<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ENRON CORP.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
OREGON 47-0255140
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
REX R. ROGERS
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
ENRON CORP.
1400 SMITH STREET, HOUSTON, TEXAS 77002
(713) 853-3069
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices and agent for service)
---------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined in
light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PER SECURITY PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Enron Corp. Debt Securities.......
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Enron Corp. Preferred Stock....... $1,000,000,000(2) (3) $1,000,000,000(4) $264,000(5)
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Enron Corp. Depositary
Shares(1).......................
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</TABLE>
(1) The consideration for the Enron Corp. depositary shares is included in that
for the Enron Corp. preferred stock.
(2) Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement contains a combined prospectus that also relates to 15 million
shares of Enron Corp. common stock previously registered on Form S-3,
Registration No. 333-70465. The maximum aggregate offering price of
securities covered by such combined prospectus (in addition to the 15
million shares of Enron Corp. common stock previously registered) is
$1,000,000,000. Without limitation as to class of securities, securities of
the classes listed in the above table may be offered pursuant to such
combined prospectus at a maximum aggregate offering price of $1,000,000,000.
(3) The proposed maximum offering price per security is equal to (a) 100% of the
principal amount thereof in the case of Enron Corp. debt securities and (b)
the proposed maximum aggregate offering price divided by the number of
shares offered in the case of other securities.
(4) Estimated solely for the purposes of calculating the registration fee.
(5) Paid herewith.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO 15 MILLION SHARES
OF ENRON CORP. COMMON STOCK PREVIOUSLY REGISTERED ON (I) REGISTRATION STATEMENT
NO. 333-70465, WHICH WAS DECLARED EFFECTIVE ON FEBRUARY 5, 1999, AND (II)
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-70465, WHICH
WAS DECLARED EFFECTIVE ON MARCH 15, 2000 (THE "PREVIOUSLY REGISTERED
SECURITIES"). THIS REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT
NO. 2 TO REGISTRATION STATEMENT NO. 333-70465, PURSUANT TO WHICH THE TOTAL
AMOUNT OF UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED ON REGISTRATION
STATEMENT NO. 333-70465 MAY BE OFFERED AND SOLD TOGETHER WITH THE SECURITIES
REGISTERED HEREUNDER THROUGH THE USE OR THE COMBINED PROSPECTUS INCLUDED HEREIN.
IN THE EVENT SUCH PREVIOUSLY REGISTERED SECURITIES ARE OFFERED AND SOLD PRIOR TO
THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE AMOUNT OF SUCH PREVIOUSLY
REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN THE PROSPECTUS HEREUNDER.
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<PAGE> 2
EXPLANATORY NOTE
INCLUSION OF BASE PROSPECTUS AND
PROSPECTUS SUPPLEMENT
This Registration Statement contains a base prospectus to be used in
connection with offerings by Enron Corp. of debt securities, preferred stock and
common stock. This Registration Statement also contains a form of Prospectus
Supplement to such base prospectus to be used in connection with offerings by
Enron of Medium-Term Notes.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY , 2000
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS DATED JULY , 2000)
$500,000,000
[ENRON LOGO]
ENRON CORP.
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
----------------------
THE NOTES:
- We will offer notes from time to time and specify the terms and
conditions of each issue of notes in a pricing supplement.
- The notes will be our senior unsecured debt securities.
- The notes will have stated maturities of nine months or more from the
date they are originally issued.
- We will pay amounts due on the notes in U.S. dollars or any other
consideration described in the applicable pricing supplement.
- The notes may bear interest at fixed or floating rates or may not bear
any interest. If the notes bear interest at a floating rate, the floating
rate may be based on one or more indices or formulas plus or minus a
fixed amount or multiplied by a factor.
- We will specify whether the notes can be redeemed at our option or repaid
at the option of the holders thereof before their maturity or whether
they are subject to mandatory redemption.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON PAGE
S-3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement, the accompanying prospectus or any pricing supplement is
truthful or complete. Any representation to the contrary is a criminal offense.
In connection with any offering of notes, the price to public, the
discounts or commissions to the agent and the proceeds of the offering to us
before expenses will be set forth in the applicable pricing supplement.
We may sell notes to an agent as principal for resale at varying or fixed
offering prices or through an agent as agent using its reasonable efforts on our
behalf. We may also sell notes without the assistance of an agent. Merrill
Lynch, Pierce, Fenner & Smith Incorporated has assisted us in arranging this
program.
If we sell other securities referred to in the accompanying prospectus, the
amount of notes that we may offer and sell under this prospectus supplement may
be reduced.
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The date of this prospectus supplement is July , 2000.
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Risk Factors................................................ S-3
Description of the Notes.................................... S-4
United States Federal Income Taxation....................... S-25
Plan of Distribution........................................ S-32
Validity of the Notes....................................... S-33
PROSPECTUS
Where You Can Find More Information......................... 2
Business of Enron........................................... 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges and Earnings to Fixed
Charges and Preferred Stock Dividends..................... 4
Description of Debt Securities.............................. 5
Description of Capital Stock................................ 12
Description of Depositary Shares............................ 20
Plan of Distribution........................................ 22
Validity of Securities...................................... 23
Experts..................................................... 23
</TABLE>
References in this prospectus supplement to an "agent" are to any agent
that has executed a distribution agreement with us to purchase notes as
principal for resale or to use reasonable efforts to distribute the notes as
agent on our behalf.
S-2
<PAGE> 5
RISK FACTORS
Your investment in the notes involves certain risks. In consultation with
your own financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the notes is suitable for you. The notes are not an appropriate
investment for you if you are unsophisticated.
STRUCTURE RISKS OF NOTES INDEXED TO INTEREST RATE, CURRENCY OR OTHER INDICES OR
FORMULAS
If you invest in notes indexed to one or more interest rate, currency or
other indices or formulas, there will be significant risks not associated with a
conventional fixed rate or floating rate debt security. These risks include
fluctuation of the indices or formulas and the possibility that you will receive
a lower, or no, amount of principal, premium or interest and at different times
than you expected. We have no control over a number of matters, including
economic, financial and political events, that are important in determining the
existence, magnitude and longevity of these risks and their results. In
addition, if an index or formula used to determine any amounts payable in
respect of the notes contains a multiplier or leverage factor, the effect of any
change in that index or formula will be magnified. In recent years, values of
certain indices and formulas have been volatile, and volatility in those and
other indices and formulas may be expected in the future. However, past
experience is not necessarily indicative of what may occur in the future.
THERE MAY NOT BE ANY TRADING MARKET FOR YOUR NOTES; MANY FACTORS AFFECT THE
TRADING MARKET AND VALUE OF YOUR NOTES
We cannot assure you a trading market for your notes will ever develop or
be maintained. In addition to our own creditworthiness, many other factors may
affect the trading market for or value of your notes. These factors include:
- the complexity and volatility of the index or formula applicable to your
notes,
- the method of calculating the principal, premium and interest in respect
of your notes,
- the time remaining to the maturity of your notes,
- the outstanding amount of your notes,
- any redemption features of your notes,
- the amount of other securities linked to the index or formula applicable
to your notes, and
- the level, direction and volatility of market interest rates generally.
There may be a limited number of buyers when you decide to sell your notes.
This may affect the price you receive for your notes or your ability to sell
your notes. In addition, notes that are designed for specific investment
objectives or strategies often experience a more limited trading market and more
price volatility. You should not purchase notes unless you understand and know
you can bear all of the investment risks involving your notes.
OUR CREDIT RATINGS MAY NOT REFLECT ALL RISKS OF AN INVESTMENT IN THE NOTES
Our credit ratings are an assessment of our ability to pay our obligations.
Consequently, real or anticipated changes in our credit ratings will generally
affect the market value of your notes. Our credit ratings, however, may not
reflect the potential impact of risks related to structural, market or other
factors discussed in this prospectus on the value of your notes.
EXCHANGE RATES AND EXCHANGE CONTROLS
If you invest in notes that are denominated and/or payable in a currency
other than U.S. dollars, which we call "Foreign Currency Notes," you will be
subject to significant risks not associated with an
S-3
<PAGE> 6
investment in a debt security denominated and payable in U.S. dollars, including
the possibility of material changes in the exchange rate between U.S. dollars
and the applicable foreign currency and the imposition or modification of
exchange controls by the applicable governments. Moreover, if payments on your
Foreign Currency Notes are determined by reference to a formula containing a
multiplier or leverage factor, the effect of any change in the exchange rates
between the applicable currencies will be magnified. We have no control over the
factors that generally affect these risks, including economic, financial and
political events and the supply and demand for the applicable currencies. In
recent years, exchange rates between certain currencies have been highly
volatile, and volatility between these and other currencies may be expected in
the future. Fluctuations between currencies in the past are not necessarily
indicative, however, of fluctuations that may occur in the future. Depreciation
of your payment currency would result in a decrease in the U.S. dollar
equivalent yield of your Foreign Currency Notes, in the U.S. dollar equivalent
value of the principal and any premium payable at maturity or on earlier
redemption of your Foreign Currency Notes and, generally, in the U.S. dollar
equivalent market value of your Foreign Currency Notes.
Governmental exchange controls could affect exchange rates and the
availability of the payment currency for your Foreign Currency Notes on a
required payment date. Even if there are no exchange controls, it is possible
that your payment currency will not be available on a required payment date for
circumstances beyond our control. In these cases, we will be allowed to satisfy
our obligations in respect of your Foreign Currency Notes in U.S. dollars.
DESCRIPTION OF THE NOTES
The notes will be issued as a series of debt securities under an indenture,
dated as of November 1, 1985, as supplemented and amended, between us and The
Bank of New York, as trustee. As of the date of this prospectus supplement,
there is outstanding $175 million principal amount of notes of this series. The
term "debt securities," as used in this prospectus supplement, refers to all
securities issued and issuable from time to time under the indenture and
includes the notes. The debt securities and the indenture are more fully
described in the accompanying prospectus. The following summary of the material
provisions of the notes and of the indenture is not complete and is qualified in
its entirety by reference to the indenture, a copy of which has been filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus are a part.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement. We have not and any agent has not authorized any other
person to provide you with different or additional information. If anyone
provides you with different or additional information, you should not rely on
it. We are not and any agent is not making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. You should assume
that the information contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus and any pricing supplement is accurate
only as of the date on the front cover of the applicable pricing supplement.
THE FOLLOWING DESCRIPTION OF NOTES WILL APPLY UNLESS OTHERWISE SPECIFIED IN
AN APPLICABLE PRICING SUPPLEMENT.
TERMS OF THE NOTES
All debt securities, including the notes, issued and to be issued under the
indenture will be our unsecured general obligations and will rank equally with
all of our other unsecured and unsubordinated indebtedness from time to time
outstanding. The indenture does not limit the aggregate principal amount of debt
securities that we may issue. We may issue our debt securities from time to time
as a single series or in two or more separate series up to the aggregate
principal amount from time to time authorized by us for each series. We may,
from time to time, without the consent of the holders of the notes, provide for
the issuance of notes or other debt securities under our indenture in addition
to the notes offered by this prospectus supplement. The aggregate principal
amount of notes that may be offered and sold by this
S-4
<PAGE> 7
prospectus supplement may be reduced by our sale of other securities under the
registration statement of which this prospectus supplement and the accompanying
prospectus are a part. We may also, from time to time, without the consent of
the holders of the notes, issue additional notes or other debt securities having
the same terms as previously issued notes, other than the date of issuance,
interest commencement date and offering price, that will form a single issue
with the previously issued notes.
We are a holding company, and therefore our only substantial assets consist
of stock of our subsidiaries, which own and operate our business assets. The
notes are not guaranteed by any of our subsidiaries, and therefore our
obligations under the notes will be structurally subordinated to the obligations
of our subsidiaries to their creditors.
The notes will be offered on a continuing basis and will mature on a day
nine months or more from their date of issue, which we call the "Stated Maturity
Date," as selected by the purchaser and agreed to by us, unless the principal
thereof, or any installment of principal thereof, becomes due and payable prior
to the Stated Maturity Date, whether by the declaration of acceleration of
maturity, notice of redemption at our option, notice of the holder's option to
elect repayment or otherwise (the Stated Maturity Date or any date prior to the
Stated Maturity Date on which the particular note becomes due and payable, as
the case may be, is referred to in this prospectus supplement as the "Maturity
Date" with respect to the principal of the particular note repayable on that
date). Interest-bearing notes will bear interest at either fixed or floating
rates as specified in the applicable pricing supplement. Some notes may not bear
interest. In addition, notes may be issued at significant discounts from their
principal amount payable at maturity.
Unless otherwise specified in the applicable pricing supplement, the notes
will be denominated in United States dollars, and we will make payments of
principal of, and premium, if any, and interest on, the notes in United States
dollars.
The notes also may be denominated in, and payments of principal, premium,
if any, and/or interest, if any, in respect thereof may be made in, one or more
foreign currencies. See "Special Provisions Relating to Foreign Currency
Notes -- Payment of Principal, Premium, if any, and Interest, if any." The
currency in which a note is denominated (or, if the particular currency is no
longer legal tender for the payment of public and private debts in the country
issuing that currency or, in the case of Euro, in the member states of the
European Union that have adopted the single currency in accordance with the
Treaty establishing the European Community, as amended by the Treaty on European
Union, the currency which is then legal tender in the applicable country or in
adopting member states of the European Union, as the case may be) is referred to
in this prospectus supplement as the "Specified Currency" with respect to the
particular note. References in this prospectus supplement to "United States
dollars," "U.S. dollars" or "$" are to the lawful currency of the United States
of America (the "United States").
We will pay for your notes in the Specified Currency. At the present time,
there are limited facilities in the United States for the conversion of United
States dollars into foreign currencies and vice versa, and commercial banks do
not generally offer non-United States dollar checking or savings account
facilities in the United States. Any agent may be prepared to arrange for the
conversion of United States dollars into the Specified Currency in order to
enable you to be paid for your Foreign Currency Notes, provided that you make a
request to the agent on or prior to the fifth Business Day, as defined below,
preceding the date of delivery of your Foreign Currency Notes, or by any other
day determined by the agent. Each conversion will be made by the agent on the
terms and subject to the conditions, limitations and charges as the agent may,
from time to time, establish in accordance with its regular foreign exchange
practices. The agent will not be required to bear any costs of exchange in
respect of any Foreign Currency Notes. See "Special Provisions Relating to
Foreign Currency Notes."
Interest rates offered with respect to the notes may differ depending upon,
among other factors, the aggregate principal amount of notes purchased in any
single transaction. Notes with different variable terms other than interest
rates may also be offered concurrently to different investors. Interest rates,
interest rate formulae and other variable terms of the notes are subject to
change from time to time, but no change will affect any note already issued or
as to which we have accepted an offer to purchase.
S-5
<PAGE> 8
Each note will be issued in fully registered book-entry form or
certificated form, in denominations of $1,000 or any larger amount that is an
integral multiple of $1,000, unless otherwise specified in the applicable
pricing supplement. Notes in book-entry form may be transferred or exchanged
only through a participating member of The Depository Trust Company, also known
as DTC, or any other depository as is identified in an applicable pricing
supplement. See "-- Book-Entry Notes." Registration of any transfer of notes in
certificated form will be made at the corporate trust office of the trustee.
There will be no service charge for any registration of a transfer or exchange
of notes, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with any transfer or exchange,
other than exchanges pursuant to the Indenture not involving any transfer.
We will make payments of principal of, and premium and interest, if any, on
notes in book-entry form through the trustee to the depository or its nominee.
See "-- Book-Entry Notes." In the case of notes in certificated form, we will
make payment of principal or premium, if any, due on the Maturity Date of each
certificated note through the trustee in immediately available funds upon
presentation and surrender thereof and, in the case of any repayment on an
optional repayment date, upon submission of a duly completed election form if
and as required by the provisions described below, at the corporate trust office
of the trustee in the Borough of Manhattan, The City of New York, or at any
other place as we may designate. Payment of interest due on the Maturity Date of
notes in certificated form will be made to the person to whom payment of the
principal thereof will be made. Payment of interest due on notes in certificated
form other than on the Maturity Date will be made at the corporate trust office
of the trustee or, at our option, may be made by check mailed to the address of
the person entitled to receive payment as the address shall appear in the
security register. Notwithstanding the immediately preceding sentence, a holder
of $10,000,000 (or, if the Specified Currency is other than United States
dollars, the equivalent thereof in the Specified Currency) or more in aggregate
principal amount of notes in certificated form, whether having identical or
different terms and provisions, will be entitled to receive interest payments,
other than on the Maturity Date, by wire transfer of immediately available funds
if appropriate wire transfer instructions have been received in writing by the
trustee not less than 15 days prior to the applicable interest payment date. Any
wire instructions received by the trustee shall remain in effect until revoked
by the applicable holder.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New York;
provided, however, that, with respect to Foreign Currency Notes, the day is also
not a day on which commercial banks are authorized or required by law,
regulation or executive order to close in the Principal Financial Center, as
defined below, of the country issuing the Specified Currency or, if the
Specified Currency is Euro, the day is also a day on which the Trans-European
Automated Real-time Gross Settlement Express Transfer (TARGET) System is open;
provided, further, that, with respect to notes as to which LIBOR is an
applicable Interest Rate Basis, the day is also a London Banking Day. "London
Banking Day" means a day on which commercial banks are open for business,
including dealings in the LIBOR Currency, as defined below, in London.
"Principal Financial Center" means:
(1) the capital city of the country issuing the Specified Currency,
except that with respect to United States dollars, Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Italian lire, South
African rand and Swiss francs, the "Principal Financial Center" will be The
City of New York, Sydney and Melbourne, Toronto, Frankfurt, Amsterdam,
Milan, Johannesburg and Zurich, respectively, or
(2) the capital city of the country to which the LIBOR Currency
relates, except that with respect to United States dollars, Australian
dollars, Canadian dollars, Deutsche marks, Dutch guilders, Italian lire,
Portuguese escudos, South African rand and Swiss francs, the "Principal
Financial Center" will be The City of New York, Sydney, Toronto, Frankfurt,
Amsterdam, Milan, London, Johannesburg and Zurich, respectively.
S-6
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REDEMPTION AT THE OPTION OF ENRON
The notes will not be subject to any sinking fund. We may redeem the notes
at our option before their Stated Maturity Date only if an initial redemption
date is specified in the applicable notes and in the applicable pricing
supplement. If so indicated in the applicable pricing supplement, we may redeem
the notes at our option on any date on and after the applicable initial
redemption date specified in the applicable pricing supplement. On and after the
initial redemption date, if any, we may redeem the related note at any time in
whole or from time to time in part at our option at the applicable redemption
price referred to below together with interest on the principal of the
applicable note payable to the redemption date, on notice given not more than 60
nor less than 30 days before the redemption date. We will redeem the notes in
increments of $1,000, provided that any remaining principal amount will be an
authorized denomination of the applicable note. Unless otherwise specified in
the applicable pricing supplement, the redemption price with respect to a note
will initially mean a percentage, the initial redemption percentage, of the
principal amount of the note to be redeemed specified in the applicable pricing
supplement and will decline at each anniversary of the initial redemption date
by a percentage, specified in the applicable pricing supplement, of the
principal amount to be redeemed until the redemption price is 100% of the
principal amount.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in an applicable pricing supplement, we will repay the
notes in whole or in part at the option of the holders of the notes on any
optional repayment date specified in the applicable pricing supplement. If no
optional repayment date is indicated with respect to a note, it will not be
repayable at the option of the holder before its Stated Maturity Date. Any
repayment in part will be in an amount equal to $1,000 or integral multiples of
$1,000, provided that any remaining principal amount will be an authorized
denomination of the applicable note. The repayment price for any note to be
repaid will be 100% of the principal amount to be repaid, together with interest
on the principal of the applicable note payable to the date of repayment. For
any note to be repaid, the trustee must receive, at its office maintained for
such purpose in the Borough of Manhattan, The City of New York, not more than 60
nor less than 30 days before the optional repayment date, the particular note
being repaid and:
- in the case of a note in certificated form, the form entitled "Option to
Elect Repayment" duly completed, or
- in the case of a note in book-entry form, instructions to that effect
from the applicable beneficial owner thereof to the depository and
forwarded by the depository.
