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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: August 2, 1994
Enron Corp.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-3423 47-0255140
(Commission File Number) (IRS Employer Identification No.)
1400 Smith Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713-853-6161
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Item 5. Other Events.
The registrant is filing herewith the following in connection with the
offering by Enron Capital Resources, L.P. of its 9% Cumulative Preferred
Securities, Series A, pursuant to the registration statement of the registrant
and Enron Capital Resources, L.P. on Form S-3 (No. 33-53877) filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
described in the Prospectus Supplement to Prospectus dated July 15, 1994 (the
"Prospectus Supplement") dated July 27, 1994, filed with the Securities and
Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933:
1.1 Purchase Agreement dated July 27, 1994 among the registrant,
Enron Capital Resources, L.P., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, PaineWebber
Incorporated, Prudential Securities Incorporated, Rauscher
Pierce Refsnes, Inc. and Smith Barney Inc., as representatives
of the several Underwriters named therein.
3.1 Form of Amended and Restated Agreement of Limited Partnership
dated as of August 3, 1994.
4.1 Form of Payment and Guarantee Agreement of the registrant dated
as of August 3, 1994.
4.2 Form of Loan Agreement dated as of August 3, 1994 between the
registrant and Enron Capital Resources, L.P.
5.1 Opinion and consent of Vinson & Elkins L.L.P. with respect to
the validity of the Series A Preferred Securities and related
contractual backup undertakings.
8.1 Opinion and consent of Vinson & Elkins L.L.P. with respect to
certain federal income tax matters.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENRON CORP.
By: /s/ KURT S. HUNEKE
Kurt S. Huneke
Vice President, Finance
and Treasurer
Dated: August 2, 1994
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INDEX TO EXHIBITS
Exhibit
Number
- - -------
Ex- 1.1 Purchase Agreement dated July 27, 1994 among the registrant,
Enron Capital Resources, L.P., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, PaineWebber
Incorporated, Prudential Securities Incorporated, Rauscher
Pierce Refsnes, Inc. and Smith Inc., as representatives of the
several Underwriters named therein.
Ex- 3.1 Form of Amended and Restated Agreement of Limited Partnership
dated as of August 3, 1994.
Ex- 4.1 Form of Payment and Guarantee Agreement of the Registrant dated
as of August 3, 1994.
Ex- 4.2 Form of Loan Agreement dated as of August 3, 1994 between the
registrant and Enron Capital Resources, L.P.
Ex- 5.1 Opinion and consent of Vinson & Elkins L.L.P. with respect to
the validity of the Series A Preferred Securities and related
contractual backup undertakings.
Ex- 8.1 Opinion and consent of Vinson & Elkins L.L.P. with respect to
certain federal income tax matters.
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EXHIBIT 1.1
3,000,000 PREFERRED SECURITIES
ENRON CAPITAL RESOURCES, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
9% CUMULATIVE PREFERRED SECURITIES, SERIES A
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
GUARANTEED BY
ENRON CORP.
(A DELAWARE CORPORATION)
PURCHASE AGREEMENT
July 27, 1994
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
PAINEWEBBER INCORPORATED,
PRUDENTIAL SECURITIES INCORPORATED,
RAUSCHER PIERCE REFSNES, INC.,
SMITH BARNEY INC.,
As representatives of the several Underwriters,
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Merrill Lynch World Headquarters,
World Financial Center,
North Tower,
New York, New York 10281-1209.
Dear Sirs:
Enron Capital Resources, L.P. (the "Company"), a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act (the
"Delaware Act"), and Enron Corp., a Delaware corporation, as guarantor and
provider of certain backup undertakings (the "Guarantor" or "Enron"), confirm
their agreement with each of the Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10), for whom
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), PaineWebber Incorporated, Prudential Securities
Incorporated, Rauscher Pierce Refsnes, Inc. and Smith Barney Inc. are acting as
representatives (in such capacity, such firms shall hereinafter be referred to
as the "Representatives"), with respect to the sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of an aggregate
of 3,000,000 shares (the "Preferred Securities") of 9% Cumulative Preferred
Securities, Series A (liquidation preference $25 per Preferred Security) of the
Company guaranteed (the "Guarantee") by the Guarantor as to the payment of
dividends and as to payments on liquidation or redemption and entitled to the
benefits of certain backup undertakings described in the Final Supplemented
Prospectus (as defined in Section 1(a) hereof) (the "Undertakings") provided by
the Guarantor (the Undertakings together with the Guarantee being referred to
collectively as the "Backup Undertakings") (the Preferred Securities and the
related Backup Undertakings being referred to collectively as the
"Securities").
Prior to the purchase and public offering of the Preferred Securities by
the Underwriters, the Company, the Guarantor and the Representatives, acting
on behalf of the Underwriters, shall enter into an agreement substantially in
the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement
may take the form of an exchange of any standard form of written
telecommunication between the Company and the Guarantor, on the one hand, and
the Representatives, on the other, and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Preferred
Securities will be governed by this Agreement, as
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supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be deemed
to incorporate the Pricing Agreement.
