunded commitment of the remaining $42 million, by way ofa letter of credit. Chase knew, however, that none of that $42 million was at risk. It was 100%supported by Enron. The structure was set up to allocate the first $200 million in losses solely toEnron.384. Chase knew the Insiders intended to account for the transaction in which Fishtail wasto be used (Bacchus) as a FAS 140 transaction. Chase also knew that Fishtail had to be structuredso as not to be consolidated with Enron. For that to happen, 20% of Fishtail’s capitalization had tocome from Annapurna. But Chase’s portion of Annapurna was not at risk because the Insiders hadagreed that Fishtail’s first $200 million in losses would be allocated completely to Enron.385. Chase’s second role in Fishtail was as valuation expert. Enron’s $200 millionvaluation of the five-year profit stream from Enron’s trading contracts was dependent on, andsupported only by, a valuation analysis Chase performed of Enron’s Forest Products business onOctober 26, 2000, and revised on November 20, 2000. Chase’s valuation had three parts: (i) the604041v1/007457-128-