Notices of elections from a holder to exercise the repayment option must be
received by the trustee by 5:00 p.m., New York City time, on the last day for
giving such notice. Exercise of the repayment option by the holder of a note
will be irrevocable.
Only the depository may exercise the repayment option in respect of global
securities representing notes in book-entry form. Accordingly, beneficial owners
of global securities that desire to have all or any portion of the notes in
book-entry form represented by global securities repaid must instruct the
participant through which they own their interest to direct the depository to
exercise the repayment option on their behalf by forwarding the repayment
instructions to the trustee as discussed above. In order to ensure that the
instructions are received by the trustee on a particular day, the applicable
beneficial owner must so instruct the participant through which it owns its
interest before that participant's deadline for accepting instructions for that
day. Different participants may have different deadlines for accepting
instructions from their customers. Accordingly, beneficial owners of notes in
book-entry form should consult the participants through which they own their
interest for the respective deadlines. All instructions given to participants
from beneficial owners of notes in book-entry form relating to the option to
elect repayment will be irrevocable. In addition, at the time instructions are
given, each beneficial owner will cause the participant through which it owns
its interest to transfer to the trustee, on the depository's records, its
interest in the global security or securities representing the related notes in
book-entry form. See "-- Book-Entry Notes."
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We may at any time purchase notes at any price or prices in the open market
or otherwise. Notes so purchased by us may, at our discretion, be held or
surrendered to the trustee for cancellation.
INTEREST
Each interest-bearing note will bear interest from the date of issue at the
rate per annum, in the case of a fixed rate note, or pursuant to the interest
rate formula, in the case of a floating rate note, in each case as and in the
applicable pricing supplement until the principal of the note is paid or made
available for payment. Interest will be payable in arrears on each interest
payment date specified in the applicable pricing supplement on which an
installment of interest is due and payable and on the Maturity Date. The first
payment of interest on any note originally issued between a regular record date
and the related interest payment date will be made on the interest payment date
immediately following the next succeeding regular record date to the holder on
the next succeeding regular record date. Unless otherwise specified in the
applicable pricing supplement, the regular record date will be the fifteenth
calendar day, whether or not a Business Day, immediately preceding the related
interest payment date.
Fixed Rate Notes
Each fixed rate note will bear interest from, and including, the date of
issue, at the rate per annum specified in the applicable pricing supplement
until the principal amount of the note is paid. Interest payments on fixed rate
notes will equal the amount of interest accrued from and including the
immediately preceding interest payment date in respect of which interest has
been paid or from, and including, the date of issue, if no interest has been
paid with respect to the applicable fixed rate notes, to, but excluding, the
applicable interest payment date or the Maturity Date, as the case may be.
Interest on fixed rate notes will be computed on the basis of a 360-day year of
twelve 30-day months.
Except as may be otherwise stated in a pricing supplement, interest on
fixed rate notes will be payable semiannually on May 15 and November 15 of each
year and on the Maturity Date. If any interest payment date or the Maturity Date
of a fixed rate note falls on a day that is not a Business Day, the related
payment of principal, premium, if any, or interest will be made on the next
succeeding Business Day as if made on the date the applicable payment was due,
and no interest will accrue on the amount payable for the period from and after
the interest payment date or the Maturity Date, as the case may be.
Floating Rate Notes
Interest on floating rate notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may be one or more
of:
- the CD Rate,
- the CMT Rate,
- the Commercial Paper Rate,
- the Eleventh District Cost of Funds Rate,
- the Federal Funds Rate,
- LIBOR,
- the Prime Rate,
- the Treasury Rate, or
- any other Interest Rate Basis or interest rate formula that is specified
in the applicable pricing supplement.
A floating rate note may bear interest with respect to two or more Interest
Rate Bases.
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Each applicable pricing supplement will specify certain terms of the
floating rate note being offered thereby, including:
- whether the floating rate note is
- a "Regular Floating Rate Note",
- a "Inverse Floating Rate Note" or
- a "Floating Rate/Fixed Rate Note,"
- the Interest Rate Basis or Bases,
- the Initial Interest Rate,
- the Interest Reset Dates,
- the interest payment dates,
- the period to maturity of the instrument or obligation with respect to
which the Interest Rate Basis or Bases will be calculated, which we call
the "Index Maturity,"
- the Maximum Interest Rate and Minimum Interest Rate, if any,
- the number of basis points to be added to or subtracted from the related
Interest Rate Basis or Bases, which we call the "Spread,"
- the percentage of the related Interest Rate Basis or Bases by which the
Interest Rate Basis or Bases will be multiplied to determine the
applicable interest rate, which we call the "Spread Multiplier," and
- if one or more of the specified Interest Rate Bases is LIBOR, the LIBOR
Currency, the Index Maturity and the Designated LIBOR Page.
The interest rate borne by the floating rate notes will be determined as
follows:
Regular Floating Rate Notes. Unless a floating rate note is designated as a
Floating Rate/Fixed Rate Note, an Inverse Floating Rate Note or as having an
Addendum attached or as having "Other Provisions" apply, in each case relating
to a different interest rate formula, it will be a "Regular Floating Rate Note"
and will bear interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any.
Commencing on the first Interest Reset Date, the rate at which interest on the
Regular Floating Rate Note will be payable will be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the period
from the date of issue to the first Interest Reset Date will be the Initial
Interest Rate.
Floating Rate/Fixed Rate Notes. If a floating rate note is designated as a
"Floating Rate/Fixed Rate Note," it will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any.
Commencing on the first Interest Reset Date, the rate at which interest on the
Floating Rate/Fixed Rate Note will be payable will be reset as of each Interest
Reset Date; provided, however, that:
- the interest rate in effect for the period from the date of issue to the
first Interest Reset Date will be the Initial Interest Rate, and
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- the interest rate in effect commencing on, and including, the date on
which interest begins to accrue on a fixed rate basis to Maturity will be
the Fixed Interest Rate, if the rate is specified in the applicable
pricing supplement, or if no Fixed Interest Rate is specified, the
interest rate in effect on the Floating Rate/Fixed Rate Note on the day
immediately preceding the date on which interest begins to accrue on a
fixed rate basis.
Inverse Floating Rate Notes. If a floating rate note is designated as an
"Inverse Floating Rate Note," it will bear interest equal to the Fixed Interest
Rate specified in the related pricing supplement minus the rate determined by
reference to the applicable Interest Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any;
provided, however, that the interest rate on the applicable Inverse Floating
Rate Note will not be less than zero percent. Commencing on the first Interest
Reset Date, the rate at which interest on the Inverse Floating Rate Note is
payable will be reset as of each Interest Reset Date; provided, however, that
the interest rate in effect for the period from the date of issue to the first
Interest Reset Date will be the Initial Interest Rate.
The interest rate derived from an Interest Rate Basis will be determined in
accordance with the applicable provisions below. The interest rate in effect on
each day will be based on:
- if the day is an Interest Reset Date, the rate determined as of the
Interest Determination Date, as defined below, immediately preceding the
applicable Interest Reset Date, or
- if the day is not an Interest Reset Date, the rate determined as of the
Interest Determination Date immediately preceding the most recent
Interest Reset Date.
Interest Reset Dates. The applicable pricing supplement will specify the
dates on which the interest rate on the related floating rate note will be reset
(each, an "Interest Reset Date"; the period between Interest Reset Dates is the
"Interest Reset Period"). The Interest Reset Date will be, in the case of
floating rate notes that reset:
- daily -- each Business Day;
- weekly -- the Wednesday of each week, with the exception of weekly reset
Floating Rate Notes as to which the Treasury Rate is an applicable
Interest Rate Basis, which will reset the Tuesday of each week, except as
described below under "-- Interest Determination Dates";
- monthly -- the third Wednesday of each month, with the exception of
monthly reset Floating Rate Notes as to which the Eleventh District Cost
of Funds Rate is an applicable Interest Rate Basis, which will reset on
the first calendar day of the month;
- quarterly -- the third Wednesday of March, June, September and December
of each year;
- semiannually -- the third Wednesday of the two months specified in the
applicable pricing supplement; and
- annually -- the third Wednesday of the month specified in the applicable
pricing supplement;
provided, however, that with respect to Floating Rate/Fixed Rate Notes, the rate
of interest will not reset after the applicable date on which interest on a
fixed rate basis begins to accrue.
If any Interest Reset Date for any floating rate note would otherwise be a
day that is not a Business Day, then the applicable Interest Reset Date will be
postponed to the next succeeding Business Day.
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Maximum and Minimum Interest Rates. A floating rate note may also have
either or both of the following:
- a maximum numerical limitation, or ceiling, on the rate at which interest
may accrue during any Interest Reset Period, which we call a "Maximum
Interest Rate," and
- a minimum numerical limitation, or floor, on the rate at which interest
may accrue during any Interest Reset Period, which we call a "Minimum
Interest Rate."
The indenture is, and any notes issued under the indenture will be,
governed by and construed in accordance with the laws of the State of Texas.
Under Texas law, generally the maximum rate of interest is 18% per annum on a
simple interest basis. The indenture provides that in no event will interest
payable on the notes exceed the maximum amount allowed by law.
Interest Payments. Each applicable pricing supplement will specify the
dates on which interest will be payable. Each floating rate note will bear
interest from the date of issue at the rates specified in the applicable
floating rate note until the principal of the applicable note is paid or
otherwise made available for payment. The interest payment dates with respect to
floating rate notes will be:
- in the case of floating rate notes that reset daily, weekly or
monthly -- the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the
applicable pricing supplement;
- in the case of floating rate notes that reset quarterly -- the third
Wednesday of March, June, September and December of each year;
- in the case of floating rate notes that reset semiannually -- the third
Wednesday of the two months of each year specified in the applicable
pricing supplement; and
- in the case of floating rate notes that reset annually -- the third
Wednesday of the month of each year specified in the applicable pricing
supplement.
In addition, the Maturity Date will also be an Interest Payment Date.
If any interest payment date for any floating rate note, other than the
Maturity Date, would otherwise be a day that is not a Business Day, the interest
payment date will be postponed to the next succeeding day that is a Business Day
except that in the case of a floating rate note as to which LIBOR is an
applicable Interest Rate Basis, if the Business Day falls in the next succeeding
calendar month, the applicable interest payment date will be the immediately
preceding Business Day. If the Maturity of a floating rate note falls on a day
that is not a Business Day, the payment of principal, premium, if any, and
interest will be made on the next succeeding Business Day, and no interest on
such payment will accrue for the period from and after the Maturity.
All percentages resulting from any calculation on floating rate notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upwards. For example,
9.876545%, or .09876545, would be rounded to 9.87655%, or .0987655. All dollar
amounts used in or resulting from any calculation on floating rate notes will be
rounded to the nearest cent with one-half cent being rounded upward.
Interest payments on floating rate notes will equal the amount of interest
accrued from and including the immediately preceding interest payment date in
respect of which interest has been paid or from, and including, the date of
issue, if no interest has been paid with respect to the applicable floating rate
notes, to, but excluding, the applicable interest payment date or the Maturity
Date, as the case may be.
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With respect to each floating rate note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. The accrued
interest factor is computed by adding the interest factor calculated for each
day in the period for which accrued interest is being calculated.
- In the case of notes for which the Interest Rate Basis is the CD Rate,
the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate, the interest factor for each
day will be computed by dividing the interest rate applicable to each day
by 360.
- In the case of notes for which the Interest Rate Basis is the CMT Rate or
the Treasury Rate, the interest factor for each day will be computed by
dividing the interest rate applicable to each day by the actual number of
days in the year.
- The interest factor for notes for which the interest rate is calculated
with reference to two or more Interest Rate Bases will be calculated in
each period in the same manner as if only one of the applicable Interest
Rate Bases applied.
Interest Determination Dates. The interest rate applicable to each Interest
Reset Period commencing on the Interest Reset Date with respect to that Interest
Reset Period will be determined by reference to the applicable Interest Rate
Basis as of the applicable "Interest Determination Date."
- The Interest Determination Date with respect to the Federal Funds Rate
and the Prime Rate will be the Business Day immediately preceding the
related Interest Reset Date.
- The Interest Determination Date with respect to the CD Rate, the CMT Rate
and the Commercial Paper Rate will be the second Business Day preceding
the related Interest Reset Date.
- The Interest Determination Date with respect to the Eleventh District
Cost of Funds Rate will be the last working day of the month immediately
preceding the related Interest Reset Date on which the Federal Home Loan
Bank of San Francisco publishes the Index, as defined below.
- The Interest Determination Date with respect to LIBOR will be the second
London Banking Day preceding the related Interest Reset Date.
- The Interest Determination Date with respect to the Treasury Rate will be
the day in the week in which the related Interest Reset Date falls on
which day Treasury Bills, as defined below, are normally auctioned.
Treasury Bills are normally sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday, except that the auction may be held on the
preceding Friday; provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the
Interest Determination Date will be the preceding Friday.
- The Interest Determination Date pertaining to a floating rate note the
interest rate of which is determined with reference to two or more
Interest Rate Bases will be the latest Business Day which is at least two
Business Days before the related Interest Reset Date for the applicable
floating rate note on which each Interest Reset Basis is determinable.
Calculation Date. The Bank of New York will be the calculation agent. The
interest rate applicable to each Interest Reset Period will be determined by the
calculation agent on or prior to the calculation date, except with respect to
LIBOR and the Eleventh District Cost of Funds Rate, which will be determined on
the particular Interest Determination Date. Upon the request of the holder of
any floating rate note, the calculation agent will provide the interest rate
then in effect and, if determined, the interest rate that will become effective
as a result of a determination made for the next Interest Reset Date with
respect to that floating rate note. Unless otherwise specified in the applicable
pricing supplement, the calculation date, if applicable, pertaining to any
Interest Determination Date will be the earlier of:
- the tenth calendar day after the applicable Interest Determination Date,
or, if the tenth calendar day is not a Business Day, the next succeeding
Business Day, or
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- the Business Day preceding the applicable Interest Payment Date or the
Maturity Date, as the case may be.
CD Rate. The "CD Rate" means:
(1) the rate on the applicable Interest Determination Date for
negotiable United States dollar certificates of deposit having the
Index Maturity specified in the applicable pricing supplement
published in H.15(519), as defined below, under the caption "CDs
(secondary market)", or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date for negotiable United
States dollar certificates of deposit of the Index Maturity
specified in the applicable pricing supplement as published in H.15
Daily Update, as defined below, or other recognized electronic
source used for the purpose of displaying the applicable rate, under
the caption "CDs (secondary market)", or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on the
applicable Interest Determination Date, of three leading non-bank
dealers in negotiable United States dollar certificates of deposit
in The City of New York, which may include an agent or its
affiliates, selected by the calculation agent for negotiable United
States dollar certificates of deposit of major United States money
market banks for negotiable United States certificates of deposit
with a remaining maturity closest to the Index Maturity specified in
the applicable pricing supplement in an amount that is
representative for a single transaction in that market at that time,
or
(4) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3) the CD Rate in effect on the applicable
Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
CMT Rate. The "CMT Rate" means:
(1) if CMT Telerate Page 7051 is specified in the applicable pricing
supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity
specified in the applicable pricing supplement as published in
H.15(519) under the caption "Treasury Constant Maturities," as
the yield is displayed on Bridge Telerate, Inc. (or any successor
service), on page 7051 (or any other page as may replace page
7051 on that service) ("Telerate Page 7051"), for the applicable
Interest Determination Date, or
(b) if the rate referred to in clause (a) does not appear on Telerate
Page 7051, the percentage equal to the yield for United States
Treasury securities at "constant maturity" having the Index
Maturity specified in the applicable pricing supplement and for
the applicable Interest Determination Date as published in
H.15(519) under the caption "Treasury Constant Maturities," or
(c) if the rate referred to in clause (b) does not appear in
H.15(519), the rate on the applicable Interest Determination Date
for the period of the Index Maturity specified in
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the applicable pricing supplement as may then be published by
either the Federal Reserve System Board of Governors or the
United States Department of the Treasury that the calculation
agent determines to be comparable to the rate which would
otherwise have been published in H.15(519), or
(d) if the rate referred to in clause (c) is not published, the rate
on the applicable Interest Determination Date calculated by the
calculation agent as a yield to maturity based on the arithmetic
mean of the secondary market bid prices at approximately 3:30
P.M., New York City time, on the applicable Interest
Determination Date of three leading primary United States
government securities dealers in The City of New York, which may
include an agent or its affiliates, each of which we call a
"Reference Dealer," selected by the calculation agent from five
Reference Dealers selected by the calculation agent and
eliminating the highest quotation, or, in the event of equality,
one of the highest, and the lowest quotation, or, in the event of
equality, one of the lowest, for United States Treasury
securities with an original maturity equal to the Index Maturity
specified in the applicable pricing supplement, a remaining term
to maturity no more than 1 year shorter than the Index Maturity
specified in the applicable pricing supplement and in a principal
amount that is representative for a single transaction in the
securities in the market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the applicable
Interest Determination Date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained, and
neither the highest nor the lowest of the quotations shall be
eliminated, or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the applicable Interest Determination
Date calculated by the calculation agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices
as of approximately 3:30 P.M., New York City time, on the
applicable Interest Determination Date of three Reference Dealers
selected by the calculation agent from five Reference Dealers
selected by the calculation agent and eliminating the highest
quotation or, in the event of equality, one of the highest and
the lowest quotation or, in the event of equality, one of the
lowest, for United States Treasury securities with an original
maturity greater than the Index Maturity specified in the
applicable pricing supplement, a remaining term to maturity
closest to the Index Maturity specified in the applicable pricing
supplement and in a principal amount that is representative for a
single transaction in the securities in the market at that time,
or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the applicable
Interest Determination Date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained, and
neither the highest nor the lowest of the quotations will be
eliminated, or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on the applicable Interest
Determination Date; or
(2) if CMT Telerate Page 7052 is specified in the applicable pricing
supplement:
(a) the percentage equal to the one-week or one-month, as specified
in the applicable pricing supplement, average yield for United
States Treasury securities at "constant maturity" having the
Index Maturity specified in the applicable pricing supplement as
published in H.15(519) opposite the caption "Treasury Constant
Maturities," as the yield is displayed on Bridge Telerate, Inc.
(or any successor service) on page 7052 (or any other page as may
replace page 7052 on that service) ("Telerate Page 7052"), for
the week or month, as applicable, ended immediately preceding the
week or month, as applicable, in which the related Interest
Determination Date falls, or
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(b) if the rate referred to in clause (a) does not appear on Telerate
Page 7052, the percentage equal to the one-week or one-month, as
specified in the applicable pricing supplement, average yield for
United States Treasury securities at "constant maturity" having
the Index Maturity specified in the applicable pricing supplement
and for the week or month, as applicable, preceding the
applicable Interest Determination Date as published in H.15(519)
opposite the caption "Treasury Constant Maturities," or
(c) if the rate referred to in clause (b) does not appear in
H.15(519), the one-week or one-month, as specified, average yield
for United States Treasury securities at "constant maturity"
having the Index Maturity specified in the applicable pricing
supplement as otherwise announced by the Federal Reserve Bank of
New York for the week or month, as applicable, ended immediately
preceding the week or month, as applicable, in which the related
Interest Determination Date falls, or
(d) if the Federal Reserve Bank of New York does not publish the rate
referred to in clause (c), the rate on the applicable Interest
Determination Date calculated by the calculation agent as a yield
to maturity based on the arithmetic mean of the secondary market
bid prices at approximately 3:30 P.M., New York City time, on the
applicable Interest Determination Date of three Reference Dealers
selected by the calculation agent from five Reference Dealers
selected by the calculation agent and eliminating the highest
quotation, or, in the event of equality, one of the highest, and
the lowest quotation or, in the event of equality, one of the
lowest, for United States Treasury securities with an original
maturity equal to the Index Maturity specified in the applicable
pricing supplement, a remaining term to maturity no more than 1
year shorter than the Index Maturity specified in the applicable
pricing supplement and in a principal amount that is
representative for a single transaction in the securities in the
market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the applicable
Interest Determination Date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained, and
neither the highest nor the lowest of the quotations shall be
eliminated, or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the applicable Interest Determination
Date calculated by the calculation agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices
as of approximately 3:30 P.M., New York City time, on the
applicable Interest Determination Date of three Reference Dealers
selected by the calculation agent from five Reference Dealers
selected by the calculation agent and eliminating the highest
quotation or, in the event of equality, one of the highest and
lowest quotation or, in the event of equality, one of the lowest,
for United States Treasury securities with an original maturity
greater than the Index Maturity specified in the applicable
pricing supplement, a remaining term to maturity closest to the
Index Maturity specified in the applicable pricing supplement and
in a principal amount that is representative for a single
transaction in the securities in the market at that time, or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate will be calculated by the
calculation agent based on the arithmetic mean of the bid prices
obtained, and neither the highest nor the lowest of the
quotations will be eliminated, or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on the applicable Interest
Determination Date.