SECTION 1. Representations and Warranties. Each of the Company and
the Guarantor jointly and severally represents and warrants to, and agrees
with, each of the Underwriters as of the date hereof and as of the date of the
Pricing Agreement (such latter date being hereinafter referred to as the
"Representation Date") as follows:
(a) A registration statement on Form S-3 (File No. 33-53877)
and Amendment No. 1 thereto in respect of Debt Securities, Depositary
Shares, Second Preferred Stock, par value $1.00, Common Stock, par value
$.10 per share, Warrants to Purchase Common Stock and Warrants to Purchase
Debt Securities of the Guarantor and the Securities (collectively, the
"Registered Securities") have been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Act"), and delivered to the Representatives; such registration
statement and any post-effective amendment thereto, each in the form
heretofore delivered to the Representatives and, excluding exhibits thereto
but including all documents incorporated by reference in the prospectus
contained therein, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such form;
no other document with respect to such registration statement or document
incorporated by reference therein has heretofore been filed, or transmitted
for filing, with the Commission other than the Preliminary Supplemented
Prospectus (as hereinafter defined); and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Act, being hereinafter called a
"Preliminary Prospectus"; the various parts of such registration statement,
including all exhibits thereto and the documents incorporated by reference
in the prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as amended at the
time such part of the registration statement became effective, being
hereinafter called the "Registration Statement"; the prospectus included in
the Registration Statement at the time it became effective being
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include without limitation any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and incorporated by reference in such Preliminary Prospectus or Prospectus,
as the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of the
Guarantor filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated
by reference in the Registration Statement; the Prospectus as supplemented
on July 19, 1994 in preliminary form in relation to the Securities, in the
form in which it was filed with the Commission pursuant to Rule 424(b)
under the Act, including any documents incorporated by reference therein as
of the date of such filing, being hereinafter called the "Preliminary
Supplemented Prospectus"; and the Prospectus as amended or supplemented in
final form in relation to the Securities in the form in which it is filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 3(a) hereof, including any documents incorporated by reference
therein as of the date of such filing, being hereinafter called the "Final
Supplemented Prospectus";
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement to such
documents, when such documents become effective or are
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filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
or the Guarantor by an Underwriter through the Representatives expressly
for use in the Preliminary Supplemented Prospectus or the Final
Supplemented Prospectus;
(c) The Registration Statement, the Prospectus and, to the
extent not used to confirm sales of Securities, the Preliminary
Supplemented Prospectus conform, and the Final Supplemented Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the applicable
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, (i) as of the applicable effective date
as to the Registration Statement and any amendment thereto, (ii) as of the
filing date and to the extent not used to confirm sales of Securities as to
the Preliminary Supplemented Prospectus, and (iii) as of the applicable
filing date as to the Final Supplemented Prospectus and any Prospectus as
further amended or supplemented, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company or the Guarantor by an Underwriter
through the Representatives expressly for use therein;
(d) The Company has no subsidiaries. Neither the Company, the
Guarantor nor any of the Guarantor's subsidiaries listed on Schedule I
hereto ("Material Subsidiaries") has sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
partners' interests or long-term debt of the Company or in the capital
stock (other than changes in common stock resulting from employee benefit
plan or dividend reinvestment plan transactions, purchases pursuant to the
Guarantor's stock repurchase program, conversions of outstanding
convertible securities and other changes occurring in the ordinary course
of business, as disclosed to the Representatives in writing) or combined
short-term and long-term debt (except as incurred in the ordinary course of
business, as disclosed to the Representatives in writing) of the Guarantor
and its subsidiaries considered as one enterprise or any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Guarantor and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, otherwise than as set forth or contemplated in
the Prospectus;
(e) The Company has been duly organized and is validly
existing as a limited partnership in good standing under the Delaware Act,
with power and authority (partnership and other) to own its properties and
conduct its business as described in the Preliminary Supplemented
Prospectus and the Final Supplemented Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(f) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and all material other) to
own its properties and conduct its business as described in the Prospectus,
and has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require
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such qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and each
Material Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and all material other)
to own its properties and conduct its business as described in the
Preliminary Supplemented Prospectus and Final Supplemented Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction; and
all of the issued shares of capital stock of each Material Subsidiary have
been duly and validly authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying shares) are owned
directly or indirectly by the Guarantor, free and clear of all liens,
encumbrances, equities or claims (other than contractual covenants
restricting the disposition thereof), except for (A) Enron Oil & Gas
Company, 80% of which capital stock is owned by the Guarantor, (B) Citrus
Corp., 50% of which capital stock is indirectly owned by the Guarantor, and
(C) Florida Gas Transmission Company, 100% of which capital stock is owned
by Citrus Corp.;
(g) Each of the Company and the Guarantor had, as of the date
indicated in the Final Supplemented Prospectus, an authorized
capitalization as set forth in the Final Supplemented Prospectus; since
such date there has been no change in the capitalization of the Company and
no change in the consolidated capitalization of the Guarantor and its
subsidiaries (other than changes in outstanding common stock resulting from
employee benefit plan or divident reinvestment plan transactions, purchases
pursuant to the Guarantor's stock repurchase program, conversions of
outstanding convertible securities and other changes in capital stock
occuring in the ordinary course of business, as disclosed to the
Representatives in writing, and changes in combined short-term and
long-term debt incurred in the ordinary course of business, as disclosed to
the Representatives in writing); all of the partners' interests in the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable (except as such nonassessability may be affected by
matters described under the caption "Enron Capital Resources, L.P. -- The
Partnership Agreement -- Limited Liability" in the Prospectus) and conform
to the descriptions thereof contained in the Final Supplemented Prospectus;
and all of the issued shares of capital stock of the Guarantor have been
duly and validly authorized and issued, are fully paid and non-assessable
and conform to the descriptions thereof contained in the Final Supplemented
Prospectus;
(h) Upon execution and delivery of the Partnership Agreement
(as defined below), the Preferred Securities will have been duly and
validly authorized by the Company, and, when issued and delivered against
payment therefor as provided herein, will be duly and validly issued and
fully paid limited partnership interests in the Company not subject to
assessment by the Company for additional capital contributions (except as
described under the caption "Enron Capital Resources, L.P. -- The
Partnership Agreement -- Limited Liability" in the Prospectus) and entitled
to the benefits of the Partnership Agreement (as defined below) and will
conform to the descriptions thereof contained in the Final Supplemented
Prospectus;
(i) The Guarantee, the loan agreement, dated as of August 3,
1994 (the "Loan Agreement"), between the Company and the Guarantor relating
to the loans to the Guarantor by the Company of the proceeds of the
Guarantor's capital contribution in respect of its general partnership
