Subject: Purchase & Sale Agreement - Outline of relationships section
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Fri, 7 Jul 2000 04:20:00 -0700 (PDT)

Brian, I am attempting to outline some of the topics we have discussed in 
order that the points can be reviewed by our respective counsel and 
management.  Upon agreement, this Outline (with the exception of #2) could 
then serve as a guide for the attorneys to incorporate into the Purchase & 
Sale Agreement.  Brian, please consider this a draft reflecting my ideas, as 
I am in the process of seeking comments from Stan Horton and the NPNG 
officers.

1.  NEWCO, an LLC, should be owned 100% by NBILP, an affiliate of the 
Northern Border MLP.  (Question for Janet - should NEWCO be the existing NBP 
Energy Pipelines LLC ?

2.  We would agree on the following personnel points: (i) ENA employees who 
transfer from ENA  are not  to be disadvantaged from their present 
compensation and benefits package. (ii)  An incentive structure at the NEWCO 
level needs to be formed as a part of the compensation package.  This 
incentive should recognize the performance of (a) NBP  LP, (b) NEWCO's bottom 
line contribution to the MLP and (c) the growth of assets being managed by 
NEWCO.   Our experience  with personnel dedicated  to MLP businesses leads us 
to recommend that the Denver employees who transfer become employees of 
Northern Plains Natural Gas Company (NPNG),  thus ensuring that the Enron 
compensation package (specifically stock options and bonus program)  covers 
the ENA employees without interruption.   Our proposal is that Brian Bierbach 
would head the Rocky Mountain Division of NPNG, as a Vice President of 
Northern Plains.  In addition, Brian would serve as an officer of NEWCO.  
Finally, Brian would report to the President of NPNG and to the CEO of NBP 
LP.    

3.   Business focus/charter of NEWCO.   The scope of permissible investments 
for publicly traded partnerships is set forth at Section 7704 (d) of the 
Internal Revenue Code.  Under Section 7704(d), qualifying income includes 
income and gains derived from the exploration, development, mining, 
production, processing, refining, transportation (including pipelines 
transporting gas, oil or products thereof), or the marketing of any mineral 
or natural resource (including fertilizer, geothermal energy, and timber. It 
also includes interest, dividends, real property rents and gain from the sale 
of real property, as well as a gain from the sale of a capital asset held for 
the production of other qualifying income. Section 7704 (d) goes on to define 
"mineral or natural resource" to mean any product of a character with respect 
to which a deduction for depletion is allowable under Section 611."

During its 7 year history NBP LP has attempted to avoid exposure to commodity 
risk inherent in trading the natural resources that it has transported.   NBP 
wishes to continue this policy and is not interested in assuming such 
exposure in any degree which might be considered material to our financial 
reporting.  Over the years  a limited body of precedent (IRS Rulings) has 
grown up, clarifying what constitutes "qualifying income" for an MLP.   For 
example, investment in assets used to generate electricity is not permitted 
for an MLP, although a pipeline to deliver natural gas to such generating 
assets could qualify. Furthermore, NBP is not restricted to investments in 
the USA, and does actively pursue investments in Canada.  NBP believes that 
the restrictions on qualifying investments for an MLP further decreases the 
potential for conflict with ENA's much broader objectives.

4. Area of Mutual Interest between ENA and NEWCO.   NBP proposes that the 
state of Wyoming and the Eastern one half of the state of Montana be defined 
as an area of mutual interest (AMI) in which NEWCO will have the first right 
to invest in ENA project assets producing "qualifying income" .   Within such 
defined AMI, ENA would have the first right to participate in the commodity 
and trading opportunities of such projects.  Outside the defined AMI,  
(everywhere else in North America) ENA and NEWCO will work together under the 
Cooperative Strategy described in the next paragraph, but without first 
rights of participation for either party.

5. Cooperative Strategy.    NBP believes that a strong and dynamic 
partnership can be created by combining ENA's expertise in commodity trading, 
use of financial derivatives and creative financial structures,  together 
with NBP's financing capabilities and its investment objective of owning an 
infrastructure of hard energy assets which produce qualifying  MLP income.   
To that end we should agree to cooperate in the pursuit of project 
investments meeting the objectives of ENA and NBP throughout the North 
American continent.