If two United States Treasury securities with an original maturity greater
than the Index Maturity specified in the applicable pricing supplement have
remaining terms to maturity equally close to the Index
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Maturity specified in the applicable pricing supplement, the quotes for the
United States Treasury security with the shorter original remaining term to
maturity will be used.
Commercial Paper Rate. The "Commercial Paper Rate" means:
(1) the Money Market Yield, as defined below, on the applicable Interest
Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable pricing supplement published in
H.15(519) under the caption "Commercial Paper-Nonfinancial," or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Money
Market Yield on the applicable Interest Determination Date of the
rate for commercial paper having the Index Maturity specified in the
applicable pricing supplement published in H.15 Daily Update, or
other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Commercial
Paper-Nonfinancial," or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Money
Market Yield of the arithmetic mean of the offered rates, calculated
by the calculation agent, at approximately 11:00 A.M., New York City
time, on the applicable Interest Determination Date of three leading
dealers of United States dollar commercial paper in The City of New
York, which may include an agent or its affiliates, selected by the
calculation agent for commercial paper having the Index Maturity
specified in the applicable pricing supplement placed for industrial
issuers whose bond rating is "Aa," or the equivalent, from a
nationally recognized statistical rating organization, or
(4) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3), the Commercial Paper Rate in effect on the
applicable Interest Determination Date.
"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = ------------ X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Eleventh District Cost of Funds Rate. The "Eleventh District Cost of Funds
Rate" means:
(1) the rate equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which the
applicable Interest Determination Date falls as set forth under the
caption "11th District" on the display on Bridge Telerate, Inc. (or
any successor service) on page 7058 (or any other page as may
replace the specified page on that service) ("Telerate Page 7058")
as of 11:00 A.M., San Francisco time, on the applicable Interest
Determination Date, or
(2) if the rate referred to in clause (1) does not appear on Telerate
Page 7058 on the applicable Interest Determination Date, the monthly
weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently
announced (the "Index") by the Federal Home Loan Bank of San
Francisco as the cost of funds for the calendar month immediately
preceding the applicable Interest Determination Date, or
(3) if the Federal Home Loan Bank of San Francisco fails to announce the
Index on or before the applicable Interest Determination Date for
the calendar month immediately preceding the applicable Interest
Determination Date, the Eleventh District Cost of Funds Rate in
effect on the applicable Interest Determination Date.
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Federal Funds Rate. The "Federal Funds Rate" means:
(1) the rate on the applicable Interest Determination Date for United
States dollar federal funds as published in H.15(519) under the
caption "Federal Funds (Effective)," as displayed on Bridge
Telerate, Inc. (or any successor service) on page 120 (or any other
page as may replace the specified page on that service) ("Telerate
Page 120"), or
(2) if the rate referred to in clause (1) does not appear on Telerate
Page 120 or is not so published by 3:00 P.M., New York City time, on
the related calculation date, the rate on the applicable Interest
Determination Date for United States dollar federal funds published
in H.15 Daily Update, or other recognized electronic source used for
the purpose of displaying the applicable rate, under the caption
"Federal Funds/Effective Rate," or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged
by three leading brokers of United States dollar federal funds
transactions in The City of New York, which may include an agent or
its affiliates, selected by the calculation agent before 9:00 A.M.,
New York City time, on the applicable Interest Determination Date,
or
(4) if the brokers selected by the calculation agent are not quoting as
mentioned in clause (3), the Federal Funds Rate in effect on the
applicable Interest Determination Date.
LIBOR. "LIBOR" means:
(1) if "LIBOR Telerate" is specified in the applicable pricing
supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in the applicable pricing supplement as the method for
calculating LIBOR, LIBOR will be the rate for deposits in the LIBOR
Currency, as defined below, having the Index Maturity specified in
the applicable pricing supplement, commencing on the related
Interest Reset Date, that appears on the Designated LIBOR Page, as
defined below, as of 11:00 A.M., London time, on the applicable
Interest Determination Date, or
(2) if "LIBOR Reuters" is specified in the applicable pricing
supplement, LIBOR will be the arithmetic mean of the offered rates
for deposits in the LIBOR Currency having the Index Maturity
specified in the applicable pricing supplement, commencing on the
related Interest Reset Date, that appear on the Designated LIBOR
Page specified in the applicable pricing supplement as of 11:00
A.M., London time, on the applicable Interest Determination Date. If
the Designated LIBOR Page by its terms provides only for a single
rate, then the single rate will be used, or
(3) with respect to an Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clauses (1) and (2),
respectively, the rate calculated by the calculation agent as the
arithmetic mean of at least two offered quotations obtained by the
calculation agent after requesting the principal London offices of
each of four major reference banks, which may include affiliates of
an agent, in the London interbank market to provide the calculation
agent with its offered quotation for deposits in the LIBOR Currency
for the period of the Index Maturity specified in the applicable
pricing supplement, commencing on the related Interest Reset Date,
to prime banks in the London interbank market at approximately 11:00
A.M., London time, on the applicable Interest Determination Date and
in a principal amount that is representative for a single
transaction in the applicable LIBOR Currency in that market at that
time, or
(4) if fewer than two quotations referred to in clause (3) are so
provided, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the arithmetic
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mean of the rates quoted at approximately 11:00 A.M., in the
applicable Principal Financial Center, on the applicable Interest
Determination Date by three major banks, which may include
affiliates of an agent, in the applicable Principal Financial Center
selected by the calculation agent for loans in the LIBOR Currency to
leading European banks, having the Index Maturity specified in the
applicable pricing supplement and in a principal amount that is
representative for a single transaction in the applicable LIBOR
Currency in that market at that time, or
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), LIBOR in effect on the applicable Interest
Determination Date.
"LIBOR Currency" means the currency specified in the applicable pricing
supplement as to which LIBOR will be calculated or, if no currency is specified
in the applicable pricing supplement, United States dollars.
"Designated LIBOR Page" means either:
- if "LIBOR Telerate" is designated in the applicable pricing supplement or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable pricing supplement as the method for calculating LIBOR, the
display on Bridge Telerate, Inc. (or any successor service) on the page
specified in such pricing supplement (or any page as may replace the
specified page on that service) for the purpose of displaying the London
interbank rates of major banks for the applicable LIBOR Currency, or
- if "LIBOR Reuters" is specified in the applicable pricing supplement, the
display on the Reuter Monitor Money Rates Service (or any successor
service) on the page specified in the applicable pricing supplement (or
any other page as may replace the specified page on that service) for the
purpose of displaying the London interbank rates of major banks for the
applicable LIBOR Currency.
Prime Rate. The "Prime Rate" means:
(1) the rate on the applicable Interest Determination Date published in
H.15(519) under the caption "Bank Prime Loan," or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date published in H.15
Daily Update, or such other recognized electronic source used for
the purpose of displaying the applicable rate, under the caption
"Bank Prime Loan," or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
calculated by the calculation agent as the arithmetic mean of the
rates of interest publicly announced by each bank that appears on
the Reuters Screen US PRIME 1 Page, as defined below, as the
particular bank's prime rate or base lending rate as of 11:00 A.M.,
New York City time, on the applicable Interest Determination Date,
or
(4) if fewer than four rates referred to in clause (3) appear on Reuters
Screen US PRIME 1 Page by 3:00 P.M., New York City time, on the
related calculation date, the rate on the applicable Interest
Determination Date calculated by the calculation agent as the
arithmetic mean of the prime rates or base lending rates quoted on
the basis of the actual number of days in the year divided by a
360-day year as of the close of business on the applicable Interest
Determination Date by three major banks, which may include
affiliates of an agent, in The City of New York selected by the
calculation agent, or
(5) if the banks selected by the calculation agent are not quoting as
mentioned in clause (4), the Prime Rate in effect on the applicable
Interest Determination Date.
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"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "US PRIME 1" page (or
other page as may replace the US PRIME 1 page on that service) for the purpose
of displaying prime rates or base lending rates of major United States banks.
Treasury Rate. The "Treasury Rate" means:
(1) the rate from the auction held on the applicable Interest
Determination Date (the "Auction") of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified
in the applicable pricing supplement under the caption "INVESTMENT
RATE" on the display on Bridge Telerate, Inc. (or any successor
service) on page 56 (or any other page as may replace page 56 on
that service) ("Telerate Page 56") or page 57 (or any other page as
may replace page 57 on that service) ("Telerate Page 57"), or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield, as defined below, of the rate for the applicable
Treasury Bills as published in H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "U.S. Government Securities/
Treasury Bills/Auction High," or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield of the auction rate of the applicable Treasury
Bills announced by the United States Department of the Treasury, or
(4) if the rate referred to in clause (3) is not announced by the United
States Department of the Treasury, or if the Auction is not held,
the Bond Equivalent Yield of the rate on the applicable Interest
Determination Date of the applicable Treasury Bills published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market," or
(5) if the rate referred to in clause (4) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date of the applicable
Treasury Bills published in H.15 Daily Update, or other recognized
electronic source used for the purpose of displaying the applicable
rate, under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market," or
(6) if the rate referred to in clause (5) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date calculated by the
calculation agent as the Bond Equivalent Yield of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on the applicable Interest Determination
Date, of three primary United States government securities dealers,
which may include an agent or its affiliates, selected by the
calculation agent, for the issue of Treasury Bills with a remaining
maturity closest to the Index Maturity specified in the applicable
pricing supplement, or
(7) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the
applicable Interest Determination Date.
"Bond Equivalent Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <C> <C>
D X N
Bond Equivalent Yield = ------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the interest period
for which interest is being calculated.
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OTHER PROVISIONS; ADDENDA
Any provisions with respect to an issue of notes, including the
determination of one or more Interest Rate Bases, the specification of one or
more Interest Rate Bases, the calculation of the interest rate applicable to a
floating rate note, the applicable interest payment dates, the stated maturity
date, any redemption or repayment provisions or any other matter relating to the
applicable notes may be modified by the terms as specified under "Other
Provisions" on the face of the applicable notes or in an Addendum relating to
the applicable notes, if so specified on the face of the applicable notes and in
the applicable pricing supplement.
ORIGINAL ISSUE DISCOUNT NOTES
We may from time to time offer notes at a price less than their redemption
price at Maturity, resulting in the applicable notes being treated as if they
were issued with original issue discount for federal income tax purposes. These
notes are called "Original Issue Discount Notes." Original Issue Discount Notes
may currently pay no interest or interest at a rate that at the time of issuance
is below market rates. Additional considerations relating to any Original Issue
Discount Notes will be described in the applicable pricing supplement.
AMORTIZING NOTES
We may from time to time offer notes, which we call "Amortizing Notes,"
with amounts of principal and interest payable in installments over the term of
the notes. Unless otherwise specified in the applicable pricing supplement,
interest on each Amortizing Note will be computed on the basis of a 360-day year
of twelve 30-day months. Payments with respect to Amortizing Notes will be
applied first to interest due and payable on the Amortizing Notes and then to
the reduction of the unpaid principal amount of the Amortizing Notes. Further
information concerning additional terms and conditions of any issue of
Amortizing Notes will be specified in the applicable pricing supplement. A table
setting forth repayment information in respect of each Amortizing Note will be
specified in the applicable pricing supplement.
LINKED NOTES
We may from time to time offer notes, which we call "Linked Notes," the
principal value of which at Maturity will be determined by reference to:
(a) one or more equity or debt securities, including, but not limited
to, the price or yield of such securities,
(b) any statistical measure of economic or financial performance,
including, but not limited to, any currency, consumer price or mortgage
index, or
(c) the price or value of any commodity or any other item or index or
any combination thereof,
(collectively, the "Linked Securities"). The payment or delivery of any
consideration on any Linked Note at Maturity will be determined by the decrease
or increase, as applicable, in the price or value of the applicable Linked
Securities. The terms of and any additional considerations, including any
material tax consequences, relating to any Linked Notes will be described in the
applicable pricing supplement.
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BOOK-ENTRY NOTES
Description of the Global Securities
Upon issuance, all notes in book-entry form having the same date of issue,
Maturity and otherwise having identical terms and provisions will be represented
by one or more fully registered global notes (the "Global Notes"). Each Global
Note will be deposited with, or on behalf of, The Depository Trust Company, as
depository, and registered in the name of the depository or a nominee of the
depository. Unless and until it is exchanged in whole or in part for notes in
certificated form, no Global Note may be transferred except as a whole by the
depository to a nominee of the depository or by a nominee of the depository to
the depository or another nominee of the depository or by the depository or any
such nominee to a successor of the depository or a nominee of the successor.
DTC Procedures
The following is based on information furnished by the depository:
The depository will act as securities depository for the notes in
book-entry form. The notes in book-entry form will be issued as fully registered
securities registered in the name of Cede & Co., the depository's partnership
nominee. One fully registered Global Note will be issued for each issue of notes
in book-entry form, each in the aggregate principal amount of the issue, and
will be deposited with the depository. If, however, the aggregate principal
amount of any issue exceeds $400,000,000, one Global Note will be issued with
respect to each $400,000,000 of principal amount and an additional Global Note
will be issued with respect to any remaining principal amount of the issue.
The depository is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The depository holds securities that its participants deposit with the
depository. The depository also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants of the depository include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
The depository is owned by a number of its direct participants, including the
agents, and by the New York Stock Exchange, Inc., the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the
depository's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly. The rules
applicable to the depository and its participants are on file with the SEC.
Purchases of notes in book-entry form under the depository's system must be
made by or through direct participants, which will receive a credit for those
notes in book-entry form on the depository's records. The ownership interest of
each actual purchaser of each note in book-entry form represented by a Global
Note is, in turn, to be recorded on the records of direct participants and
indirect participants. Beneficial owners in book-entry form will not receive
written confirmation from the depository of their purchase, but beneficial
owners are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the direct
participants or indirect participants through which the beneficial owner entered
into the transaction. Transfers of ownership interests in a Global Note
representing notes in book-entry form are to be accomplished by entries made on
the books of participants acting on behalf of beneficial owners. Beneficial
owners of a Global Note representing notes in book-entry form will not receive
notes in certificated form representing their ownership interests therein,
except in the event that use of the book-entry system for such notes in book-
entry form is discontinued.
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To facilitate subsequent transfers, all Global Notes representing notes in
book-entry form which are deposited with, or on behalf of, the depository are
registered in the name of the depository's nominee, Cede & Co. The deposit of
Global Notes with, or on behalf of, the depository and their registration in the
name of Cede & Co. effect no change in beneficial ownership. The depository has
no knowledge of the actual beneficial owners of the Global Notes representing
the notes in book-entry form; the depository's records reflect only the identity
of the direct participants to whose accounts such notes in book-entry form are
credited, which may or may not be the beneficial owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the depository to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the depository nor Cede & Co. will consent or vote with respect to
the Global Notes representing the notes in book-entry form. Under its usual
procedures, the depository mails an omnibus proxy to us as soon as possible
after the applicable record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants, identified in a
listing attached to the omnibus proxy, to whose accounts the notes in book-entry
form are credited on the applicable record date.
We will make principal, premium, if any, and/or interest, if any, payments
on the Global Notes representing the notes in book-entry form in immediately
available funds to the depository. The depository's practice is to credit direct
participants' accounts on the applicable payment date in accordance with their
respective holdings shown on the depository's records unless the depository has
reason to believe that it will not receive payment on the applicable payment
date. Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the applicable participant and not of the
depository, the trustee, any agent or us, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
premium, if any, and/or interest, if any, to the depository will be our
responsibility and that of the trustee, disbursement of payments to direct
participants will be the responsibility of the depository, and disbursement of
payments to the beneficial owners will be the responsibility of direct
participants and indirect participants.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the notes in book-entry form of like tenor and terms are being redeemed,
the depository's practice is to determine by lot the amount of the interest of
each direct participant in the issue to be redeemed.
A beneficial owner will give notice of any option to elect to have its
notes in book-entry form repaid by us, through its participant, to the trustee,
and will effect delivery of the applicable notes in book-entry form by causing
the direct participant to transfer the participant's interest in the Global Note
notes in book-entry form, on the depository's records, to the trustee.
The depository may discontinue providing its services as securities
depository with respect to the notes in book-entry form at any time by giving
reasonable notice to the trustee or us. In the event that a successor securities
depository is not obtained, notes in certificated form are required to be
printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through the depository or a successor securities depository. In that event,
notes in certificated form will be printed and delivered.
The laws of some states may require that certain purchasers of securities
take physical delivery of securities in definitive form. Such limits and such
laws may impair the ability to own, transfer or pledge beneficial interests in
Global Notes.
So long as the depository, or its nominee, is the registered owner of a
Global Note, the depository or its nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by
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such Global Note for all purposes under the indenture. Except as provided below,
beneficial owners of a Global Note will not be entitled to have the notes
represented by a Global Note registered in their names, will not receive or be
entitled to receive physical delivery of the notes in definitive form and will
not be considered the owners or holders thereof under the indenture.
Accordingly, each person owning a beneficial interest in a Global Note must rely
on the procedures of the depository and, if that person is not a participant, on
the procedures of the participant through which that person owns its interest,
to exercise any rights of a holder under the indenture. We understand that under
existing industry practices, in the event we were to request any action of
holders or an owner of a beneficial interest in a Global Note were to desire to
give or take any action that a holder is entitled to give or take under the
indenture, the depository would authorize the participants holding the relevant
beneficial interests to give or take the desired action, and the participants
would authorize beneficial owners owning through the participants to give or
take the desired action or would otherwise act upon the instructions of
beneficial owners.
Exchange for Notes in Certificated Form
If:
(a) the depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by us within 60
days,
(b) we execute and deliver to the trustee a company order to the
effect that the Global Notes shall be exchangeable, or
(c) an Event of Default has occurred and is continuing with respect to
the notes,
the Global Note or Global Notes will be exchangeable for notes in certificated
form of like tenor and of an equal aggregate principal amount, in denominations
of $1,000 and integral multiples of $1,000. The certificated notes will be
registered in the name or names as the depository instructs the trustee. It is
expected that instructions may be based upon directions received by the
depository from participants with respect to ownership of beneficial interests
in Global Notes.
The information in this section concerning the depository and the
depository's system has been obtained from sources that we believe to be
reliable, but we take no responsibility for the accuracy of the information.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Foreign Currency Notes will not be sold in, or to residents of, the country
issuing the Specified Currency. The information set forth in this prospectus
supplement is directed to prospective purchasers who are United States residents
and, with respect to Foreign Currency Notes, is by necessity incomplete. Each
agent and we disclaim any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal of, and premium, if any, and interest, if any, on, Foreign Currency
Notes. Such persons should consult their own financial and legal advisors with
regard to such matters. See "Risk Factors -- Exchange Rates and Exchange
Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
We will be obligated to make payments of principal of, and premium, if any,
and interest, if any, on, a Foreign Currency Note in the Specified Currency. Any
such amounts payable by us in the Specified Currency will be converted by the
exchange rate agent named in the applicable pricing supplement into United
States dollars for payment to holders or the holder of the Foreign Currency
Note, unless the holder or holders elect, in the manner hereinafter described,
to receive such amounts in the Specified Currency.