interest in the Company and of the issuance of the Preferred Securities and
the Amended and Restated Agreement of Limited Partnership, dated as of
August 3, 1994 (the "Partnership Agreement"), among the Guarantor, as
general partner, and the holders from time to time of the Preferred
Securities, as limited partners, the Guarantee, Loan Agreement and
Partnership Agreement being collectively referred to as "Guarantor
Agreements") have each been duly authorized and when validly executed and
delivered by the Guarantor and, to the extent relevant, by the Company,
will constitute legal, valid and binding obligations of the Guarantor,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; the Guarantor Agreements will
conform to the
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descriptions thereof in the Final Supplemented Prospectus; and the
Guarantor Agreements will be the only instruments comprising the Backup
Undertakings relating to the Preferred Securities;
(j) The sole general partner interest and all limited partner
interests (other than the Preferred Securities) in the Company are owned
directly or indirectly by the Guarantor, free and clear of all liens,
encumbrances, equities or claims; each of the limited partners of the
Company has been duly admitted as a limited partner of the Company; the
Company is not a party to or otherwise bound by any agreement other than
those described in the Final Supplemented Prospectus;
(k) The issue and sale of the Preferred Securities by the
Company, the compliance by the Company with all of the provisions of this
Agreement, the execution, delivery and performance by the Company of the
Loan Agreement and the Partnership Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the property or assets
of the Company is subject, nor will such action result in any violation of
the provisions of the Company's Certificate of Limited Partnership, the
Partnership Agreement or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act of
the Securities and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase of the Preferred Securities and the
distribution of the Securities by the Underwriters;
(l) The issue and sale of the Preferred Securities by the
Company, the compliance by the Company and the Guarantor with all of the
provisions of this Agreement, the execution, delivery and performance by
the Guarantor of the Guarantor Agreements, the performance by the Guarantor
of the other Backup Undertakings and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Guarantor is a party or by which
it is bound or to which any of its property or assets is subject or any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which any of the Guarantor's subsidiaries is a
party or by which any of its subsidiaries is bound or to which any of the
property or assets of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or by-laws of the Guarantor or the charter or by-laws of any
of its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Guarantor
or any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue of
the Backup Undertakings or the consummation by the Guarantor of the
transactions contemplated by this Agreement, except the registration under
the Act of the Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase of the Securities and
distribution of the Securities by the Underwriters;
(m) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company, the
Guarantor or any of the Guarantor's subsidiaries is a party or of which any
property of the Company, the Guarantor or any of the Guarantor's
subsidiaries is the subject which would result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company or of the Guarantor
and its subsidiaries considered as one enterprise, or which would
materially and adversely affect the properties or assets thereof or which
would materially and adversely affect the consummation of this Agreement;
and, to the
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best of the Company's or the Guarantor's knowledge, as the case may be, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(n) Arthur Andersen & Co., who have certified certain
financial statements of the Guarantor and its subsidiaries, are independent
public accountants with respect to the Guarantor as required by the Act and
the rules and regulations of the Commission thereunder; and
(o) There are no contracts, agreements or understandings
between the Company or the Guarantor and any person granting such person
the right to require the Company or the Guarantor to file a registration
statement under the Act with respect to any partner interests in the
Company or any preferred stock or guarantees thereof of the Guarantor owned
or to be owned by such person or to require the Company or the Guarantor to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company or the Guarantor
under the Act.
Any certificate signed by any officer of the Company or the Guarantor and
delivered to the Representatives or to counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company or the Guarantor, as the case may be, to each Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing. (a) On the
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price per share set forth
in the Pricing Agreement, the number of shares of Preferred Securities set
forth in Schedule A opposite the name of such Underwriter (except as otherwise
provided in the Pricing Agreement), plus any additional number of shares of
Preferred Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof. The purchase price per share
to be paid by the Underwriters for the Preferred Securities shall be an amount
equal to the initial public offering price, as determined by agreement between
the Representatives and the Company. As compensation to the Underwriters for
their commitments hereunder, and in view of the fact that the proceeds of the
sale of the Preferred Securities will be loaned by the Company to the
Guarantor, the Guarantor hereby agrees to pay at the Closing Time (as defined
in subsection (b) hereof) to the Representatives, for the accounts of the
several Underwriters, an amount per share determined by agreement between the
Representatives and the Guarantor, provided, however, that such compensation
will be a different amount per share determined by agreement between the
Representatives and the Guarantor for Preferred Securities in excess of an
agreed number sold to any single purchaser and to be delivered by the Company
hereunder at the Closing Time. The Underwriters shall inform the Guarantor in
writing, the business day prior to the Closing Time, of the number of Preferred
Securities in excess of such agreed number so sold to single purchasers. The
purchase price and such compensation amounts, when so determined, shall be set
forth in the Pricing Agreement. In the event that such price and such
compensation amounts have not been agreed upon and the Pricing Agreement has
not been executed and delivered by all parties thereto by the close of business
on the fourth business day following the date of this Agreement, this Agreement
shall terminate forthwith, without liability of any party to any other party
unless otherwise agreed to by the Company and the Representatives. The
Guarantor agrees to issue the Backup Undertakings concurrently with the issue
and sale of Preferred Securities as contemplated herein. The Guarantor hereby
guarantees the timely performance by the Company of its obligations under this
Section 2.
(b) Payment of the purchase price for, and delivery of certificates
for, the Preferred Securities shall be made at the office of the Guarantor, 1400
Smith Street, Houston, Texas, or at such other place as shall be agreed upon by
the Representatives and the Company, at 8:30 A.M., Houston time, on the fifth
business day (unless postponed in accordance with the provisions of Section 10)
after execution of the Pricing Agreement, or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein called
"Closing Time"). Payment shall be made to the Company by certified or official
bank check or checks drawn in, or wire transfer in, New York Clearing House
funds or similar next day funds payable to the order of the Company, against
delivery to the Representatives for the respective accounts of the Underwriters
of certificates for the Preferred Securities to be
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purchased by them. Certificates for the Preferred Securities shall be in such
denominations and registered in such names as the Representatives may request
in writing at least two business days before Closing Time. It is understood
that each Underwriter has authorized the Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for,
the Preferred Securities which it has agreed to purchase. Merrill Lynch and
the other firms acting as Representatives, individually and not as
Representatives, may (but shall not be obligated to) make payment of the
purchase price for the Preferred Securities to be purchased by any Underwriter
whose check has not been received by Closing Time, but such payment shall not
relieve such Underwriter from its obligations hereunder. The certificates for
the Preferred Securities will be made available for examination and packaging
by the Representatives not later than 10:00 A.M., New York time, on the last
business day prior to Closing Time.
