FYI,  The issue we discussed this morning.


---------------------- Forwarded by Gerald Nemec/HOU/ECT on 03/17/2000 01:38 
PM ---------------------------


Nora Dobin@ENRON
03/17/2000 01:05 PM
To: Cris Sherman/HOU/ECT@ECT
cc: Stephanie Balette/HOU/ECT@ECT, Gerald Nemec/HOU/ECT@ECT 
Subject: LLC Accounting Issue--Consolidation

The Kachina LLC agreement is being amended and restated to accomplish Gallup 
transactions as part of existing Kachina LLC.  The existing Kachina LLC 
agreement currently does not contain a provision giving non-Enron equity 
holders a right to remove the Managing Member with or without cause but does 
give these holders numerous veto rights over actions proposed by the Managing 
Member.  Notwithstanding these veto rights, AA seemed to indicate during our 
meeting earlier this week a desire to include a removal provision.  

Please consider the following:

Given use of existing Kachina structure, do we do need to include removal 
provision as part of amendment and restatement of Kachina LLC or can we table 
this issue for now? 

If we do need to include a removal provision, attached is some proposed 
language which (i) gives non-Enron equity interests right to remove Managing 
Member at any time with or without cause, (ii) requires simultaneous 
appointment of another Member as Managing Member, and (iii) if removal is of 
initial Managing Member (i.e., Enron entity), then initial Managing Member 
has option to cause dissolution of LLC.  

Thanks, NJD