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Any United States dollar amount to be received by a holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the exchange rate agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers, one of whom may be the exchange rate
agent, selected by the exchange rate agent and approved by us for the purchase
by the quoting dealer of the Specified Currency for United States dollars for
settlement on such payment date in the aggregate amount of the Specified
Currency payable to all holders of Foreign Currency Notes scheduled to receive
United States dollar payments and at which the applicable dealer commits to
execute a contract. All currency exchange costs will be borne by the holders of
the Foreign Currency Notes by deductions from such payments. If three such bid
quotations are not available, payments will be made in the Specified Currency.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest, if any,
in the Specified Currency by submitting a written request for such payment to
the trustee at its corporate trust office in The City of New York on or prior to
the applicable record date or at least fifteen calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of all future payments in the Specified Currency and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the trustee, but written notice of any such
revocation must be received by the trustee on or prior to the applicable record
date or at least fifteen calendar days prior to the Maturity Date, as the case
may be. Holders of Foreign Currency Notes to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
If the Specified Currency is other than United States dollars, a beneficial
owner of the related Global Note who elects to receive payments of principal,
premium, if any, and/or interest, if any, in the Specified Currency must notify
the participant through which it owns its interest on or prior to the applicable
record date or at least fifteen calendar days prior to the Maturity Date, as the
case may be, of the beneficial owner's election. Such participant must notify
the depository of such election on or prior to the third Business Day after such
record date or at least twelve calendar days prior to the Maturity Date, as the
case may be, and the depository will notify the trustee of such election on or
prior to the fifth business day after such record date or at least ten calendar
days prior to the Maturity Date, as the case may be. If complete instructions
are received by the participant from the beneficial owner and forwarded by the
participant to the depository, and by the depository to the trustee, on or prior
to such dates, then the beneficial owner will receive payments in the Specified
Currency.
Payments of the principal of, and premium, if any, and/or interest, if any,
on, Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to notes denominated in United
States dollars. See "Description of the Notes -- Terms of the Notes." Payments
of interest, if any, on Foreign Currency Notes which are to be made in the
Specified Currency on an interest payment date other than the Maturity Date will
be made by check mailed to the address of the holders of the Foreign Currency
Notes as they appear in the security register, subject to the right to receive
such interest payments by wire transfer of immediately available funds under the
circumstances described under "Description of the Notes -- Terms of the Notes."
Payments of principal of, and premium, if any, and/or interest, if any, on,
Foreign Currency Notes which are to be made in the Specified Currency on the
Maturity Date will be made by wire transfer of immediately available funds to an
account with a bank designated at least fifteen calendar days prior to the
Maturity Date by each holder thereof, provided that such bank has appropriate
facilities therefor and that the applicable Foreign Currency Note is presented
and surrendered at the office or agency maintained by us for such purpose in the
Borough of Manhattan, The City of New York, currently the corporate trust office
of the trustee located at 101 Barclay Street, New York, New York 10286, in time
for the trustee to make such payments in such funds in accordance with its
normal procedures.
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AVAILABILITY OF SPECIFIED CURRENCY
If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest, if any, in
respect thereof due to the imposition of exchange controls or other
circumstances beyond our control, we will be entitled to satisfy our obligations
to the holder of the Foreign Currency Note by making such payment in United
States dollars on the basis of the Market Exchange Rate, computed by the
exchange rate agent, on the second Business Day prior to such payment or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate.
The "Market Exchange Rate" for a Specified Currency other than United
States dollars means the noon dollar buying rate in The City of New York for
cable transfers for the Specified Currency as certified for customs purposes
(or, if not so certified, as otherwise determined) by the Federal Reserve Bank
of New York. Any payment made in United States dollars under such circumstances
where the required payment is in a Specified Currency other than United States
dollars will not constitute an Event of Default under the Indenture with respect
to the notes.
All determinations referred to above made by the exchange rate agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of the Foreign Currency
Notes.
JUDGMENTS
Under current Texas law, a state court in the State of Texas rendering a
judgment in respect of a Foreign Currency Note would be required to render such
judgment in United States dollars, and such judgment would be converted into the
Specified Currency at the exchange rate prevailing on the date of entry of such
judgment or date of payment if the Specified Currency has appreciated since the
event or events giving rise to the cause of action, or at the exchange rate
prevailing on the date of the event or events giving rise to the cause of action
if the Specified Currency has depreciated since that date. It is not certain,
however, whether a non-Texas state court would follow the same rules and
procedures with respect to conversions of foreign currency judgments.
UNITED STATES FEDERAL INCOME TAXATION
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the notes reflects
the opinion of Vinson & Elkins L.L.P., counsel to Enron, and is based upon laws,
regulations, rulings and decisions now in effect, all of which are subject to
change, including changes in effective dates, or possible differing
interpretations. It deals only with notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers, except where otherwise specifically
noted. Persons considering the purchase of the notes should consult their own
tax advisors concerning the application of United States Federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the notes arising under the laws of any other
taxing jurisdiction.
As used in this prospectus, the term "U.S. Holder" means a beneficial owner
of a note that is for United States Federal income tax purposes:
(1) a citizen or resident of the United States,
(2) a corporation or a partnership, including an entity treated as a
corporation or a partnership for United States Federal income tax purposes,
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia (unless, in the case of a partnership,
Treasury regulations are adopted that provide otherwise),
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(3) an estate whose income is subject to United States Federal income
tax regardless of its source,
(4) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States persons have the authority to control all substantial
decisions of the trust, or
(5) any other person whose income or gain in respect of a note is
effectively connected with the conduct of a United States trade or
business.
Certain trusts not described in clause (4) above in existence on August 20, 1996
that elect to be treated as a United States person will also be a U.S. Holder
for purposes of the following discussion. As used herein, the term "non-U.S.
Holder" means a beneficial owner of a note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received, in accordance with the U.S. Holder's regular method
of tax accounting.
Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of notes issued with original issue discount
("Discount Notes").
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a note over its issue
price. If such excess is less than a de minimis amount (generally 1/4 of 1% of
the note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a note
providing for the payment of any amount other than qualified stated interest, as
defined below, prior to maturity, multiplied by the weighted average maturity of
the note), the amount of original issue discount will be treated as zero. The
issue price of each note of an issue of notes equals the first price at which a
substantial amount of the notes has been sold, ignoring sales to bond houses,
brokers, or similar persons or organizations acting in the capacity of
underwriters, placement agents, or wholesalers. The stated redemption price at
maturity of a note is the sum of all payments provided by the note other than
"qualified stated interest" payments. The term "qualified stated interest"
generally means stated interest that is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually at a
single fixed rate. In addition, if a note bears interest for one or more accrual
periods at a rate below the rate applicable for the remaining term of the note
(e.g., notes with teaser rates or interest holidays), and if the greater of
either the resulting foregone interest on the note or any "true" discount on the
note (i.e., the excess of the note's stated principal amount over its issue
price) equals or exceeds a specified de minimis amount, then the stated interest
on the note would be treated as original issue discount rather than qualified
stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note generally must include original
issue discount in income as ordinary interest income for United States Federal
income tax purposes as it accrues under a constant yield method in advance of
receipt of the cash payments attributable to such income, regardless of the U.S.
Holder's regular method of tax accounting. In general, the amount of original
issue discount included in income by the initial U.S. Holder of a Discount Note
is the sum of the daily portions of original issue discount with respect to the
Discount Note for each day during the taxable year (or portion of the taxable
year) on which the U.S. Holder held the Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual
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period. The amount of original issue discount allocable to each accrual period
is generally equal to the difference between
- the Discount Note's adjusted issue price at the beginning of such accrual
period and its yield to maturity (determined on the basis of compounding
at the close of each accrual period and appropriately adjusted to take
into account the length of the particular accrual period) and
- the amount of any qualified stated interest payments allocable to such
accrual period.
The "adjusted issue price" of a Discount Note at the beginning of any accrual
period is the sum of the issue price of the Discount Note plus the amount of
original issue discount included in the holders income in all prior accrual
periods minus the amount of any prior payments on the Original Issue Discount
Note that were not qualified stated interest payments. Under these rules, U.S.
Holders generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium". Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder must
include in its gross income with respect to such Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the Discount Note) will
be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Floating Rate Notes and Indexed Notes (hereinafter "Variable Notes"), are
subject to special rules whereby a Variable Note will qualify as a "variable
rate debt instrument" if
- its issue price does not exceed the total noncontingent principal
payments due under the Variable Note by more than a specified de minimis
amount and
- it provides for stated interest, paid or compounded at least annually, at
current values of:
- one or more qualified floating rates,
- a single fixed rate and one or more qualified floating rates,
- a single objective rate, or
- a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, two or more qualified floating rates that can reasonably be expected
to have approximately the same values throughout the term of the Variable Note
(e.g., two or more qualified floating rates with values within 25 basis points
of each other as determined on the Variable Note's issue date) will be treated
as a single qualified floating rate. Notwithstanding the foregoing, a variable
rate that would otherwise constitute a qualified floating rate but which is
subject to one or more restrictions such as a restriction on the maximum
interest rate (i.e., a cap) or the minimum interest rate (i.e., a floor) may,
under certain circumstances, fail to be treated as a qualified floating rate
under the OID Regulations unless such cap or floor is fixed throughout the term
of the note. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula that is based
on objective financial or economic information. A rate will not qualify as an
objective rate if it is based on information that is within the control of the
issuer, or a related party, or that is unique to the
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circumstances of the issuer, or a related party, such as dividends, profits, or
the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the issuer).
A "qualified inverse floating rate" is any objective rate where such rate is
equal to a fixed rate minus a qualified floating rate, as long as variations in
the rate can reasonably be expected to inversely reflect contemporaneous
variations in the qualified floating rate. If a Variable Note provides for
stated interest at a fixed rate for an initial period of one year or less
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate on
the issue date does not differ from the value of the fixed rate by more than 25
basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument", and if the interest on a
Variable Note is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually, then all stated interest on the
Variable Note will constitute qualified stated interest and will be taxed
accordingly. Thus, a Variable Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof and that qualifies as a "variable rate debt instrument" will generally
not be treated as having been issued with original issue discount unless the
Variable Note is issued at a "true" discount (i.e., at a price below the
Variable Note's stated principal amount) in excess of a specified de minimis
amount. The amount of qualified stated interest and the amount of original issue
discount, if any, that accrues during an accrual period on such a Variable Note
is determined under the rules applicable to fixed rate debt instruments by
assuming that the variable rate is a fixed rate equal to
(1) in the case of a qualified floating rate or qualified inverse
floating rate, the value as of the issue date, of the qualified floating
rate or qualified inverse floating rate, or
(2) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is reasonably
expected for the Variable Note.
The qualified stated interest allocable to an accrual period is increased (or
decreased) if the interest actually paid during an accrual period exceeds (or is
less than) the interest assumed to be paid during the accrual period pursuant to
the foregoing rules.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. Such a Variable Note must be
converted into an "equivalent" fixed rate debt instrument by substituting any
qualified floating rate or qualified inverse floating rate provided for under
the terms of the Variable Note with a fixed rate equal to the value of the
qualified floating rate or qualified inverse floating rate, as the case may be,
as of the Variable Note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the Variable Note is
converted into a fixed rate that reflects the yield that is reasonably expected
for the Variable Note. In the case of a Variable Note that qualifies as a
"variable rate debt instrument" and provides for stated interest at a fixed rate
in addition to either one or more qualified floating rates or a qualified
inverse floating rate, the fixed rate is initially converted into a qualified
floating rate (or a qualified inverse floating rate, if the Variable Note
provides for a qualified inverse floating rate). Under such circumstances, the
qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the Variable Note as of
the Variable Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the fixed
rate. Subsequent to converting the fixed rate into either a qualified floating
rate or a qualified inverse floating rate, the Variable Note is then converted
into an "equivalent" fixed rate debt instrument in the manner described above.
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<PAGE> 31
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument,"
then the Variable Note would be treated as a contingent payment debt obligation.
On June 11, 1996, the Treasury Department issued final regulations (the "CPDI
Regulations") concerning the proper United States Federal income tax treatment
of contingent payment debt instruments. The CPDI Regulations generally require a
U.S. Holder of such an instrument to include future contingent and noncontingent
interest payments in income as such interest accrues based upon a projected
payment schedule. Moreover, in general, under the CPDI Regulations, any gain
recognized by a U.S. Holder on the sale, exchange, or retirement of a contingent
payment debt instrument will be treated as ordinary income and all or a portion
of any loss realized could be treated as ordinary loss as opposed to capital
loss, depending upon the circumstances. The proper United States Federal income
tax treatment of Variable Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable pricing supplement.
Furthermore, any other special United States Federal income tax considerations,
not otherwise discussed herein, which are applicable to any particular issue of
notes will be discussed in the applicable pricing supplement.
We may issue notes that:
- may be redeemable at our option prior to their stated maturity (a "call
option")
- may be repayable at the option of the holder prior to their stated
maturity (a "put option").
Notes containing such features may be subject to rules that differ from the
general rules discussed above. Investors intending to purchase notes with such
features should consult their own tax advisors, since the original issue
discount consequences will depend, in part, on the particular terms and features
of the purchased notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Foreign-Currency Notes. The United States Federal income tax consequences
of the purchase, ownership and disposition of notes providing for payments
denominated in a currency other than U.S. dollars will be more fully described
in the applicable pricing supplement.
Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") may be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis
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<PAGE> 32
unless an election is made to accrue the original issue discount under a
constant yield method (based on daily compounding).
Market Discount. If a U.S. Holder purchases a note, other than a Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of a Discount Note, for an amount that is less than its adjusted issue price as
of the purchase date, such U.S. Holder will be treated as having purchased the
note at a "market discount", unless such market discount is less than a
specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a note as ordinary
income to the extent of the lesser of:
- the amount of such payment or realized gain or
- the market discount which has not previously been included in the income
of the holder and is treated as having accrued on the note while held by
the holder through the time of such payment or disposition.
Market discount will be considered to accrue ratably during the period from the
date of acquisition to the maturity date of the note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a note with market discount until the maturity of the note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain
realized upon the disposition of the note and upon the receipt of certain cash
payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes. Such an election will
apply to all debt instruments acquired by the U.S. Holder on or after the first
day of the taxable year to which such election applies and may be revoked only
with the consent of the IRS.
Premium. If a U.S. Holder purchases a note for an amount that is greater
than the sum of all amounts payable on the note after the purchase date other
than payments of qualified stated interest, the U.S. Holder will be considered
to have purchased the note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the note and may offset interest
otherwise required to be included in respect of the note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the note. Any election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder and may be revoked only with the consent of the IRS.
Disposition of a Note. Except as discussed above, upon the sale, exchange
or retirement of a note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
the U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax
basis in a note generally will equal the U.S. Holder's initial investment in the
note increased by any original issue discount included in income (and accrued
market discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
the note. Such gain or
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loss generally will be long-term capital gain or loss if the note were held for
more than one year. Long-term capital gains of individuals are subject to
reduced capital gain rates while short-term capital gains are subject to
ordinary income rates. The deductibility of capital losses is subject to certain
limitations. Prospective investors should consult their own tax advisors
concerning these tax law provisions.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of Enron, a controlled foreign corporation related to
Enron or a bank receiving interest described in section 881(c)(3)(A) of the
Code. To qualify for the exemption from taxation, the last United States payor
in the chain of payment prior to payment to a non-U.S. Holder (the "Withholding
Agent") must have received in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a statement
that (1) is signed by the beneficial owner of the note under penalties of
perjury, (2) certifies that such owner is not a U.S. Holder and (3) provides the
name and address of the beneficial owner. The statement may be made on an IRS
Form W-8, IRS Form W-8 BEN or a substantially similar form, and the beneficial
owner must inform the Withholding Agent of any change in the information on the
statement within 30 days of such change. If a note is held through a securities
clearing organization or certain other financial institutions, the organization
or institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS Form
W-8, IRS Form W-8 BEN or the substitute form provided by the beneficial owner to
the organization or institution.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes capital gain upon retirement or
disposition of a note, provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the non-U.S. Holder, and
in the case of a non-U.S. Holder that is an individual such individual was not
present in the United States for 183 days or more in the taxable year of
disposition and certain other conditions are met. Certain other exceptions may
be applicable, and a non-U.S. Holder should consult its tax advisor in this
regard.
The notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of Enron or,
at the time of such individual's death, payments in respect of the notes would
have been effectively connected with the conduct by such individual of a trade
or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information,
such as the registered owner's taxpayer identification number, in the required
manner.
Generally, individuals are not exempt recipients, whereas corporations and
certain other entities generally are exempt recipients. Payments made in respect
of the notes to a U.S. Holder must be reported to the IRS, unless the U.S.
Holder is an exempt recipient or establishes an exemption. Compliance with the
identification procedures described in the preceding section would establish an
exemption from backup withholding for those non-U.S. Holders who are not exempt
recipients.
In addition, upon the sale of a note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either:
- the broker determines that the seller is a corporation or other exempt
recipient or
- the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such
seller is a non-U.S. Holder (and certain other conditions are met).
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<PAGE> 34
Such a sale must also be reported by the broker to the IRS, unless either:
- the broker determines that the seller is an exempt recipient or
- the seller certifies its non-U.S. status (and certain other conditions
are met).
Certification of the registered owner's non-U.S. status would be made normally
on an IRS Form W-8 or IRS Form W-8 BEN under penalties of perjury, although in
certain cases it may be possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
The Treasury has issued regulations (the "Regulations") which make certain
modifications to the withholding, backup withholding and information reporting
rules and attempt to unify certification requirements and modify reliance
standards. The Regulations will generally be effective for payments made after
December 31, 2000, subject to certain transition rules. Prospective investors
are urged to consult their own tax advisors regarding the Regulations.
PLAN OF DISTRIBUTION
We are offering the notes for sale on a continuing basis on our own behalf
or to or through one or more agents. As of the date of this prospectus
supplement, we have entered into agreements with Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Banc of America Securities LLC as agents. Notes purchased
by an agent, as principal, from us, may be sold to investors and other
purchasers at varying prices relating to prevailing market prices at the time of
resale as determined by the agent or, if so specified in an applicable pricing
supplement, at a fixed public offering price. Unless otherwise specified in an
applicable pricing supplement, any note sold to an agent as principal will be
purchased by the agent at a price equal to 100% of the principal amount of the
note less a discount equal to a percentage of the principal amount, as specified
in the applicable pricing supplement. If agreed to by an agent and us, the agent
may use its reasonable efforts on an agency basis to solicit offers to purchase
the notes at 100% of the principal amount of the notes, unless otherwise
specified in the applicable pricing supplement. When an agent acts on an agency
basis, we will pay a commission to the agent in an amount set forth in the
applicable pricing supplement. In addition, we estimate that our expenses
incurred in connection with the offering and sale of the notes, including
reimbursement of certain agents' expenses, total $300,000.
An agent may sell notes it has purchased from us as principal to other
dealers for resale to investors, and may allow any portion of the discount
received in connection with such purchases from us to such dealers. After the
initial public offering of notes, the public offering price, in the case of
notes to be resold at a fixed public offering price and the concession and
discount allowed to dealers may be changed.
We reserve the right to withdraw, cancel or modify the offer made by this
prospectus supplement without notice and may reject offers, in whole or in part,
whether placed directly with us or through an agent. An agent will have the
right, in its discretion reasonably exercised, to reject in whole or in part any
offer to purchase notes received by the agent.
Payment of the purchase price of the notes will be required to be made in
immediately available funds in the Specified Currency in New York City on the
date of settlement.
No note will have an established trading market when issued. Unless
otherwise specified in the applicable pricing supplement, we will not list the
notes on any securities exchange. An agent may from time to time purchase and
sell notes in the secondary market, but no agent is obligated to do so, and
there can be no assurance that there will be a secondary market for the notes or
liquidity in the secondary market if one develops. From time to time, an agent
may make a market in the notes, but no agent is obligated to do so, and any
agent may discontinue any market-making at any time without notice.
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<PAGE> 35
Any agent may be deemed to be an "underwriter" within the meaning of the
Securities Act. We will agree to indemnify any agent against certain civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments the agent may be required to make in that respect. We may agree to
reimburse any agent for certain expenses.