At Closing Time, the Guarantor will pay, or cause to be paid, the
compensation payable at Closing Time to the Underwriters under Section 2(a) by
certified or official bank check or checks drawn in, or wire transfer in, New
York Clearing House (next day) funds.
SECTION 3. Covenants of the Company and the Guarantor. Each of the
Company and the Guarantor jointly and severally agrees with each Underwriter as
follows:
(a) To prepare the Final Supplemented Prospectus in a form
approved by the Representatives and to file the Final Supplemented
Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of the Pricing Agreement, or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Final
Supplemented Prospectus prior to Closing Time which shall be reasonably
disapproved by the Representatives promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment or
supplement after Closing Time and furnish the Representatives with copies
thereof; in the case of the Guarantor, to file promptly all reports and any
definitive proxy or information statements required to be filed with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities; and during such same period to
advise the Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or Final Supplemented
Prospectus or any amended Prospectus or Final Supplemented Prospectus has
been filed with the Commission, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
prospectus relating to the Securities, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal; provided that nothing herein shall require the
Guarantor to furnish copies of any post-effective amendment to the
Registration Statement or supplement to the Prospectus or any other
information that, in any such case, is unrelated to the offering and sale
of the Securities;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith neither the Company nor the Guarantor
shall be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Final
Supplemented Prospectus in such quantities as the Representatives may from
time to time reasonably request, and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months after the date
of this Agreement
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<PAGE> 8
in connection with the offering or sale of the Securities and if at such
time any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act
or the Exchange Act, to notify the Representatives and upon request of the
Representatives to file such document (other than Reports on Form 10-Q or
10-K of the Guarantor, which shall be timely filed and may be filed without
prior notice to the Representatives) and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies
as the Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with the
distribution of any of the Securities at any time nine months or more after
the date of this Agreement, upon request of the Representatives but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as
many copies as the Representatives may request of an amended or
supplemented Prospectus complying with Section 10(a) (3) of the Act;
(d) In the case of the Guarantor, to make generally available
to its securityholders as soon as practicable, but in any event not later
than eighteen months after the effective date of the Registration Statement
(as defined in Rule 158(c)), an earning statement of the Guarantor and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations thereunder (including at the option
of the Guarantor Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the earlier of (i) the date, after Closing
Time, on which the distribution of the Securities ceases, as determined by
the Underwriters, or (ii) the date which is 90 days after Closing Time, not
to offer, sell, contract to sell or otherwise dispose of any Securities,
any preferred stock or any other securities (including any backup
undertakings) of the Company or the Guarantor which are substantially
similar to the Preferred Securities or related Backup Undertakings, or any
securities convertible into or exchangeable for Preferred Securities,
related Backup Undertakings, preferred stock or such substantially similar
securities of either the Company or the Guarantor without the prior written
consent of the Merrill Lynch;
(f) To furnish to the holders of Preferred Securities as soon
as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders' equity
and cash flow of the Guarantor and its consolidated subsidiaries certified
by independent public accountants) and, as soon as practicable after the
end of each of the first three quarters of each fiscal year (beginning with
the first such fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of the
Guarantor and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the date of this
Agreement to furnish to the Representatives copies of all reports or other
communications (financial or other) furnished to holders of common stock of
the Guarantor, and deliver to the Representatives (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company or the Guarantor are listed; and (ii)
such additional information concerning the business and financial condition
of the Guarantor as the Representatives may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Guarantor and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission);
and
(h) To use its best efforts to list, subject to notice of
issuance, the Preferred Securities on the New York Stock Exchange.
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<PAGE> 9
SECTION 4. Payment of Expenses. The Company and the Guarantor
jointly and severally agree to pay all expenses incident to the performance of
their obligations under this Agreement, including (i) the printing and filing
of the Registration Statement as originally filed and of each amendment
thereto, (ii) the printing of this Agreement, the Pricing Agreement and the
Underwriters' Questionnaire, if any, (iii) the preparation, issuance and
delivery of the certificates for the Preferred Securities to the Underwriters,
(iv) the fees and disbursements of the Company's counsel and accountants, (v)
the qualification of the Preferred Securities under securities laws in
accordance with the provisions of Section 3(b), including filing fees and the
reasonable fee and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky and Legal
Investment Memoranda, (vi) the printing and delivery to the Underwriters of
copies of the Registration Statement, any Preliminary Prospectus, the
Prospectus, the Preliminary Supplemented Prospectus, the Final Supplemented
Prospectus and any amendments or supplements thereto, (vii) the printing and
delivery to the Underwriters of copies of the Blue Sky and Legal Investment
Memoranda, (viii) the fee of the National Association of Securities Dealers,
Inc. and (ix) the listing fees of the New York Stock Exchange. It is
understood, however, that except as provided in this Section 4 and in Sections
6, 7 and 9, the Underwriters will pay all of their own costs and expenses,
including the fees and disbursements of their counsel (other than those
referred to in (v) of the previous sentence), stock transfer taxes on resale of
any of the Preferred Securities by them and any advertising expenses connected
with any offers they may make.
If this Agreement is terminated by the Representatives in accordance with
the provisions of Section 5 or Section 9(a)(i), the Company and the Guarantor,
jointly and severally, shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fee and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Guarantor herein
contained, to the performance by the Company and the Guarantor of their
obligations hereunder, and to the following further conditions:
(a) The Final Supplemented Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under the
Act and in accordance with Section 3(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information
on the part of the Commission shall have been complied with to the
reasonable satisfaction of the Representatives;
(b) At Closing Time, the Representatives shall have received:
1. The favorable opinion, dated as of Closing Time,
of James V. Derrick, Jr., Esq., Senior Vice President and General
Counsel of the Guarantor, in form and substance reasonably
satisfactory to counsel for the Underwriters, covering the
following matters:
(i) The Guarantor has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Delaware,
with all necessary corporate power and authority to
own its properties and conduct its business as
described in the Final Supplemented Prospectus;
(ii) The Guarantor has authorized capital
stock as set forth in the Final Supplemented
Prospectus, and all of the issued shares of capital
stock of the Guarantor have been duly and validly
authorized and issued and are fully paid and
non-assessable and conform to the descriptions
thereof contained in the Prospectus; and the sole
general partnership interest and all limited
partnership interests (other than the Preferred
Securities) in the Company are owned directly or
indirectly by the Guarantor, and, except as disclosed
in the Final Supplemented Prospectus, are so
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<PAGE> 10
owned free of all liens and, to the knowledge of such
counsel, encumbrances, equities or claims (other than
contractual covenants restricting the disposition
thereof);
(iii) The Company has been duly formed and is
validly existing as a limited partnership and in good
standing under the Delaware Act; all filings required
under the Delaware Act with respect to the formation
and valid existence of the Company as a limited
partnership have been made; and the Company has all
necessary partnership power and authority to own its
properties and conduct its business as described in
the Final Supplemented Prospectus;
(iv) The Company's authorized capitalization,
as set forth in the Final Supplemented Prospectus,
consists of the sole general partnership interest
owned by the Guarantor and the Preferred Securities;
the general partnership interest in the Company
conforms to the description thereof contained in the
Final Supplemented Prospectus; no Preferred
Securities have been previously issued;
(v) The Preferred Securities have been duly
and validly authorized and issued and are fully paid
and nonassessable (except as such nonassessability
may be affected by matters described under the
caption "Enron Capital Resources, L.P. -- The
Partnership Agreement -- Limited Liability" in the
Prospectus) limited partnership interests in the
Company, as to which the holders of Preferred
Securities, as limited partners of the Company, will
(except as may be affected by matters described under
the caption "Enron Capital Resources, L.P. -- the
Partnership Agreement -- Limited Liability" in the
Prospectus) have no liability in excess of their
obligations to make payments provided for in the
Partnership Agreement and their share of the
Company's assets and undistributed profits; and the
Preferred Securities conform to the description
thereof contained in the Final Supplemented
Prospectus;
(vi) The provisions of the Partnership
Agreement are valid and will be given effect in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws of general applicability
relating to or affecting creditors' rights and to
general equity principles;
(vii) The Company has no subsidiaries;
(viii) The Loan Agreement has been duly
authorized, executed and delivered by the Company;
the Guarantor Agreements have been duly authorized,
executed and delivered by the Guarantor, and the
Guarantor Agreements constitute legal, valid and
binding obligations of the Guarantor, enforceable in
accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws of
general applicability relating to or affecting
creditors' rights and to general equity principles;
and the Guarantor Agreements conform to the
descriptions thereof in the Final Supplemented
Prospectus; and the Guarantor Agreements are the only
instruments comprising the Backup Undertakings
relating to the Preferred Securities;
(ix) Each of the Company and the Guarantor has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under
the laws of each other United States jurisdiction in
which it owns or leases properties, or conducts any
business, so as to require such qualification, or is
subject to no material liability or disability by
reason of failure to be so qualified in any such
jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause (ix) in respect
of matters of fact upon certificates of public
officials);
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<PAGE> 11
(x) Each Material Subsidiary has been duly
incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction
of incorporation and has been duly qualified as a
foreign corporation for the transaction of business
and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such
qualification, or is subject to no liability or
disability by reason of failure to be so qualified in
any such jurisdiction that would be material to the
Guarantor and its subsidiaries taken as a whole; and
all of the issued shares of capital stock of each
Material Subsidiary have been duly and validly
authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying
shares) to the best of such counsel's knowledge are
owned directly or indirectly by the Guarantor, free
and clear of all liens, encumbrances, equities or
claims (other than contractual covenants restricting
the disposition thereof), except for (A) Enron Oil &
Gas Company, 80% of which capital stock is owned by
the Guarantor, (B) Citrus Corp., 50% of which capital
stock is owned indirectly by the Guarantor and (C)
Florida Gas Transmission Company, 100% of which
capital stock is owned by Citrus Corp. (such counsel
being entitled to rely in respect of the opinion in
this clause upon, in respect of matters of fact,
certificates of officers of the Guarantor or its
subsidiaries, provided that such counsel shall state
that he believes that he is justified in so relying
upon such certificates, or certificates of public
officials);
(xi) To the best of such counsel's knowledge
and other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending to
which the Company, the Guarantor or any of the
Guarantor's subsidiaries is a party or of which any
property of the Company, the Guarantor or any of the
Guarantor's subsidiaries is the subject which, if
determined adversely to the Company, the Guarantor or
any of the Guarantor's subsidiaries, as the case may
be, would individually or in the aggregate have a
material adverse effect on the consolidated financial
position, stockholders' equity or results of
operations of the Company or the Guarantor and its
subsidiaries taken as a whole; and, to the best of
such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental
authorities or threatened by others;
(xii) This Agreement and the Pricing Agreement
have been duly authorized, executed and delivered by
each of the Company and the Guarantor;
(xiii) The issue and sale by the Company of the
Preferred Securities, the compliance by the Company
and the Guarantor with all of the provisions of this
Agreement and the Pricing Agreement, the execution,
delivery and performance by the Guarantor of the
Guarantor Agreements and the consummation of the