From time to time, we may issue and sell other securities described in the
accompanying prospectus, and the amount of notes that we may offer and sell
under this prospectus supplement may be reduced as a result of such sales.
In connection with the offering of notes purchased by an agent as principal
on a fixed public offering price basis, the agent is permitted to engage in
certain transactions that stabilize the price of the notes. These transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the notes. If the agent creates a short position in the
notes in connection with the offering, i.e., if it sells notes in an amount
exceeding that set forth in the applicable pricing supplement, then the agent
may reduce that short position by purchasing notes in the open market. In
general, purchases of notes for the purpose of stabilization or to reduce a
short position could cause the price of the notes to be higher than in the
absence of these purchases.
We do not make and no agent will make any representation or prediction as
to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, we do not make and no
agent will make any representation that the agent will engage in any such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
Any agent and/or its affiliates may be entities that have provided
investment banking and general financing and/or banking services to us and our
subsidiaries or affiliates in the past, for which they have received customary
compensation and expense reimbursement, and may do so again in the future.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for Enron by James V.
Derrick, Jr., Executive Vice President and General Counsel of Enron. Mr. Derrick
owns less than 1% of the outstanding shares of Common Stock of Enron. Certain
matters will be passed upon for Enron by Vinson & Elkins L.L.P. and for any
agent by Bracewell & Patterson, L.L.P. Bracewell & Patterson, L.L.P. currently
provides services to Enron and certain of its subsidiaries and affiliates as
outside counsel on matters unrelated to the issuance of the notes.
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<PAGE> 36
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY , 2000
PROSPECTUS
[ENRON LOGO]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
ENRON CORP.
1400 Smith Street
Houston, Texas 77002
(713) 853-6161
---------------------
We will provide specific terms of these securities in supplements to this
prospectus. This prospectus may not be used to consummate sales of these
securities unless accompanied by a prospectus supplement.
---------------------
Neither the SEC nor any state securities commission has approved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
---------------------
July , 2000
<PAGE> 37
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 2
Business of Enron........................................... 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges and Earnings to Fixed
Charges and Preferred Stock Dividends..................... 4
Description of Debt Securities.............................. 5
Description of Capital Stock................................ 12
Description of Depositary Shares............................ 20
Plan of Distribution........................................ 22
Validity of Securities...................................... 23
Experts..................................................... 23
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms and their copy charges.
Reports, proxy statements and other information concerning Enron can also
be inspected and copied at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005, the offices of the Chicago Stock
Exchange at 120 South LaSalle Street, Chicago, Illinois 60603, and the offices
of the Pacific Stock Exchange at 301 Pine Street, San Francisco, California
94014.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
- Current Report on Form 8-K filed May 19, 2000; and
- The description of Enron's capital stock set forth in Enron's
Registration Statement on Form 8-B filed on July 2, 1997.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Secretary Division, Enron Corp.
1400 Smith Street
Houston, Texas 77002
(713) 853-6161
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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BUSINESS OF ENRON
Headquartered in Houston, Texas, Enron Corp. provides products and services
related to natural gas, electricity and communications to wholesale and retail
customers. Our operations are conducted through our subsidiaries and affiliates,
which are principally engaged in:
- the marketing of natural gas, electricity and other commodities and
related risk management and finance services worldwide;
- the development, construction and operation of power plants, pipelines
and other energy related assets worldwide;
- the delivery and management of energy commodities and capabilities to
end-use retail customers in the industrial and commercial business
sectors;
- the delivery of high bandwidth communication applications;
- the transportation of natural gas through pipelines to markets throughout
the United States; and
- the generation and transmission of electricity to markets in the
northwestern United States.
WHOLESALE ENERGY OPERATIONS AND SERVICES
Our wholesale energy operations and services businesses operate worldwide
in developed and deregulated markets such as North America and Europe, as well
as developing or newly deregulating markets, including South America, India and
Japan. We build our wholesale businesses through the creation of networks
involving asset ownership, contractual access to third-party assets and
market-making activities. Wholesale energy operations and services can be
categorized into two business lines: (a) Commodity Sales and Services and (b)
Assets and Investments.
Commodity Sales and Services. We provide commodity delivery and predictable
pricing to our customers through forward contracts. This market-making activity
includes the purchase, sale, marketing and delivery of natural gas, electricity,
liquids and other commodities, as well as the management of our own portfolio of
contracts. Our market-making activity is facilitated through a network of
capabilities including asset ownership. Accordingly, certain assets involved in
the delivery of these services are included in this business (such as intrastate
natural gas pipelines, power plants and gas storage facilities).
Assets and Investments. We make investments in various energy-related
assets as a part of our network strategy by either purchasing the asset from a
third party or developing and constructing the asset. Additionally, we invest in
debt and equity securities of energy and certain communications-related
businesses.
RETAIL ENERGY SERVICES
Enron Energy Services provides energy expertise and capabilities to end-use
retail customers in the industrial and commercial business sectors to manage
their energy requirements and reduce their total energy costs. Enron Energy
Services sells or manages the delivery of natural gas, electricity, liquids and
other commodities to industrial and commercial customers located throughout the
United States and the United Kingdom. Enron Energy Services also provides
outsourcing solutions to customers for full energy management. This integrated
product includes the management of commodity delivery, energy information and
energy assets, and price risk management activities.
BROADBAND SERVICES
Our broadband services business provides customers with a single source for
broadband services. In implementing our network strategy, we are constructing
the Enron Intelligent Network(TM) (EIN), a nationwide fiber optic network that
consists of both fiber deployed by us and acquired capacity on networks not
owned by us. The EIN, managed by our Broadband Operating System software,
provides a bandwidth-on-demand platform allowing the delivery high-bandwidth
media rich content such as video streaming, high capacity data transport and
video conferencing. In addition, we are extending our market-making and risk
management
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intermediation business to help customers manage unexpected fluctuations in the
price, supply and demand of bandwidth. We also make investments in companies
with related technologies and with the potential for capital appreciation.
TRANSPORTATION AND DISTRIBUTION
Our transportation and distribution business is comprised of our North
American interstate natural gas transportation systems and our electricity
transmission and distribution operations in Oregon.
Interstate Transmission of Natural Gas. Included in our domestic interstate
natural gas pipeline operations are Northern Natural Gas Company, Transwestern
Pipeline Company and Florida Gas Transmission Company (indirectly 50% owned by
our company). Northern, Transwestern and Florida Gas are interstate pipelines
and are subject to the regulatory jurisdiction of the Federal Energy Regulatory
Commission. Each pipeline serves customers in a specific geographical area.
Northern serves the upper Midwest, Transwestern serves principally the
California market and pipeline interconnects on the east end of the Transwestern
system, and Florida Gas serves the State of Florida. In addition, we hold an
interest in Northern Border Partners, L.P., which owns a 70% interest in the
Northern Border Pipeline system. One of our subsidiaries operates the Northern
Border Pipeline system, which transports gas from Western Canada to delivery
points in the midwestern United States.
Electricity Transmission and Distribution Operations. We conduct our
electric utility operations through our wholly-owned subsidiary, Portland
General Electric Company. Portland General is engaged in the generation,
purchase, transmission, distribution and sale of electricity in the State of
Oregon. Portland General also sells energy to wholesale customers throughout the
western United States. Portland General's Oregon service area is approximately
3,170 square miles. At March 31, 2000, Portland General served approximately
724,000 customers. On November 8, 1999, we announced that we have entered into
an agreement to sell Portland General to Sierra Pacific Resources for $2.1
billion, comprised of $2.02 billion in cash and the assumption of our
approximately $80 million Portland General merger payment obligation. Sierra
Pacific Resources will also assume $1 billion in Portland General debt and
preferred stock. The proposed transaction, which is subject to customary
regulatory approvals, is expected to close in late 2000.
USE OF PROCEEDS
The net proceeds from the sale of the offered securities will be added to
our general funds and will be used to repay debt and for general corporate
purposes. Other uses may be stated in a prospectus supplement.
RATIO OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ---------------------------------
2000 1999 1998 1997 1996 1995
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............ 2.66 2.29 2.08 1.02 3.00 2.92
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................... 2.43 2.13 2.03 (a) 2.85 2.76
</TABLE>
---------------
(a) For the year ended December 31, 1997, earnings were inadequate to cover
combined fixed charges and preferred stock dividends by $6 million.
The ratios of earnings to fixed charges and preferred stock dividends are
based on continuing operations. "Earnings" is determined by adding:
- the pre-tax income of Enron and its majority owned subsidiaries,
- Enron's share of pre-tax income of its 50% owned companies,
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- any income actually received from less than 50% owned companies, and
- fixed charges, net of interest capitalized.
"Fixed Charges" represent (1) interest (whether expensed or capitalized), (2)
amortization of debt discount and expense and (3) that portion of rentals
considered to be representative of the interest factor. "Fixed Charges and
Preferred Stock Dividends" represent fixed charges (as described above) and
preferred stock dividend requirements of Enron and its majority owned
subsidiaries.
DESCRIPTION OF DEBT SECURITIES
The following description highlights the general terms and provisions of
the debt securities. When debt securities are offered in the future, the
prospectus supplement will explain the particular terms of those securities and
the extent to which these general provisions may apply.
The debt securities will be secured or unsecured obligations of Enron. Any
unsecured obligations will be issued under an indenture between Enron and The
Bank of New York, as Trustee, dated as of November 1, 1985, as supplemented and
amended. Any secured obligations will be issued under a separate indenture,
which will be described in the prospectus supplement relating to those debt
securities.
We have summarized selected provisions of the indenture below. The summary
is not complete. The form of the indenture has been filed as an exhibit to the
registration statement of which this prospectus is a part, and you should read
the indenture for any provisions that may be important to you. In the summary
below, we have included references to section numbers of the indenture so that
you can easily locate these provisions. Capitalized terms used in the summary
have the meanings specified in the indenture.
GENERAL
The indenture does not limit the principal amount of unsecured debentures,
notes or other obligations of Enron which we may issue from time to time in one
or more series. In this prospectus we refer to such debt obligations as
Indenture Securities. We may issue additional Indenture Securities, in addition
to the debt securities, in the future under the indenture. At June 30, 2000, we
had approximately $5,654,129,000 principal amount of Indenture Securities issued
and outstanding under the indenture.
A prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- The title of the debt securities;
- The total principal amount of the debt securities;
- The date on which the principal of the debt securities is payable;
- The interest rate which the debt securities will bear and the interest
payment dates for the debt securities;
- The place where the principal of (and premium, if any) and interest on
debt securities will be payable;
- Any optional redemption periods and the terms of that option;
- Any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the debt securities;
- Any trustees, paying agents, transfer agents or registrars with respect
to debt securities; and
- Any other terms of the debt securities. (Section 301.)
LIMITATIONS ON MORTGAGES AND LIENS
The indenture provides that so long as any of the Indenture Securities,
including the debt securities, are outstanding, Enron will not, and will not
permit any Subsidiary to, pledge, mortgage or hypothecate, or permit
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to exist, except in favor of Enron or any Subsidiary, any mortgage, pledge or
other lien upon, any Principal Property at any time owned by it, to secure any
indebtedness, as defined in the Indenture, unless effective provision is made
whereby outstanding Indenture Securities, including the debt securities, will be
equally and ratably secured with any and all such indebtedness and with any
other indebtedness similarly entitled to be equally and ratably secured. This
restriction does not apply to prevent the creation or existence of:
- Mortgages, pledges, liens or encumbrances on any property held or used by
Enron or a Subsidiary in connection with the exploration for, development
of or production of, oil, gas, natural gas (including liquified gas and
storage gas), other hydrocarbons, helium, coal, metals, minerals, steam,
timber, geothermal or other natural resources or synthetic fuels, such
properties to include, but not be limited to, Enron's or a Subsidiary's
interest in any mineral fee interests, oil, gas or other mineral leases,
royalty, overriding royalty or net profits interests, production payments
and other similar interests, wellhead production equipment, tanks, field
gathering lines, leasehold or field separation and processing facilities,
compression facilities and other similar personal property and fixtures;
- Mortgages, pledges, liens or encumbrances on oil, gas, natural gas
(including liquified gas and storage gas), other hydrocarbons, helium,
coal, metals, minerals, steam, timber, geothermal or other natural
resources or synthetic fuels produced or recovered from any property, an
interest in which is owned or leased by Enron or a Subsidiary;
- Mortgages, pledges, liens or encumbrances (or certain extensions,
renewals or refundings thereof) upon any property acquired before or
after the date of the indenture, created at the time of acquisition or
within one year thereafter to secure all or a portion of the purchase
price thereof, or existing thereon at the date of acquisition, whether or
not assumed by Enron or a Subsidiary, provided that every such mortgage,
pledge, lien or encumbrance applies only to the property so acquired and
fixed improvements thereon;
- Mortgages, pledges, liens or encumbrances upon any property acquired
before or after the date of the Indenture by any corporation that is or
becomes a Subsidiary after the date of the indenture ("Acquired Entity"),
provided that every such mortgage, pledge, lien or encumbrance (1) shall
either (a) exist prior to the time the Acquired Entity becomes a
Subsidiary or (b) be created at the time the Acquired Entity becomes a
Subsidiary or within one year thereafter to secure all or a portion of
the acquisition price thereof and (2) shall only apply to those
properties owned by the Acquired Entity at the time it becomes a
Subsidiary or thereafter acquired by it from sources other than Enron or
any other Subsidiary;
- Pledges of current assets, in the ordinary course of business, to secure
current liabilities;
- Deposits to secure public or statutory obligations;
- Liens to secure indebtedness other than Funded Debt, as defined in the
indenture and herein;
- Mortgages, pledges, liens or encumbrances upon any office, data
processing or transportation equipment;
- Mortgages, pledges, liens or encumbrances created or assumed by Enron or
a Subsidiary in connection with the issuance of debt securities the
interest on which is excludable from gross income of the holder of such
security pursuant to the Internal Revenue Code of 1986, as amended, for
the purpose of financing the acquisition or construction of property to
be used by Enron or a Subsidiary;
- Pledges or assignments of accounts receivable or conditional sales
contracts or chattel mortgages and evidences of indebtedness secured
thereby, received in connection with the sale by Enron or a Subsidiary of
goods or merchandise to customers; or
- Certain other liens or encumbrances. (Section 1007.)
Notwithstanding the foregoing, Enron or a Subsidiary may issue, assume or
guarantee indebtedness secured by a mortgage which would otherwise be subject to
the foregoing restrictions in an aggregate amount
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which, together with all other indebtedness of Enron or a Subsidiary secured by
a mortgage which, if originally issued, assumed or guaranteed at such time,
would otherwise be subject to the foregoing restrictions (not including secured
indebtedness permitted under the foregoing exceptions), does not at the time
exceed 10% of the Consolidated Net Tangible Assets. Consolidated Net Tangible
Assets is generally defined as total assets less (a) total current liabilities,
excluding indebtedness due within 12 months, and (b) goodwill, patents and
trademarks of Enron, as shown on the audited consolidated financial statements
of Enron as of the end of the fiscal year preceding the date of determination.
(Section 1007.)
The holders of at least 50% in principal amount of the outstanding
Indenture Securities under the indenture, including the debt securities may
waive compliance by Enron with the covenant contained in Section 1007 of the
indenture and certain other covenants of Enron. (Section 1009.)
"Subsidiary" is defined to mean a corporation all of the voting shares
(that is, shares entitled to vote for the election of directors, but excluding
shares entitled so to vote only upon the happening of some contingency unless
such contingency shall have occurred) of which shall be owned by Enron or by one
or more Subsidiaries or by Enron and one or more Subsidiaries. The term
"Principal Property" is defined to mean any oil or gas pipeline, gas processing
plant or chemical plant located in the United States, except any such property,
pipeline or plant that in the opinion of the Board of Directors of Enron is not
of material importance to the total business conducted by Enron and its
Subsidiaries. "Principal Property" does not include any oil or gas property or
the production or any proceeds of production from an oil or gas producing
property or the production or any proceeds of production of gas processing
plants or oil or gas or petroleum products in any pipeline. (Section 101.)
The term "indebtedness", as applied to Enron or any Subsidiary, is defined
to mean bonds, debentures, notes and other instruments representing obligations
created or assumed by any such corporation for the repayment of money borrowed
(other than unamortized debt discount or premium). All indebtedness secured by a
lien upon property owned by Enron or any Subsidiary and upon which indebtedness
any such corporation customarily pays interest, even though such corporation has
not assumed or become liable for the payment of such indebtedness, is also
deemed to be indebtedness of any such corporation. All indebtedness for money
borrowed incurred by other persons which is directly guaranteed as to payment of
principal by Enron or any Subsidiary is for all purposes of the indenture deemed
to be indebtedness of any such corporation, but no other contingent obligation
of any such corporation in respect of indebtedness incurred by other persons is
for any purpose deemed indebtedness of such corporation. Indebtedness of Enron
or any Subsidiary does not include (a) amounts which are payable only out of all
or a portion of the oil, gas, natural gas, helium, coal, metals, minerals,
steam, timber or other natural resources produced, derived or extracted from
properties owned or developed by such corporation; (b) any amount representing
capitalized lease obligations; (c) any indebtedness incurred to finance oil,
gas, natural gas, helium, coal, metals, minerals, steam, timber, hydrocarbons or
geothermal or other natural resources or synthetic fuel exploration or
development, payable, with respect to principal and interest, solely out of the
proceeds of oil, gas, natural gas, helium, coal, metals, minerals, steam,
timber, hydrocarbons or geothermal or other natural resources or synthetic fuel
to be produced, sold and/or delivered by Enron or any Subsidiary; (d) indirect
guarantees or other contingent obligations in connection with the indebtedness
of others, including agreements, contingent or otherwise, with such other
persons or with third persons with respect to, or to permit or ensure the
payment of, obligations of such other persons, including, without limitation,
agreements to purchase or repurchase obligations of such other persons,
agreements to advance or supply funds to or to invest in such other persons or
agreements to pay for property, products or services of such other persons
(whether or not conferred, delivered or rendered) and any demand charge,
throughput, take-or-pay, keep-well, make-whole, cash deficiency, maintenance of
working capital or earnings or similar agreements; and (e) any guarantees with
respect to lease or other similar periodic payments to be made by other persons.
(Section 101.)
"Funded Debt" as applied to any corporation means all indebtedness
incurred, created, assumed or guaranteed by such corporation, or upon which it
customarily pays interest charges, which matures, or is renewable by such
corporation to a date, more than one year after the date as of which Funded Debt
is being determined; provided, however, that the term "Funded Debt" shall not
include (a) indebtedness incurred in the ordinary course of business
representing borrowings, regardless of when payable, of such corporation from
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time to time against, but not in excess of the face amount of, its installment
accounts receivable for the sale of appliances and equipment sold in the regular
course of business or (b) advances for construction and security deposits
received by such corporation in the ordinary course of business. (Section 101.)
The foregoing limitations on mortgages, pledges and liens are intended to
limit other creditors of Enron from obtaining preference or priority over
holders of the Indenture Securities issued under the indenture, but are not
intended to prevent other creditors from sharing equally and ratably and without
preference ("pari passu") over the holders of such Indenture Securities. While
such limitations on mortgages and liens do provide protection to the holders of
the Indenture Securities, there are a number of exceptions to such restrictions
which could result in certain assets of Enron and its Subsidiaries being
encumbered without equally and ratably securing the Indenture Securities issued
under the indenture. Specifically, the restrictions apply only to pledges,
mortgages or liens upon "Principal Property", as defined in the indenture and
herein, to secure any "indebtedness", as defined in the indenture and herein,
unless effective provision is made whereby outstanding Securities will be
equally and ratably secured with any such indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. There are
certain exceptions to the definition of "indebtedness," which are enumerated in
the indenture and herein. In addition, the restrictions do not apply to prevent
the creation or existence of mortgages, pledges, liens or encumbrances on
certain types of properties or pursuant to certain types of transactions, all as
enumerated in the indenture and above. Also, up to 10% of Consolidated Net
Tangible Assets, as defined in the indenture and herein, is not subject to the
mortgage and lien limitations contained in the indenture.