transactions herein and therein contemplated will not
conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or
instrument known to such counsel to which the
Guarantor, the Company or any of the Guarantor's
subsidiaries is a party or by which the Guarantor,
the Company or any of the Guarantor's subsidiaries is
bound or to which any of the property or assets of
the Guarantor, the Company or any of the Guarantor's
subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate
of Incorporation or by-laws of the Guarantor, the
Certificate of Limited Partnership of the Company,
the Partnership Agreement, any U.S. Federal or Texas
statute, the Delaware General Corporation Law, the
Delaware Act or, to the knowledge of such counsel,
any other statute or any order, rule or regulation
known to such counsel of any court or governmental
agency or body having jurisdiction over the Guarantor
or any of the Guarantor's subsidiaries or any of
their properties;
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<PAGE> 12
(xiv) No consent, approval, authorization,
order, registration or qualification of or with any
such court or governmental agency or body is required
for the issue and sale of the Preferred Securities,
the issuance and performance of the Backup
Undertakings (including the execution, delivery and
performance of the Guarantor Agreements), or the
consummation by the Company and the Guarantor of the
transactions contemplated herein and therein, except
the registration under the Act of the Securities, and
such consents, approvals, authorizations,
registrations or qualifications as may be required
under state securities or Blue Sky laws in connection
with the purchase of the Preferred Securities and
distribution of the Securities by the Underwriters;
and
(xv) The documents incorporated by reference
in the Preliminary Supplemented Prospectus and the
Final Supplemented Prospectus (other than the
financial statements and related schedules and
reports of experts pertaining to natural resource
reserves therein, as to which such counsel need
express no opinion), when they became effective or
were filed with the Commission, as the case may be,
complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the
Commission thereunder; and nothing has come to the
attention of such counsel that has caused such
counsel to believe that any of such documents, when
such documents became effective or were so filed, as
the case may be, contained, in the case of a
registration statement which became effective under
the Act, an untrue statement of a material fact, or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading, or, in the case of other
documents which were filed under the Exchange Act
with the Commission, an untrue statement of a
material fact or omitted to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made when such documents were so filed, not
misleading;
In rendering the opinion expressed in
paragraphs (viii) and (xii) hereof, such counsel may
rely, as to all matters of New York law, upon the
opinion of Sullivan & Cromwell, dated the Closing
Time and delivered pursuant to subsection (b)(3)
hereof.
2. The favorable opinion, dated as of Closing Time,
of Vinson & Elkins, L.L.P., counsel for the Company and the
Guarantor, in form and substance reasonably satisfactory to counsel
for the Underwriters covering the following matters:
(i) The Registration Statement, the
Preliminary Supplemented Prospectus (to the extent
not used to confirm sales of Securities), the Final
Supplemented Prospectus and any further amendments
and supplements thereto made by the Company or the
Guarantor prior to Closing Time (other than the
financial statements and related schedules and
reports of experts pertaining to natural resource
reserves therein, as to which such counsel need
express no opinion) comply as to form in all material
respects with the requirements of the Act and the
rules and regulations thereunder; nothing has come to
the attention of such counsel that has caused such
counsel to believe that, as of its effective date,
the Registration Statement or any further amendment
thereto made by the Company or the Guarantor prior to
Closing Time (other than the financial statements and
related schedules and reports of experts pertaining
to natural resource reserves therein, as to which
such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading or that, as of their respective dates, the
Preliminary Supplemented Prospectus, the Final
Supplemented Prospectus or any further amendment or
supplement thereto made by the Company or the
Guarantor prior to Closing Time
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<PAGE> 13
(other than the financial statements and related
schedules and reports of experts pertaining to
natural resource reserves therein, as to which such
counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a
material fact necessary to make the statements
therein, in light of the circumstances in which they
were made, not misleading or that, as of Closing
Time, either the Registration Statement or the Final
Supplemented Prospectus or any further amendment or
supplement thereto made by the Company or the
Guarantor prior to Closing Time (other than the
financial statements and related schedules and
reports of experts pertaining to natural resource
reserves therein, as to which such counsel need
express no opinion) contains an untrue statement of a
material fact or omits to state a material fact
necessary to make the statements therein, in light of
the circumstances in which they were made, not
misleading; and they do not know of any amendment to
the Registration Statement required to be filed or of
any contracts or other documents of a character
required to be filed as an exhibit to the
Registration Statement or required to be incorporated
by reference into the Preliminary Supplemented
Prospectus or the Final Supplemented Prospectus or
required to be described in the Registration
Statement or the Preliminary Supplemented Prospectus
or the Final Supplemented Prospectus which are not
filed or incorporated by reference or described as
required; and
(ii) Such counsel confirms its opinion as set
forth under "Taxation" in the Final Supplemented
Prospectus;
3. The favorable opinion, dated as of Closing Time,
of Sullivan & Cromwell, counsel for the Underwriters, with
respect to the incorporation of the Guarantor, the organization of
the Company; the validity of the Preferred Securities and the
related Backup Undertakings, the Registration Statement and the
Final Supplemented Prospectus; and other related matters as the
Representatives may reasonably request; and such counsel shall have
received such papers and information as they may reasonably request
to enable them to pass upon such matters;
(c) At Closing Time, there shall not have been, since the
respective dates as of which information is given in the Registration
Statement and the Final Supplemented Prospectus, any material adverse
change in the condition, financial or otherwise, of the Company or of the
Guarantor and its subsidiaries considered as one enterprise, or in the
earnings, business affairs or business prospects of the Company or of the
Guarantor and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall
have received a certificate of the Chief Executive Officer, the President
or any Executive or Senior Vice President of the Guarantor and of the chief
financial or chief accounting officer of the Guarantor, dated as of Closing
Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1 are true and
correct with the same force and effect as though expressly made at and as
of Closing Time, (iii) the Company and the Guarantor have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or, to the Company's best
knowledge, threatened by the Commission.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from Arthur Andersen & Co. a letter
dated such date, in form and substance reasonably satisfactory to the
Representatives, to the effect set forth in Schedule B hereto.
(e) At Closing Time, the Representatives shall have received
from Arthur Andersen & Co. a letter, dated as of Closing Time, to the
effect that, except as otherwise set forth in said letter, they reaffirm
the statements made in the letter furnished pursuant to subsection (d) of
this Section, except that the specified date referred to shall be a date
not more than five days prior to Closing Time.
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<PAGE> 14
(f) At Closing Time, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale
of the Securities as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company and the Guarantor in connection with the
issuance and sale of the Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Preferred Securities or any of the
Guarantor's debt securities or preferred stock (including the Guarantee or
any other Backup Undertakings in respect of the Preferred Securities) by
any "nationally recognized statistical rating organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the Act,
and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of the Securities or any of the Guarantor's debt securities or
preferred stock (including the Guarantee or any other Backup Undertakings
in respect of the Preferred Securities);
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that the provisions of
Sections 6 and 7 shall survive termination.
SECTION 6. Indemnification. (a) The Company and the Guarantor jointly
and severally agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Prospectus, the Preliminary Supplemented
Prospectus, the Final Supplemented Prospectus or any other prospectus
relating to the Securities (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they are made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company and the Guarantor; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by the Representatives), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or to
the Guarantor by any Underwriter through the Representatives expressly for use
in the Registration Statement (or any amendment thereto) or any Preliminary
Prospectus, the Prospectus, the Preliminary Supplemented Prospectus, the Final
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<PAGE> 15
Supplemented Prospectus or any other prospectus relating to the Securities (or
any amendment or supplement thereto); and provided, further, that neither the
Company nor the Guarantor shall be liable to any Underwriter under the
indemnity agreement in this subsection (a) with respect to the Preliminary
Supplemented Prospectus to the extent that any such loss, liability, claim,
damage or expense of such Underwriter results from the fact such Underwriter
sold Preferred Securities to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Final Supplemented Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then further amended or
supplemented relating to the Securities (excluding documents incorporated by
reference) in any case where such delivery is required by the Act if the
Company and the Guarantor have previously furnished copies thereof in
sufficient quantity to such Underwriter and the loss, liability, claim, damage
or expense of such Underwriter results from an untrue statement or omission of
a material fact contained in the Preliminary Supplemented Prospectus which was
corrected in the Final Supplemented Prospectus or in the Prospectus as then
further amended or supplemented relating to the Securities (excluding documents
incorporated by reference).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, the Guarantor, their directors, each of their officers who signed
the Registration Statement, and each person, if any, who controls the Company
or the Guarantor within the meaning of Section 15 of the Act against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to the untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
Preliminary Prospectus, the Prospectus, the Preliminary Supplemented
Prospectus, the Final Supplemented Prospectus or any other prospectus relating
to the Securities (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company or to the
Guarantor by such underwriter through the Representatives expressly for use in
the Registration Statement (or any amendment thereto) or such Preliminary
Prospectus, the Prospectus, the Preliminary Supplemented Prospectus, the Final
Supplemented Prospectus or any other Prospectus relating to the Securities (or
any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. In
case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under subsection (a) or (b) hereof for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company and the
Guarantor, on the one hand, and the Underwriters, on the other hand, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated by said indemnity agreement incurred by the Company
and the Guarantor, on the one hand, and one or more of the Underwriters, on the
other hand, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting compensation paid by the Guarantor appearing on the cover page of
the Final Supplemented Prospectus bears to the initial public offering price
appearing thereon and the Company and the Guarantor are responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
15
<PAGE> 16
fraudulent misrepresentation. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act
shall have the same rights to contribution as such Underwriter, and the general
partner of the Company, each director of the Guarantor, each officer of the
Guarantor who signed the Registration Statement, and each person, if any, who
controls the Company or the Guarantor within the meaning of Section 15 of the
Act shall have the same rights to contribution as the Company and the
Guarantor.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement and
the Pricing Agreement, or contained in certificates of officers of the Company
and the Guarantor submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company or the
Guarantor, and shall survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement. (a) The Representatives may
terminate this Agreement, by notice to the Company and the Guarantor, at any
time at or prior to Closing Time (i) if there has been, since the date of this
Agreement or since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the business or the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or of the Guarantor and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or any outbreak of hostilities or
escalation of any existing hostilities or calamity or crisis, the effect of
which is such as to make it, in the reasonable judgment of the Representatives,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in the Securities has been suspended by the
Commission, or if trading generally on either the American Stock Exchange or
the New York Stock Exchange has been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by either of said Exchanges or by order of the Commission or any
other governmental authority, or if a banking moratorium has been declared by
either Federal, New York or Delaware authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4 and except that the provisions of Sections 6 and 7
shall survive termination.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Preferred
Securities which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) If the number of Defaulted Securities does not exceed 10%
of the total number of Preferred Securities, the non- defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear
to the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
total number of Preferred Securities, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Final Supplemented
Prospectus or in any other documents or arrangements.
16
<PAGE> 17
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated at Merrill Lynch World Headquarters, World
Financial Center, North Tower, New York, New York 10281-1201, attention of
Jerry R. Hilligoss, Managing Director, Fax No. (212) 449-8636; notices to the
Company or the Guarantor shall be directed to it c/o the Guarantor, 1400 Smith
Street, Houston, Texas 77002, attention of Secretary, Fax No. (713) 853-2534.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriters, the Company and
the Guarantor and their respective successors. Nothing expressed or mentioned
in this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters, the Company
and the Guarantor and their respective successors and the controlling persons
and officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the Underwriters, the Company and the Guarantor and their respective
successors and legal representatives, and said controlling persons and officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time unless otherwise
indicated.
17
<PAGE> 18
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts will become a binding agreement among the
Underwriters, the Company and the Guarantor in accordance with its terms.
Very truly yours,
ENRON CAPITAL RESOURCES, L.P.
By Enron Corp., as general partner
By________________________________
Name:
Title:
ENRON CORP.