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the indenture and the Indenture Securities would not necessarily
afford holders of the Indenture Securities protection in the event of a highly
leveraged or other transaction involving Enron that may adversely affect
holders.
MODIFICATION OF THE INDENTURE
With certain exceptions, the indenture provides that Enron and the Trustee
may modify the indenture or the rights of the holders of Indenture Securities if
they have the consent of the holders of at least 50% in principal amount of all
outstanding Indenture Securities affected thereby. However, no modification of
the principal or interest payment terms, no modification of provisions
concerning waivers of past defaults or waivers of certain covenants, and no
modification reducing the percentage required for any modifications, is
effective against any holder without its consent. (Section 902.)
EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT
"Event of Default" means any one of the following with respect to any
series of Indenture Securities:
(a) failure to pay interest on any Indenture Security of that series
for 30 days;
(b) failure to deposit any sinking fund payment for 30 days;
(c) failure to pay the principal or any premium on any Indenture
Security of that series when due;
(d) failure to perform any other covenant in the indenture for 60 days
after being given written notice by the Trustee or the holders of at least
25% in principal amount of all outstanding Indenture Securities; or
(e) certain events in bankruptcy, receivership or other insolvency
proceedings or an assignment for the benefit of creditors. (Section 501.)
An Event of Default for a particular series of Indenture Securities does
not necessarily constitute an Event of Default for any other series of Indenture
Securities issued under the indenture. A default under other indebtedness of
Enron is not an Event of Default under the indenture.
If an Event of Default for any series of Indenture Securities occurs and
continues, the Trustee or the holders of at least 25% in principal amount of the
outstanding Indenture Securities of that series may declare the principal amount
of all of the Indenture Securities of that series to be due and payable
immediately. If an
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Event of Default described in clause (d) or (e) of the foregoing paragraph
occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of all of the Indenture Securities then outstanding may declare
the principal amount of all of the Indenture Securities to be due and payable
immediately. (Section 502.) If this happens, subject to certain conditions, the
holders of a majority of the aggregate principal amount of the outstanding
Indenture Securities of that series (or of all series, as the case may be) may
rescind and annul such declaration and its consequences, if, subject to certain
conditions, all Events of Default with respect to Indenture Securities of that
series, or of all series, as the case may be, other than the non-payment of the
principal of the Indenture Securities due solely by such declaration of
acceleration, have been cured or waived and all payments due, other than by
acceleration, have been paid or deposited with the Trustee. With certain
exceptions, the holders of not less than a majority in principal amount of the
outstanding Indenture Securities of any series, on behalf of the holders of all
the Indenture Securities of such series, may waive any past default described in
clause (a), (b) or (c) of the first paragraph under this subheading (or, in the
case of a default described in clause (d) or (e) of such paragraph, the holders
of a majority in principal amount of all outstanding Indenture Securities may
waive any such past default) and its consequences, except a default (1) in the
payment of the principal of (or premium, if any) or interest on any Indenture
Security, or (2) in respect of a covenant or provision of the indenture which
under the indenture cannot be modified or amended without the consent of the
holder of each outstanding Indenture Security of such series affected. (Section
513.)
DISCHARGE OF INDENTURE; DEFEASANCE
With certain exceptions, we will be discharged from our obligations under
the indenture with respect to any series of Indenture Securities by either
paying or causing to be paid the principal of, premium, if any, and interest on
all of the Indenture Securities of such series outstanding, as and when the same
shall become due and payable, or delivering to the Trustee all outstanding
Indenture Securities of such series for cancellation. (Section 401.)
In addition, we will be discharged if at any time we defease the Indenture
Securities of a series by depositing in escrow or trust with the Trustee
sufficient cash and/or Government Obligations and/or Eligible Obligations to pay
the principal of, premium, if any, and interest on the Indenture Securities of
that series to the stated maturity date or a redemption date for the Indenture
Securities of that series. If that happens, payment of the Indenture Securities
of such series may not be accelerated because of an event specified as a default
or Event of Default with respect to such Indenture Securities, and the holders
of the Indenture Securities of such series will not be entitled to the benefits
of the Indenture, except for registration of transfer and exchange of Indenture
Securities and replacement of lost, stolen or mutilated Indenture Securities.
The Indenture defines "Eligible Securities" to mean interest bearing
obligations as a result of the deposit of which the Indenture Securities are
rated in the highest generic long-term debt rating category assigned to defeased
debt by one or more nationally recognized rating agencies.
Under Federal income tax law as of the date of this prospectus, a discharge
may be treated as an exchange of the related debt securities. Each holder might
be required to recognize gain or loss equal to the difference between the
holder's cost or other tax basis for the debt securities and the value of the
holder's interest in the trust. Holders might be required to include as income a
different amount than would be includable without the discharge. Prospective
investors are urged to consult their own advisors as to the tax consequences of
a discharge, including the applicability and effect of tax laws other than
Federal income tax law.
FORM, DENOMINATION AND REGISTRATION; BOOK ENTRY ONLY SYSTEM
Unless otherwise indicated in a prospectus supplement, the debt securities
will be issued only in fully registered form, without coupons, in denominations
of $1,000 or integral multiples thereof. (Section 302.) You will not have to pay
a service charge to transfer or exchange debt securities, but we may require you
to pay for taxes or other governmental charges due upon a transfer or exchange.
(Section 305.)
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Unless otherwise indicated in a prospectus supplement, each series of
Indenture Securities will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") or any successor depositary (the "Depositary") and will be
represented by one or more Global Notes registered in the name of Cede & Co., as
nominee of DTC. The interests of beneficial owners in the Global Notes will be
represented through financial institutions acting on their behalf as direct or
indirect participants in DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of these ownership interests will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Indenture Securities of that series represented by
such Global Note for all purposes of the indenture, the Indenture Securities of
that series and applicable law. In addition, no beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures (in addition to those under the indenture).
Payments on Indenture Securities represented by Global Notes will be made
to DTC or its nominee, as the registered owner thereof. Neither we, the Trustee,
any underwriter nor any paying agent will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in Global Notes, for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any
action taken or omitted to be taken by the Depositary or any participant.
We expect that DTC or its nominee will credit participants' accounts on the
payable date with payments in respect of a Global Note in amounts proportionate
to their respective beneficial interest in the principal amount of such Global
Note as shown on the records of DTC or its nominee, unless DTC has reason to
believe that it will not receive payment on the payable date. We also expect
that payments by participants to owners of beneficial interests in such Global
Note held through such participants will be governed by standing instructions
and customary practices, as is now the case with securities held for the
accounts of customers registered in "street name." Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in accordance with
DTC rules. The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability to transfer
beneficial interests in a Global Note to such persons may be impaired. Because
DTC can only act on behalf of participants, who in turn act on behalf of others,
such as securities brokers and dealers, banks and trust companies ("indirect
participants"), the ability of a person having a beneficial interest in a Global
Note to pledge such interest to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such interest, may be
impaired by the lack of a physical certificate of such interest.
We believe it is the policy of DTC to take any action permitted to be taken
by a holder of Indenture Securities of a series only at the direction of one or
more participants to whose account interests in Global Notes are credited and
only in respect of such portion of the aggregate principal amount of the
Indenture Securities of a series as to which such participant or participants
has or have given such direction.
If (a) the Depositary notifies us that it is unwilling or unable to
continue as Depositary or if the Depositary ceases to be eligible under the
indenture and a successor depositary is not appointed by us within 90 days or
(b) an event of default with respect to a series of Indenture Securities shall
have occurred and be continuing, the respective Global Notes representing the
affected series of Indenture Securities will be exchanged for Indenture
Securities in definitive form of like tenor and of an equal aggregate principal
amount, in authorized denominations. Such definitive Indenture Securities shall
be registered in such name or names as the Depositary shall instruct the
Trustee. Such instructions will most likely be based upon directions received by
the Depositary from participants with respect to ownership of beneficial
interests in Global Notes.
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DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants deposit with
DTC and facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its direct participants, including those who may act as underwriters of our
Indenture Securities, and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as indirect
participants that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the SEC.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in Global Notes among participants of DTC, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we, the Trustee, any
underwriter nor any paying agent will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the indenture. The bank also may
act as a depository of funds for, make loans to, and perform other services for,
Enron in the normal course of business, including acting as trustee under other
indentures of Enron. The corporate trust office of the Trustee is located at 101
Barclay Street, New York, New York 10286.
The holders of a majority in principal amount of the outstanding securities
issued under the Indenture will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The indenture provides that if an Event
of Default occurs (and it is not cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of such person's own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any holder of securities issued under the indenture,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense, and then only to the
extent required by the terms of the indenture. The Trustee may resign from its
duties with respect to the indenture at any time or may be removed by Enron. If
the Trustee resigns, is removed or becomes incapable of acting as Trustee or a
vacancy occurs in the office of the Trustee for any reason, a successor Trustee
shall be appointed in accordance with the provisions of the indenture. (Article
Six.)
The indenture contains the provisions required by the Trust Indenture Act
of 1939 with reference to the disqualification of the Trustee if it shall have
or acquire any "conflicting interest", as therein defined. (Section 608.) The
indenture also contains certain limitations on the right of the Trustee, as a
creditor of Enron, to obtain payment of claims in certain cases, or to realize
on certain property received by it in respect of any such claims, as security or
otherwise. (Section 613.)
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
At June 30, 2000, our authorized capital stock was 1,216,500,000 shares,
consisting of:
(a) 16,500,000 shares of preferred stock, no par value, of which:
- 1,272,684 shares of Cumulative Second Preferred Convertible Stock
were outstanding;
- 35.568509 shares of 9.142% Perpetual Second Preferred Stock were
issued and are held by an Enron subsidiary;
- 250,000 shares of Mandatorily Convertible Junior Preferred Stock,
Series B, were issued and outstanding;
- 204,800 shares of Mandatorily Convertible Single Reset Preferred
Stock, Series A, were issued and are held by an Enron subsidiary;
- 83,000 shares of Mandatorily Convertible Single Reset Preferred
Stock, Series B, were issued and are held by an Enron subsidiary;
(b) 1,200,000,000 shares of common stock, of which 737,056,970 shares
were outstanding.
COMMON STOCK
We are authorized to issue up to 1,200,000,000 shares of common stock. The
holders of our common stock are entitled to one vote for each share on all
matters submitted to a vote of shareholders and do not have cumulative voting
rights in the election of directors. The holders of our common stock are
entitled to receive ratably such dividends, if any, as may be declared by our
Board of Directors out of legally available funds subject to the rights of any
preferred stock. In the event of liquidation, dissolution or winding up of
Enron, the holders of our common stock are entitled to share ratably in all
assets of Enron remaining after provision for payment of liabilities and
satisfaction of the liquidation preference of any shares of our preferred stock
that may be outstanding. The holders of our common stock have no preemptive,
subscription, redemption or conversion rights. The rights, preferences and
privileges of holders of our common stock are subject to those of holders of our
preferred stock, including any series of Enron preferred stock issued in the
future.
PREFERRED STOCK
The following is a general description of the terms of our preferred stock.
If we offer preferred stock, the specific designations and rights will be
described in the prospectus supplement and a description will be filed with the
SEC.
The preferred stock shall rank in preference to the common stock as to
payment of dividends and as to distribution of assets of Enron upon the
liquidation, dissolution or winding up of Enron. Upon issuance against full
payment of the purchase price therefor, shares of preferred stock will be fully
paid and nonassessable.
Enron is authorized to issue up to 16,500,000 shares of preferred stock. An
aggregate of 1,370,000 shares of Enron preferred stock are designated the
Cumulative Second Preferred Convertible Stock ("Enron Convertible Preferred
Stock"), an aggregate of 35.568509 shares of Enron preferred stock are
designated the 9.142% Perpetual Second Preferred Stock ("Enron 9.142% Preferred
Stock"), an aggregate of 250,000 shares of Enron preferred stock are designated
the Mandatory Convertible Junior Preferred Stock, Series B ("Enron Mandatorily
Convertible Junior Preferred Stock"), an aggregate of 204,800 shares of Enron
preferred stock are designated the Mandatorily Convertible Single Reset
Preferred Stock, Series A ("Enron Mandatorily Convertible Preferred Stock,
Series A"), and 83,000 shares of Enron preferred stock are designated the
Mandatorily Convertible Single Reset Preferred Stock, Series B ("Enron
Mandatorily Convertible Preferred Stock, Series B" and together with the Enron
Mandatorily Convertible Preferred Stock, Series A, the "Enron Mandatorily
Convertible Preferred Stock").
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In addition to the Enron Convertible Preferred Stock, the Enron 9.142%
Preferred Stock, the Enron Mandatorily Convertible Junior Preferred Stock and
the Enron Mandatorily Convertible Preferred Stock, the Enron Board of Directors
has authority, without shareholder approval (except to the extent that holders
of any series of Enron preferred stock are entitled by their terms to class
voting rights), to issue shares of Enron preferred stock in one or more series
and to determine the number of shares, designations, dividend rights, conversion
rights, voting power, redemption rights, liquidation preferences and other terms
of any such series. The issuance of Enron preferred stock, while providing
desired flexibility in connection with possible acquisitions and other corporate
purposes, could adversely affect the voting power of holders of Enron common
stock and the likelihood that such holders will receive dividend payments and
payments upon liquidation and could have the effect of delaying, deferring or
preventing a change in control of Enron.
ENRON CONVERTIBLE PREFERRED STOCK
We have summarized the terms of the Enron Convertible Preferred Stock
below. The summary is not complete. The form of series designation for the Enron
Convertible Preferred Stock has been filed as an exhibit to this registration
statement, and you should read the form for any terms that may be important to
you.
The annual rate of dividends payable on shares of the Enron Convertible
Preferred Stock is the greater of $10.50 per share or the dividend amount
payable on the number of shares of Enron common stock into which one share of
Enron Convertible Preferred Stock is convertible (currently 27.304 shares,
subject to adjustment). Such dividends are payable quarterly on the first days
of January, April, July and October. These dividend rights are superior to the
dividend rights of the Enron common stock, the Enron Mandatorily Convertible
Junior Preferred Stock and the Enron Mandatorily Convertible Preferred Stock and
rank equally with the dividend rights on the Enron 9.142% Preferred Stock.
The amount payable on shares of the Enron Convertible Preferred Stock in
the event of any involuntary or voluntary liquidation, dissolution or winding up
of the affairs of Enron is $100 per share, together with accrued dividends to
the date of distribution or payment. The liquidation rights of the Enron
Convertible Preferred Stock are superior to the Enron common stock, the Enron
Mandatorily Convertible Junior Preferred Stock and the Enron Mandatorily
Convertible Preferred Stock and rank equally with the liquidation rights of the
Enron 9.142% Preferred Stock. The Enron Convertible Preferred Stock is
redeemable at the option of Enron at any time, in whole or in part, at a
redemption price of $100 per share, together with accrued dividends to the date
of payment. Each share of Enron Convertible Preferred Stock is convertible into
27.304 shares of Enron common stock at any time at the option of the holder
(which conversion rate is and will be subject to certain adjustments).
Holders of Enron Convertible Preferred Stock are entitled to vote together
with the Enron common stock on all matters submitted to a vote of Enron
shareholders, with each share of Enron Convertible Preferred Stock having a
number of votes equal to the number of shares of Enron common stock into which
one share of Enron Convertible Preferred Stock is convertible. In addition,
holders of Enron Convertible Preferred Stock are entitled to certain class
voting rights, including (unless provision is made for redemption of such
shares):
(a) the requirement for approval by the holders of at least two-thirds
of the Enron Convertible Preferred Stock (voting together with all
other shares of parity stock similarly affected) to effect:
- an amendment to the Enron Charter or Bylaws that would affect
adversely the voting powers, rights or preferences of the
holders of the Enron Convertible Preferred Stock or that would
reduce the time for any notice to which the holders of the Enron
Convertible Preferred Stock may be entitled,
- the authorization, creation or issuance of, or the increase in
the authorized amount of, any stock of any class or series or
any security convertible into stock of any class or series
ranking prior to the Enron Convertible Preferred Stock,
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- the voluntary dissolution, liquidation or winding up of the
affairs of Enron, or the sale, lease or conveyance by Enron of
all or substantially all of its property or assets, or
- the purchase or redemption (for sinking fund purposes or
otherwise) of less than all of the Enron Convertible Preferred
Stock and other parity stock at the time outstanding unless the
full dividends on all shares of Enron Convertible Preferred
Stock then outstanding shall have been paid or declared and a
sum sufficient for payment thereof set apart, and
(b) the requirement for approval by the holders of at least a majority
of the Enron Convertible Preferred Stock (voting together with all
other shares of parity stock similarly affected), to effect:
- the authorization, creation or issuance of, or the increase in
the authorized amount of, any stock of any class or series, or
any security convertible into stock of any class or series,
ranking on a parity with the Enron Convertible Preferred Stock,
provided that no such consent shall be required for the
authorization, creation or issuance by Enron of a number of
shares of one or more series of preferred stock ranking on
parity with the Enron Convertible Preferred Stock that, together
with number of shares of Enron Convertible Preferred Stock and
other preferred stock ranking on parity with the Enron
Convertible Preferred Stock then outstanding, would equal
5,000,000, or
- the merger or consolidation of Enron with or into any other
corporation, unless the corporation resulting from such merger
or consolidation will have after such merger or consolidation no
class of stock and no other securities either authorized or
outstanding ranking prior to or on a parity with the Enron
Convertible Preferred Stock, except the same number of shares of
stock and the same amount of other securities with the same
rights and preferences as the stock and securities of Enron
respectively authorized and outstanding immediately preceding
such merger or consolidation, and each holder of Enron
Convertible Preferred Stock immediately preceding such merger or
consolidation shall receive the same number of shares, with the
same rights and preferences, of the resulting corporation.
In addition, if dividend payments on the Enron Convertible Preferred Stock are
in default in an amount equivalent to six quarterly dividends on such shares,
then the holders of the Enron Convertible Preferred Stock (together with holders
of any parity stock similarly affected) shall be able to elect two directors to
Enron's Board of Directors until such dividends have been paid or funds
sufficient therefor deposited in trust. If we fail to pay dividends when due on
this preferred stock, the terms of this preferred stock will prohibit us from
paying dividends on junior stock, including Enron common stock, and prohibit us
and our subsidiaries from acquiring junior stock, including Enron common stock,
subject to certain exceptions.
9.142% PREFERRED STOCK
We have summarized the terms of the Enron 9.142% Preferred Stock below. The
summary is not complete. The form of series designation for the Enron 9.142%
Preferred Stock has been filed as an exhibit to this registration statement, and
you should read the form for any terms that may be important to you.
The annual rate of dividends payable on shares of the Enron 9.142%
Preferred Stock is $91,420 per share. Such dividends are payable quarterly on
the first days of January, April, July and October. These dividend rights are
superior to the dividend rights of the Enron common stock, the Enron Mandatorily
Convertible Junior Preferred Stock and the Enron Mandatorily Convertible
Preferred Stock and rank equally with the dividend rights on the Enron
Convertible Preferred Stock.
The amount payable on shares of the Enron 9.142% Preferred Stock in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of Enron is $1,000,000 per share, together with accrued dividends.
The liquidation rights of the Enron 9.142% Preferred Stock are superior to those
of the Enron common stock, the Enron Mandatorily Convertible Junior Preferred
Stock and the Enron Mandatorily
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Convertible Preferred Stock and rank equally with the liquidation rights of the
Enron Convertible Preferred Stock.
The Enron 9.142% Preferred Stock is not redeemable at the option of Enron.
Pursuant to an agreement between Enron and its subsidiary, however, such
subsidiary will have the rights, exercisable at any time, in whole or in part,
for a 180-day period commencing January 31, 2004, to cause Enron to redeem 18
shares for $1,000,000 per share, together with accrued dividends.
The holders of Enron 9.142% Preferred Stock generally have no voting rights
but are entitled to certain class voting rights, including (unless provision is
made for redemption of such shares):
(a) the requirement for approval by the holders of at least two-thirds
of the Enron 9.142% Preferred Stock (voting together with the
holders of all other shares of parity stock similarly affected),
to effect:
- an amendment to the Enron Charter or Bylaws that would affect
adversely the voting powers, rights or preferences of the
holders of the Enron 9.142% Preferred Stock or would reduce the
time for any notice to which the holders of the Enron 9.142%
Preferred Stock may be entitled,
- the authorization, creation or issuance of, or the increase in
the authorized amount of, any stock of any class or series or
any security convertible into stock of any class or series
ranking prior to the Enron 9.142% Preferred Stock,
- the voluntary dissolution, liquidation or winding up of the
affairs of Enron, or the sale, lease or conveyance by Enron of
all or substantially all of its property or assets, or
- the purchase or redemption (for sinking fund purposes or
otherwise) of less than all of the Enron 9.142% Preferred Stock
and other parity stock at the time outstanding unless the full
dividends on all shares of Enron 9.142% Preferred Stock then
outstanding shall have been paid or declared and a sum
sufficient for payment thereof set apart, and
(b) the requirement for approval by the holders of at least a majority
of the Enron 9.142% Preferred Stock (voting together with all
other shares of parity stock similarly affected), to effect:
- the authorization, creation or issuance of, or the increase in
the authorized amount of, any stock of any class or series or
any security convertible into stock of any class or series,
ranking on a parity with the Enron 9.142% Preferred Stock,
provided that no such consent shall be required for the
authorization, creation or issuance by Enron of a number of
shares of one or more series of preferred stock ranking on
parity with the Enron 9.142% Preferred Stock that, together with
number of shares of Enron 9.142% Preferred Stock and other
preferred stock ranking on parity with the Enron 9.142%
Preferred Stock then outstanding, would equal 5,000,000, or
- the merger or consolidation of Enron with or into any other
corporation, unless the corporation resulting from such merger
or consolidation will have after such merger or consolidation no
class of stock and no other securities either authorized or
outstanding ranking prior to or on a parity with the Enron
9.142% Preferred Stock, except the same number of shares of
stock and the same amount of other securities with the same
rights and preferences as the stock and securities of Enron
respectively authorized and outstanding immediately preceding
such merger or consolidation, and each holder of Enron 9.142%
Preferred Stock immediately preceding such merger or
consolidation shall receive the same number of shares, with the
same rights and preferences, of the resulting corporation.
In addition, if dividend payments on the Enron 9.142% Preferred Stock are in
default in an amount equivalent to six quarterly dividends on such shares, then
the holders of the Enron 9.142% Preferred Stock (together with holders of any
other parity stock similarly affected) shall be able to elect two directors to
Enron's Board of Directors until such dividends have been paid or funds
sufficient therefor deposited in trust. If we fail to pay
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dividends when due on this preferred stock, the terms of this preferred stock
will prohibit us from paying dividends on junior stock, including Enron common
stock, and prohibit us and our subsidiaries from acquiring junior stock,
including Enron common stock, subject to certain exceptions.
ENRON MANDATORILY CONVERTIBLE JUNIOR PREFERRED STOCK
We have summarized the terms of the Enron Mandatorily Convertible Junior
Preferred Stock below. The summary is not complete. The form of the statement of
resolutions establishing the Enron Mandatorily Convertible Junior Preferred
Stock has been filed as an exhibit to this registration statement, and you
should read the form for any terms that may be important to you.
The annual rate of dividends payable on shares of the Enron Mandatorily
Convertible Junior Preferred Stock is 6.5%. The amount payable on shares of the
Enron Mandatorily Convertible Junior Preferred Stock in the event of any
liquidation, dissolution or winding up of the affairs of Enron is $4,000 per
share, together with accrued dividends. The dividend and liquidation rights of
the Enron Mandatorily Convertible Junior Preferred Stock are superior to the
dividend and liquidation rights of the Enron common stock, but rank junior to
the dividend and liquidation rights of all other outstanding series of Enron
preferred stock. The Enron Mandatorily Convertible Junior Preferred Stock is not
redeemable at the option of Enron. Each share of Enron Mandatorily Convertible
Junior Preferred Stock is convertible initially into 200 shares of Enron common
stock (which conversion rate is subject to certain adjustments).
The holders of Enron Mandatorily Convertible Junior Preferred Stock
generally have no voting rights but are entitled to certain class voting rights,
including the requirement for approval by the holders of at least a majority of
the Enron Mandatorily Convertible Junior Preferred Stock (voting together with
all other shares of parity stock similarly affected) to effect:
- an amendment to the Enron Charter that would adversely affect the voting
powers, rights or preferences of the holders of the Enron Mandatorily
Convertible Junior Preferred Stock,
- the sale, lease or conveyance by Enron of all or substantially all of its
assets,
- the authorization, creation, issuance or increase in the authorized
amount of securities ranking on a parity with the Enron Mandatorily
Convertible Junior Preferred Stock, or
- the merger or consolidation of Enron with or into any other corporation,
unless each holder of Enron Mandatorily Convertible Junior Preferred
Stock immediately preceding such merger or consolidation shall receive
the same number of shares, with substantially the same rights and
preferences, of the surviving corporation.
In addition, if full cumulative dividends are not paid for six consecutive
quarterly periods, the holders of the Enron Mandatorily Convertible Junior
Preferred Stock (together with the holders of any parity stock similarly
affected) will have the right to elect two directors to Enron's Board of
Directors until all dividends in arrears have been paid or funds sufficient
therefor deposited in trust. If we fail to pay dividends when due on this
preferred stock, the terms of this preferred stock will prohibit us from paying
dividends on junior stock, including Enron common stock, and prohibit us and our
subsidiaries from acquiring junior stock, including Enron common stock, subject
to certain exceptions.
ENRON MANDATORILY CONVERTIBLE PREFERRED STOCK
We have summarized the terms of the Enron Mandatorily Convertible Preferred
Stock, Series A and Series B, below. The summary is not complete. The terms of
the Series A and the Series B are generally the same except as discussed below.
The forms of the statement of resolutions establishing both series of the Enron
Mandatorily Convertible Preferred Stock have been filed as exhibits to this
registration statement, and you should read the forms for any terms that may be
important to you.
The shares of each of the two series of the Enron Mandatorily Convertible
Preferred Stock were deposited under deposit agreements, and the related
depositary shares were then deposited into trusts of which
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we are the beneficial owner. The depositary shares are to be sold by the trusts
only if a default occurs under certain of our debt obligations or under certain
debt obligations that were incurred in connection with our investment in Wessex
Water Plc and Elektro-Eletricidade e Servicos S.A. (the "Obligations") or our
credit ratings fall below investment grade and, in the case of Series A, our
common stock price falls below $18.92, subject to certain adjustments. The date
that the depositary shares are sold by the trust, or under certain circumstances
the date the depositary shares were to have been sold but were unable to be
sold, is the Rate Reset Date, and the market price of Enron common stock on the
day such sale is priced is the Reset Price, subject to certain adjustments. If
the Obligations, which generally mature on or before December 2001, are timely
repaid in full, we expect the Enron Mandatorily Convertible Preferred Stock will
be retired and canceled.
No dividends are payable on the Enron Mandatorily Convertible Preferred
Stock prior to the applicable Rate Reset Date. After a Rate Reset Date, the
annual rate of dividends payable is $350 per share plus an amount which is
intended to approximate the dividend yield on the Enron common stock as of the
Rate Reset Date. Such dividends are payable quarterly and are cumulative. The
amount payable on shares of Enron Mandatorily Convertible Preferred Stock in the
event of any liquidation, dissolution or winding up of the affairs of Enron is
$5,000 per share, together with accrued dividends to the date of payment. These
dividend and liquidation rights are superior to the dividend and liquidation
rights of the Enron common stock and the Enron Mandatorily Convertible Junior
Preferred Stock, but rank junior to the dividend and liquidation rights of the
Enron Convertible Preferred Stock and Enron 9.142% Preferred Stock.
The Enron Mandatorily Convertible Preferred Stock is not redeemable after
the Rate Reset Date. The Enron Mandatorily Convertible Preferred Stock will be
converted into Enron common stock on the third anniversary of the Rate Reset
Date. The number of shares issuable per share of Enron Mandatorily Convertible
Preferred Stock on conversion will equal the liquidation preference ($5,000)
divided by the conversion price. The conversion price will be between 100% to
110% of the applicable Reset Price (subject to certain adjustments) depending on
the market price of Enron common stock at the time of conversion. After the Rate
Reset Date and prior to the third anniversary of the Rate Reset Date, the
holders of the Enron Mandatorily Convertible Preferred Stock will be entitled to
convert such shares into Enron common stock based on a conversion price of 110%
of the Reset Price (subject to certain adjustments).
The holders of each series of Enron Mandatorily Convertible Preferred Stock
generally have no voting rights, but are entitled to certain class voting
rights, including the requirement for approval by the holders of at least a
majority of each series to effect:
- an amendment to the Enron Charter that would adversely affect the powers,
rights or preferences of the holders of such series of Enron Mandatorily
Convertible Preferred Stock,
- the authorization or issuance of capital stock ranking senior to the
Enron Mandatorily Convertible Preferred Stock, or
- the merger or statutory exchange in which holders of the Enron
Mandatorily Convertible Preferred Stock do not receive a similar
preferred stock in the surviving entity, subject to certain exceptions.
If the Obligations are not paid when due, the holders of each series of
Enron Mandatorily Convertible Preferred Stock will have the right to elect two
directors to Enron's Board of Directors until such debt is paid or certain other
events occur. In addition, if full cumulative dividends are not paid for six
consecutive quarterly periods, the holders of the Enron Mandatorily Convertible
Preferred Stock (together with the holders of any parity stock similarly
affected) will have the right to elect two directors to Enron's Board of
Directors until all dividends in arrears have been paid. If we fail to pay
dividends when due on Enron Mandatorily Convertible Preferred Stock, the terms
of the Enron Mandatorily Convertible Preferred Stock will prohibit us from
paying dividends on junior stock, including Enron common stock, and prohibit us
and our subsidiaries from acquiring junior stock, including Enron common stock,
subject to certain exceptions.
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CERTAIN PROVISIONS OF THE ENRON CHARTER AND BYLAWS
Fair Price Provision. Our corporate charter contains a "fair price"
provision which generally requires that certain mergers, business combinations
and similar transactions with a "Related Person" (generally the beneficial owner
of at least 10 percent of our voting stock) be approved by the holders of at
least 80 percent of our voting stock, unless (a) the transaction is approved by
at least 80 percent of our "Continuing Directors", who constitute a majority of
the entire board, (b) the transaction occurs more than five years after the last
acquisition of our voting stock by the Related Person or (c) certain "fair
price" and procedural requirements are satisfied.
"Business Transaction" means
- any merger or consolidation involving Enron or a subsidiary of Enron,
- any sale, lease, exchange, transfer or other disposition, in one
transaction or a series of transactions, including without limitation a
mortgage or any other security device, of all or any substantial part of
the assets either of Enron or of a subsidiary of Enron,
- any sale, lease, exchange, transfer or other disposition of all or any
substantial part of the assets of an entity to Enron or a subsidiary of
Enron,
- the issuance, sale, exchange, transfer or other disposition by Enron or a
subsidiary of Enron of any securities of Enron or any subsidiary of
Enron,
- any recapitalization or reclassification of Enron's securities (including
without limitation, any reverse stock split) or other transaction that
would have the effect of increasing the voting power of a Related Person,
- any liquidation, spinoff, splitoff, splitup or dissolution of Enron, and
- any agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Transaction.
"Continuing Director" means a director who either was a member of our Board
of Directors prior to the time such Related Person became a Related Person or
who subsequently became a director of Enron and whose election, or nomination
for election by our shareholders, was approved by a vote of at least 80 percent
of the Continuing Directors then on the Board, either by a specific vote or by
approval of the proxy statement issued by Enron on behalf of the Board of
Directors in which such person is named as nominee for director, without an
objection to such nomination; provided, however, that in no event shall a
director be considered a "Continuing Director" if such director is a Related
Person and the Business Transaction to be voted upon is with such Related Person
or is one in which such Related Person otherwise has an interest, except
proportionately as a shareholder of Enron.
Advance Notice Requirements for Shareholder Proposals and Nominations. Our
bylaws provide that for business to be properly brought before an annual meeting
of shareholders, it must be either (a) specified in the notice of meeting, or
any supplement thereto, given by or at the direction of the Board of Directors,
(b) otherwise brought before the meeting by or at the direction of the Board of
Directors or (c) otherwise properly brought before the meeting by a shareholder
of Enron who is a shareholder of record at the time of giving of notice
hereinafter provided for, who shall be entitled to vote at such meeting and who
complies with the following notice procedures. In addition to any other
applicable requirements, for business to be brought before an annual meeting by
a shareholder of Enron, the shareholder must have given to the Secretary of
Enron timely notice in writing of the business to be brought before an annual
meeting of shareholders. To be timely, a shareholder's notice must be delivered
to or mailed and received at our principal executive offices not less than 120
days prior to the anniversary date of the proxy statement for the previous
year's annual meeting of the shareholders of Enron. A shareholder's notice to
the Secretary must set forth as to each matter the shareholder proposes to bring
before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (b) the name and address, as they appear on Enron's
books, of the shareholder proposing such business,
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(c) the acquisition date, the class and the number of shares of voting stock of
Enron which are owned beneficially by the shareholder, (d) any material interest
of the shareholder in such business and (e) a representation that the
shareholder intends to appear in person or by proxy at the meeting to bring the
proposed business before the meeting. No business shall be conducted at an
annual meeting except in accordance with the procedures outlined above.
Our bylaws provide that only persons who are nominated for election as a
director of Enron in accordance with the following procedures shall be eligible
for election as directors. Nominations of persons for election to our Board of
Directors may be made at a meeting of shareholders (a) by or at the direction of
the Board of Directors or (b) by any shareholder of Enron who is a shareholder
of record at the time of giving of notice hereinafter provided for, who shall be
entitled to vote for the election of directors at the meeting and who complies
with the following notice procedures. Such nominations, other than those made by
or at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of Enron. To be timely, a shareholder's
notice must be delivered to or mailed and received at our principal executive
offices, (a) with respect to an election to be held at an annual meeting of
shareholders of Enron, not less than 120 days prior to the anniversary date of
the proxy statement for the previous year's annual meeting of the shareholders
of Enron, and (b) with respect to an election to be held at a special meeting of
shareholders of Enron for the election of directors, not later than the close of
business on the 10th day following the date on which notice of the date of the
meeting was mailed or public disclosure of the date of the meeting was made,
whichever first occurs. Such shareholder's notice to the Secretary shall set
forth (a) as to each person whom the shareholder proposes to nominate for
election or re-election as a director, all information relating to the person
that is required to be disclosed in solicitations for proxies for election of
directors, or is otherwise required, pursuant to Regulation 14A under the
Exchange Act, including the written consent of such person to be named in the
proxy statement as a nominee and to serve as a director if elected; and (b) as
to the shareholder giving the notice, (1) the name and address, as they appear
on Enron's books, of such shareholder, and (2) the class and number of shares of
capital stock of Enron which are beneficially owned by the shareholder.
CERTAIN ANTI-TAKEOVER PROVISIONS OF OREGON LAW
Business Combinations with Interested Shareholders. We are subject to the
provisions of Sections 60.825-60.845 of the Oregon Business Corporation Act
("OBCA"), which generally provide that any person who acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested shareholder") may
not engage in certain "business combinations" with the corporation for a period
of three years following the date the person became an interested stockholder,
unless (a) the board of directors has approved, prior to the date the person
became an interested shareholder, either the business combination or the
transaction that resulted in the person becoming an interested shareholder, (b)
upon consummation of the transaction that resulted in the person becoming an
interested shareholder, that person owns at least 85% of the corporation's
voting stock outstanding at the time the transaction is commenced (excluding
shares owned by persons who are both directors and officers and shares owned by
employee stock plans in which participants do not have the right to determine
whether shares will be tendered in a tender or exchange offer), or (c) on or
subsequent to the date the person became an interested shareholder, the business
combination is approved by the board of directors and authorized by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested shareholder.
Control Share Statute. As is permitted by the OBCA, our corporate charter
provides that we are not subject to the Oregon Control Share Act. The Oregon
Control Share Act restricts the ability of a shareholder of certain Oregon-based
corporations to vote shares of stock acquired in a transaction that causes the
acquiring person to control at least one-fifth, one-third or one-half of the
votes entitled to be cast in the election of directors, except as authorized by
a vote of the corporation's disinterested shareholders.
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<PAGE> 55
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may choose to offer fractional interests in the preferred stock. If so,
we will offer depositary shares, each of which will represent a fraction (to be
set forth in the prospectus supplement relating to a particular series of
preferred stock) of a share of a particular series of preferred stock as
described below.
The preferred stock of any series represented by depositary shares will be
deposited under a deposit agreement between us and a bank or trust company we
select having its principal office in the United States and having, alone or
together with its affiliates, a combined capital and surplus of at least
$50,000,000 (the "Depositary"). Subject to the terms of the deposit agreement,
each registered holder of a depositary share will be entitled, in proportion to
the applicable fraction of a share of preferred stock represented by such
depositary share, to all the rights and preferences of the preferred stock
represented thereby, including dividend, voting, redemption and liquidation
rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional interests in preferred stock in
accordance with the terms of the offering set forth in the applicable prospectus
supplement.
We have summarized the terms of the depositary shares below. The summary is
not complete. A copy of the form of deposit agreement is filed as an exhibit to
the registration statement of which this prospectus is a part, and you should
read the exhibit for any terms that may be important to you.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all dividends or other cash distributions
received in respect of the preferred stock to the record holders of depositary
shares relating to such preferred stock in proportion to the number of such
depositary shares owned by such holders.
In the event of a distribution other than in cash or rights, preferences or
privileges upon the preferred stock, the Depositary will distribute property
received by it to the record holders of depositary shares entitled thereto in
proportion to the number of such depositary shares owned by such holders, unless
the Depositary determines that such distribution cannot be made proportionately
among such holders or that it is not feasible to make such distribution, in
which case the Depositary may, with our approval, sell such securities or
property and distribute the net proceeds from such sale to such holders or adopt
such other method as it deems equitable and practicable for effecting such
distribution.
WITHDRAWAL OF THE PREFERRED STOCK
Upon surrender of the depositary receipts at the corporate trust office of
the Depositary (unless the related preferred stock or depositary shares have
previously been called for redemption), and upon payment of the charges provided
in the deposit agreement and subject to the terms thereof, the holder of the
depositary shares evidenced thereby is entitled to delivery at such office to or
upon his order the number of whole shares of preferred stock and any money or
other property represented by such depositary shares. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of the
number of depositary shares representing the number of whole shares of preferred
stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new depositary receipt evidencing such excess number of depositary
shares. Holders of preferred stock thus withdrawn, and any subsequent holders of
those shares, will not thereafter be entitled to deposit such shares under the
deposit agreement or to receive depositary shares therefor.
REDEMPTION OF DEPOSITARY SHARES
Upon redemption of preferred stock represented by depositary shares, the
Depositary will redeem as of the same redemption date the number of depositary
shares representing preferred stock so redeemed, provided Enron shall have paid
in full to the Depositary the redemption price of the preferred stock to be
redeemed, which redemption price shall include an amount equal to any accrued
and unpaid dividends thereon to the
20
<PAGE> 56
date fixed for redemption. The redemption price per depositary share will be
equal to the applicable fraction of the redemption price and any other amounts
per share payable with respect to the preferred stock. If fewer than all the
depositary shares are to be redeemed, the depositary shares to be redeemed will
be selected by the Depositary by lot or pro rata or by any other equitable
method, in each case as may be determined by Enron.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the depositary shares. Each
record holder of such depositary shares on the record date (which will be the
same date as the record date for the preferred stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of preferred stock represented by such holder's depositary shares.
The Depositary will endeavor, insofar as practicable, to vote the number of
shares of preferred stock represented by such depositary shares in accordance
with such instructions, and Enron will agree to take all reasonable action which
may be deemed necessary by the Depositary in order to enable the Depositary to
do so. The Depositary will abstain from voting preferred stock (but, at its
discretion, not from appearing at any meeting with respect to such preferred
stock) to the extent it does not receive specific instructions from the holders
of depositary shares representing preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between the Depositary and us. However, any amendment which materially and
adversely alters the rights of the holders of depositary shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding.
We may terminate the deposit agreement upon not less than 60 days' notice,
whereupon the Depositary shall deliver or make available to each holder of
depositary receipts, upon surrender of the depositary receipts held by such
holder, such number of whole or fractional shares of preferred stock represented
by such depositary receipts. The deposit agreement will automatically terminate
if (a) all outstanding depositary shares have been redeemed, or (b) there has
been a final distribution in respect of the preferred stock in connection with
any liquidation, dissolution or winding up of Enron and such distribution has
been made to the holders of depositary receipts.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the Depositary arrangements. We will pay the fees
and expenses of the Depositary in connection with the performance of its duties
under the deposit agreement, to the extent specified in the deposit agreement.
Holders of depositary receipts will pay transfer and other taxes and
governmental charges.
MISCELLANEOUS
We will forward to holders of depositary shares any reports and
communications that it sends to holders of preferred stock.
Neither we nor the Depositary will be liable if it is prevented from or
delayed in, by law or any circumstances beyond its control, performing its
obligations under the deposit agreement. The obligations of Enron and the
Depositary under the deposit agreement will be limited to performing their
duties thereunder without negligence or willful misconduct, and neither we nor
the Depositary will be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares or any preferred stock unless satisfactory
indemnity is furnished. We and the Depositary may rely on advice of counsel or
accountants, on information provided by holders of depositary shares or other
persons believed to be authorized or competent and on documents believed to be
genuine.
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<PAGE> 57
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and
Enron, on the other hand, the Depositary shall be entitled to act on such
claims, requests or instructions received from Enron.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Enron notice of its
election to do so, and we may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having, alone or together with its affiliates, a combined
capital and surplus of at least $50,000,000.
PLAN OF DISTRIBUTION
We may sell the offered securities (a) through agents; (b) through
underwriters or dealers; (c) directly to one or more purchasers; or (d) pursuant
to delayed delivery contracts or forward contracts.
BY AGENTS
Offered securities may be sold through agents designated by us. The agents
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment.
BY UNDERWRITERS
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to certain conditions. The underwriters will be obligated to purchase
all the securities of the series offered if any of the securities are purchased.
Any initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time.
DIRECT SALES
Offered securities may also be sold directly by us. In this case, no
underwriters or agents would be involved. We may use electronic media, including
the Internet, to sell offered securities directly.
DELAYED DELIVERY CONTRACTS OR FORWARD CONTRACTS
If indicated in the prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers to purchase offered securities from us
at the public offering price set forth in the prospectus supplement pursuant to
delayed delivery contracts or forward contracts providing for payment or
delivery on a specified date in the future at prices determined as described in
the prospectus supplement. Such contracts will be subject only to those
conditions set forth in the prospectus supplement, and the prospectus supplement
will set forth the commission payable for solicitation of such contracts.
GENERAL INFORMATION
The offered securities (other than common stock, which is traded on the New
York Stock Exchange under the symbol "ENE"), when first issued, will have no
established trading market. Any underwriters or agents to or through whom
offered securities are sold for public offering and sale may make a market in
such offered securities, but such underwriters or agents will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any such
offered securities.
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<PAGE> 58
The offered securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for the offered
securities.
Underwriters, dealers and agents that participate in the distribution of
the offered securities may be underwriters as defined in the Securities Act, and
any discounts or commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act. Any underwriters or agents
will be identified and their compensation described in a prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents or their affiliates may engage in
transactions with, or perform services for, us or our subsidiaries in the
ordinary course of their businesses.
VALIDITY OF SECURITIES
The validity of the offered securities will be passed upon for Enron by
James V. Derrick, Jr., Esq., Executive Vice President and General Counsel of
Enron. Mr. Derrick owns less than 1% of the outstanding shares of common stock
of Enron.
EXPERTS
The consolidated financial statements and schedule included in Enron's
Annual Report on Form 10-K for the year ended December 31, 1999, incorporated by
reference in this prospectus and elsewhere in the registration statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.
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<PAGE> 59
[ENRON LOGO]
<PAGE> 60
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth those expenses to be incurred by Enron in
connection with the issuance and distribution of the securities being
registered. Except for the Securities and Exchange Commission registration fee,
all amounts shown are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $264,000
Accounting Fees and Expenses................................ 100,000
Legal Fees and Expenses..................................... 50,000
Fees and Expenses of Transfer Agent, Trustee and
Depositary................................................ 15,000
Blue Sky Fees and Expenses, Including Counsel Fees.......... 50,000
Listing Fees................................................ 20,000
Printing and Engraving Expenses............................. 150,000
Miscellaneous............................................... 1,000
--------
Total............................................. $650,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Enron Charter contains provisions under which Enron will indemnify, to
the fullest extent permitted by law, persons who are made a party to an action
or proceeding by virtue of the fact that the individual is or was a director,
officer, or, in certain circumstances, an employee or agent, of Enron or another
corporation at Enron's request. The Oregon Business Corporation Act generally
permits such indemnification to the extent that the individual acted in good
faith and in a manner which he reasonably believed to be in the best interest of
or not opposed to the corporation or, with respect to criminal matters, if the
individual had no reasonable cause to believe his or her conduct was unlawful.
In addition, the Enron Charter contains a provision that eliminates the personal
liability of a director to the corporation or its shareholders for monetary
damages for conduct as a director, except for liability of a director (i) for
breach of the duty of loyalty, (ii) for actions or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
the payment of improper dividends or redemptions, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Form of Underwriting Agreement filed as Exhibit 1 hereto, under certain
specified circumstances, provides for indemnification by the Underwriters of the
directors, officers and controlling persons of Enron.
Enron has purchased liability insurance policies covering the directors and
officers of Enron to provide protection where Enron cannot legally indemnify a
director or officer and where a claim arises under the Employee Retirement
Income Security Act of 1974 against a director or officer based on an alleged
breach of fiduciary duty or other wrongful act.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
*1.01 -- Form of Underwriting Agreement -- Debt Securities
(Exhibit 1.01 to Enron Registration Statement on Form
S-3 -- File No. 333-35549)
*1.02 -- Form of Underwriting Agreement -- Equity Securities
(Exhibit 1.02 to Enron Registration Statement on Form
S-3 -- File No. 333-35549)
*1.03 -- Enron Corp. Underwriting Agreement Standard Provisions,
dated as of September 15, 1997 (Exhibit 1.03 to Enron
Registration Statement on Form S-3 -- File No. 333-35549)
</TABLE>
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<PAGE> 61
<TABLE>
<C> <S>
*3.01 -- Amended and Restated Articles of Incorporation of Enron
Oregon Corp. (Annex E to the Proxy Statement/Prospectus
included in Enron's Registration Statement on Form
S-4 -- File No. 333-13791).
*3.02 -- Articles of Merger of Enron Oregon Corp., an Oregon
Corporation, and Enron Corp., a Delaware Corporation
(Exhibit 3.02 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.03 -- Articles of Merger of Enron Corp., an Oregon Corporation,
and Portland General Corporation, an Oregon Corporation
(Exhibit 3.03 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.04 -- Bylaws of Enron (Exhibit 3.04 to Post-Effective Amendment
No. 1 to Enron's Registration Statement on Form
S-3 -- File No. 33-60417).
*3.05 -- Articles of Amendment of Enron: Form of Series
Designation for the Enron Convertible Preferred Stock
(Annex F to the Proxy Statement/Prospectus included in
Enron's Registration Statement on Form S-4 -- File No.
333-13791).
*3.06 -- Articles of Amendment of Enron: Form of Series
Designation for the Enron 9.142% Preferred Stock (Annex G
to the Proxy Statement/Prospectus included in Enron's
Registration Statement on Form S-4 -- File No.
333-13791).
*3.07 -- Articles of Amendment of Enron: Form of Series
Designation for the Enron Series A Junior Voting
Convertible Preferred Stock (Exhibit 3.07 to Enron's
Registration Statement on Form S-3 -- File No.
333-44133).
*3.08 -- Articles of Amendment of Enron: Statement of Resolutions
Establishing A Series of Preferred Stock of Enron
Corp. -- Mandatorily Convertible Single Reset Preferred
Stock, Series A (Exhibit 4.01 to Enron's Form 8-K filed
on January 26, 1999).
*3.09 -- Articles of Amendment of Enron: Statement of Resolutions
Establishing A Series of Preferred Stock of Enron
Corp. -- Mandatorily Convertible Single Reset Preferred
Stock, Series B (Exhibit 4.02 to Enron's Form 8-K filed
on January 26, 1999).
*3.10 -- Articles of Amendment of Enron amending Article IV of the
Articles of Incorporation (Exhibit 3.10 to Enron's
Post-Effective Amendment No. 1 to Registration Statement
on Form S-3 -- File No. 333-70465).
*3.11 -- Articles of Amendment of Enron: Statement of Resolutions
Establishing A Series of Preferred Stock of Enron
Corp. -- Mandatorily Convertible Junior Preferred Stock,
Series B (Exhibit 3.11 to Enron's Post-Effective
Amendment No. 1 to Registration Statement on Form
S-3 -- File No. 333-70465).
*4.01 -- Indenture dated as of November 1, 1985, between Enron and
Harris Trust and Savings Bank (now The Bank of New York),
as supplemented and as amended by the First Supplemental
Indenture dated as of December 1, 1995 (Form T-3
Application for Qualification of Indentures under the
Trust Indenture Act of 1939, File No. 22-14390, filed
October 24, 1985; Exhibit 4(b) to Enron's Form S-3
Registration Statement No. 33-64057 filed on November 8,
1995). There have not been filed as exhibits to this
registration statement other debt instruments defining
the rights of holders of long-term debt of Enron, none of
which relates to authorized indebtedness that exceeds 10%
of the consolidated assets of Enron and its subsidiaries.
Enron hereby agrees to furnish a copy of any such
instrument to the Commission upon request.
*4.02 -- Supplemental Indenture, dated as of May 8, 1997, by and
among Enron Corp., Enron Oregon Corp. and Harris Trust
and Savings Bank (now The Bank of New York), as Trustee
(Exhibit 4.02 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
</TABLE>
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<PAGE> 62
<TABLE>
<C> <S>
*4.03 -- Third Supplemental Indenture, dated as of September 1,
1997, between Enron Corp. and Harris Trust and Savings
Bank (now The Bank of New York), as Trustee. (Exhibit
4.03 to Enron Registration Statement on Form S-3 -- File
No. 333-35549).
*4.04 -- Fourth Supplemental Indenture, dated as of August 17,
1999, between Enron Corp. and Harris Trust and Savings
Bank (now The Bank of New York), as Trustee (Exhibit 4.05
to Enron Registration Statement on Form S-3 -- File No.
333-83549).
*4.05 -- Form of Deposit Agreement between Enron and the
Depositary (Exhibit 4(b) to Enron Registration Statement
No. 33-50641, filed October 15, 1993).
5 -- Opinion of James V. Derrick, Jr., Esq., Executive Vice
President and General Counsel of Enron, as to validity of
debt securities, preferred stock, depositary shares and
common stock.
8 -- Opinion and consent of Vinson & Elkins L.L.P. with
respect to certain federal income tax matters.
12 -- Computation of Enron's Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.
23.01 -- Consent of Arthur Andersen LLP.
23.02 -- The consent of James V. Derrick, Jr., Esq., is contained
in his opinion filed as Exhibit 5 hereto.
24 -- Powers of Attorney.
25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Bank of New York.
</TABLE>
---------------
* Incorporated by reference as indicated.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant, Enron Corp., hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to each Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of each Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statements. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statements
or any material change to such information in the Registration
Statements;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
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<PAGE> 63
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statements;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of Enron's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Enron certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement or
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston and State of Texas, on the 17th day of July,
2000.
ENRON CORP.
(Registrant)
By: /s/ RICHARD A. CAUSEY
----------------------------------
Richard A. Causey
Executive Vice President and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities with Enron Corp. indicated and on the 17th day of July, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S> <C>
/s/ KENNETH L. LAY Chairman of the Board, Chief Executive
------------------------------------------------------ Officer and Director (Principal
(Kenneth L. Lay) Executive Officer)
/s/ RICHARD A. CAUSEY Executive Vice President and Chief
------------------------------------------------------ Accounting Officer (Principal Accounting
(Richard A. Causey) Officer)
/s/ ANDREW S. FASTOW Executive Vice President and Chief
------------------------------------------------------ Financial Officer (Principal Financial
(Andrew S. Fastow) Officer)
ROBERT A. BELFER* Director
------------------------------------------------------
(Robert A. Belfer)
NORMAN P. BLAKE, JR.* Director
------------------------------------------------------
(Norman P. Blake, Jr.)
RONNIE C. CHAN* Director
------------------------------------------------------
(Ronnie C. Chan)
JOHN H. DUNCAN* Director
------------------------------------------------------
(John H. Duncan)
WENDY L. GRAMM* Director
------------------------------------------------------
(Wendy L. Gramm)
KEN L. HARRISON* Director
------------------------------------------------------
(Ken L. Harrison)
</TABLE>
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<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S> <C>
ROBERT K. JAEDICKE* Director
------------------------------------------------------
(Robert K. Jaedicke)
CHARLES A. LEMAISTRE* Director
------------------------------------------------------
(Charles A. LeMaistre)
REBECCA MARK-JUSBASCHE* Director
------------------------------------------------------
(Rebecca Mark-Jusbasche)
JOHN MENDELSOHN* Director
------------------------------------------------------
(John Mendelsohn)
JEROME J. MEYER* Director
------------------------------------------------------
(Jerome J. Meyer)
PAULO V. FERRAZ PEREIRA* Director
------------------------------------------------------
(Paulo V. Ferraz Pereira)
FRANK SAVAGE* Director
------------------------------------------------------
(Frank Savage)
JEFFREY K. SKILLING* Director and President and Chief
------------------------------------------------------ Operating Officer
(Jeffrey K. Skilling)
JOHN A. URQUHART* Director
------------------------------------------------------
(John A. Urquhart)
JOHN WAKEHAM* Director
------------------------------------------------------
(John Wakeham)
HERBERT S. WINOKUR, JR.* Director
------------------------------------------------------
(Herbert S. Winokur, Jr.)
*By: /s/ REBECCA C. CARTER
-------------------------------------------------
Rebecca C. Carter
(Attorney-in-fact for persons indicated)
</TABLE>
II-6
<PAGE> 66
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*1.01 -- Form of Underwriting Agreement -- Debt Securities
(Exhibit 1.01 to Enron Registration Statement on Form
S-3 -- File No. 333-35549).
*1.02 -- Form of Underwriting Agreement -- Equity Securities
(Exhibit 1.02 to Enron Registration Statement on Form
S-3 -- File No. 333-35549).
*1.03 -- Enron Corp. Underwriting Agreement Standard Provisions,
dated as of September 15, 1997 (Exhibit 1.03 to Enron
Registration Statement on Form S-3 -- File No.
333-35549).
*3.01 -- Amended and Restated Articles of Incorporation of Enron
Oregon Corp. (Annex E to the Proxy Statement/Prospectus
included in Enron's Registration Statement on Form
S-4 -- File No. 333-13791).
*3.02 -- Articles of Merger of Enron Oregon Corp., an Oregon
Corporation, and Enron Corp., a Delaware Corporation
(Exhibit 3.02 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.03 -- Articles of Merger of Enron Corp., an Oregon Corporation,
and Portland General Corporation, an Oregon Corporation
(Exhibit 3.03 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*3.04 -- Bylaws of Enron (Exhibit 3.04 to Post-Effective Amendment
No. 1 to Enron's Registration Statement on Form
S-3 -- File No. 33-60417).
*3.05 -- Articles of Amendment of Enron: Form of Series
Designation for the Enron Convertible Preferred Stock
(Annex F to the Proxy Statement/Prospectus included in
Enron's Registration Statement on Form S-4 -- File No.
333-13791).
*3.06 -- Articles of Amendment of Enron: Form of Series
Designation for the Enron 9.142% Preferred Stock (Annex G
to the Proxy Statement/Prospectus included in Enron's
Registration Statement on Form S-4 -- File No.
333-13791).
*3.07 -- Articles of Amendment of Enron: Form of Series
Designation for the Enron Series A Junior Voting
Convertible Preferred Stock (Exhibit 3.07 to Enron's
Registration Statement on Form S-3 -- File No.
333-44133).
*3.08 -- Articles of Amendment of Enron: Statement of Resolutions
Establishing A Series of Preferred Stock of Enron
Corp. -- Mandatorily Convertible Single Reset Preferred
Stock, Series A (Exhibit 4.01 to Enron's Form 8-K filed
on January 26, 1999).
*3.09 -- Articles of Amendment of Enron: Statement of Resolutions
Establishing A Series of Preferred Stock of Enron
Corp. -- Mandatorily Convertible Single Reset Preferred
Stock, Series B (Exhibit 4.02 to Enron's Form 8-K filed
on January 26, 1999).
*3.10 -- Articles of Amendment of Enron amending Article IV of the
Articles of Incorporation (Exhibit 3.10 to Enron's
Post-Effective Amendment No. 1 to Registration Statement
on Form S-3 -- File No. 333-70465).
*3.11 -- Articles of Amendment of Enron: Statement of Resolutions
Establishing A Series of Preferred Stock of Enron
Corp. -- Mandatorily Convertible Junior Preferred Stock,
Series B (Exhibit 3.11 to Enron's Post-Effective
Amendment No. 1 to Registration Statement on Form
S-3 -- File No. 333-70465).
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*4.01 -- Indenture dated as of November 1, 1985, between Enron and
Harris Trust and Savings Bank (now the Bank of New York),
as supplemented and as amended by the First Supplemental
Indenture dated as of December 1, 1995 (Form T-3
Application for Qualification of Indentures under the
Trust Indenture Act of 1939, File No. 22-14390, filed
October 24, 1985; Exhibit 4(b) to Enron's Form S-3
Registration Statement No. 33-64057 filed on November 8,
1995). There have not been filed as exhibits to this
registration statement other debt instruments defining
the rights of holders of long-term debt of Enron, none of
which relates to authorized indebtedness that exceeds 10%
of the consolidated assets of Enron and its subsidiaries.
Enron hereby agrees to furnish a copy of any such
instrument to the Commission upon request.
*4.02 -- Supplemental Indenture, dated as of May 8, 1997, by and
among Enron Corp., Enron Oregon Corp. and Harris Trust
and Savings Bank (now the Bank of New York), as Trustee
(Exhibit 4.02 to Post-Effective Amendment No. 1 to
Enron's Registration Statement on Form S-3 -- File No.
33-60417).
*4.03 -- Third Supplemental Indenture, dated as of September 1,
1997, between Enron Corp. and Harris Trust and Savings
Bank (now the Bank of New York), as Trustee. (Exhibit
4.03 to Enron Registration Statement on Form S-3 -- File
No. 333-35549).
*4.04 -- Fourth Supplemental Indenture, dated as of August 17,
1999, between Enron Corp. and Harris Trust and Savings
Bank (now the Bank of New York), as Trustee (Exhibit 4.05
to Enron Registration Statement on Form S-3 -- File No.
333-83549).
*4.05 -- Form of Deposit Agreement between Enron and the
Depositary (Exhibit 4(b) to Enron Registration Statement
No. 33-50641, filed October 15, 1993).
5 -- Opinion of James V. Derrick, Jr., Esq., Executive Vice
President and General Counsel of Enron, as to validity of
debt securities, preferred stock, depositary shares and
common stock.
8 -- Opinion and consent of Vinson & Elkins L.L.P. with
respect to certain federal income tax matters.
12 -- Computation of Enron's Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.
23.01 -- Consent of Arthur Andersen LLP.
23.02 -- The consent of James V. Derrick, Jr., Esq., is contained
in his opinion filed as Exhibit 5 hereto.
24 -- Powers of Attorney.
25 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Bank of New York.
</TABLE>
---------------
* Incorporated by reference as indicated.