By_______________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
PAINEWEBBER INCORPORATED,
PRUDENTIAL SECURITIES INCORPORATED,
RAUSCHER PIERCE REFSNES, INC.,
SMITH BARNEY INC.,
as Representatives of the several Underwriters
By Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By_____________________________
Title:
Investment Banking Group
18
<PAGE> 19
SCHEDULE I
LIST OF MATERIAL SUBSIDIARIES
Citrus Corp.
Enron Gas Processing Company
Enron Gas Services Corp.
Enron International Inc.
Enron Oil & Gas Company
Enron Power Corp.
Florida Gas Transmission Company
Houston Pipe Line Company
Northern Natural Gas Company
Transwestern Pipeline Company
19
<PAGE> 20
SCHEDULE A
Number of
Name of Underwriter Shares
------------------- ------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 472,000
PaineWebber Incorporated 472,000
Prudential Securities Incorporated 472,000
Rauscher Pierce Refsnes, Inc. 472,000
Smith Barney Inc. 472,000
Robert W. Baird & Co. Incorporated 30,000
Bear, Stearns & Co., Inc. 30,000
Credit Lyonnais Securities (USA) Inc. 30,000
Dillon, Read & Co., Inc. 30,000
Donaldson, Lufkin & Jenrette Securities
Corporation 30,000
A.G. Edwards & Sons, Inc. 30,000
Howard, Weil, Labouisse, Friedrichs Incorporated 30,000
Kidder, Peabody & Co. Incorporated 30,000
Oppenheimer & Co., Inc. 30,000
Piper Jaffray Inc. 30,000
Raymond James & Associates, Inc. 30,000
Wertheim Schroder & Co. Incorporated 30,000
Advest, Inc. 10,000
Apex Securities Inc. 10,000
J.C. Bradford & Co. 10,000
JW Charles Securities, Inc. 10,000
Cowen & Company 10,000
Dain Bosworth Incorporated 10,000
Doft & Co., Inc. 10,000
Fahnestock & Co., Inc. 10,000
First Albany Corporation 10,000
First of Michigan Corporation 10,000
Furman Seiz Incorporated 10,000
Gruntal & Co., Incorporated 10,000
Interstate/Johnson Lane Corporation 10,000
Janney Montgomery Scott Inc. 10,000
Josephthal Lyon & Ross Incorporated 10,000
Legg Mason Wood Walker, Incorporated 10,000
McDonald & Company Securities, Inc. 10,000
Morgan Keegan & Company, Inc. 10,000
The Ohio Company 10,000
The Robinson-Humphrey Company, Inc. 10,000
Rodman & Renshaw, Inc. 10,000
Roney & Co. 10,000
Stifel, Nicolaus & Company, Incorporated 10,000
Sutro & Co. Incorporated 10,000
Tucker Anthony Incorporated 10,000
US Clearing Corp. 10,000
Utendahl Capital Partners, L.P. 10,000
Wheat, First Securities, Inc. 10,000
---------
Total 3,000,000
20
<PAGE> 21
SCHEDULE B
(Form of letter of accountants
to be delivered pursuant to Section 5(d))
Pursuant to Section 5(d) of the Purchase Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Guarantor and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma
financial information examined) by them and included or incorporated
by reference in the Registration Statement or the Prospectus comply as
to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the
related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the consolidated interim financial statements, selected financial
data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited
financial statements of the Guarantor for the periods specified in
such letter, as indicated in their reports thereon, copies of which
have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the
Guarantor for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Guarantor's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Guarantor's Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Guarantor and its subsidiaries, inspection of the
minute books of the Guarantor and its subsidiaries since the date of
the latest audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the Guarantor
and its subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe
that:
(A) the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included or incorporated by reference
in the Guarantor's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or are not in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with the basis for
the audited consolidated statements of income, consolidated
balance sheet and consolidated statements of cash flows
included or incorporated by reference in the Guarantor's
Annual Report on Form 10-K for the most recent fiscal year;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts
21
<PAGE> 22
in the audited consolidated financial statements included or
incorporated by reference in the Guarantor's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited financial statements included or
incorporated by reference in the Guarantor's Annual Report on
Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there has been any change in
capital stock, or any increase in combined short-term and
long-term debt of the Guarantor or any decrease in
consolidated net assets or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases as compared to the corresponding
period in the preceding year in consolidated income before
extraordinary items, net income or earnings per share of
common stock, or any increases in any items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except
in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(v) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Guarantor and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference) or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by
the Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Guarantor and its subsidiaries and have
found them to be in agreement.
For purposes of this letter, all references in this Schedule B to the
Prospectus shall be deemed to refer to the Final Supplemented Prospectus in the
form in which it is proposed to be filed but otherwise as defined in the
Purchase Agreement (including all documents incorporated by reference therein)
as of the date of the letter delivered on the date of the Purchase Agreement
and to the Final Supplemented Prospectus as defined in the Purchase Agreement
(including all documents incorporated by reference therein), or, if the
Prospectus has at such time been further amended or supplemented, to the
Prospectus as so further amended or supplemented, as of the date of the letter
delivered at Closing Time.
22
<PAGE> 23
EXHIBIT A
3,000,000 PREFERRED SECURITIES
ENRON CAPITAL RESOURCES, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
9% CUMULATIVE PREFERRED SECURITIES,
SERIES A (LIQUIDATION PREFERENCE
$25 PER PREFERRED SECURITY) GUARANTEED BY
ENRON CORP.
(A DELAWARE CORPORATION)
PRICING AGREEMENT
July 27, 1994
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
PAINEWEBBER INCORPORATED,
PRUDENTIAL SECURITIES INCORPORATED,
RAUSCHER PIERCE REFSNES, INC.,
SMITH BARNEY INC.,
As representatives of the several Underwriters,
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Merrill Lynch World Headquarters,
World Financial Center,
North Tower,
New York, New York 10281-1209.
Dear Sirs:
Reference is made to the Purchase Agreement dated July 27, 1994 (the
"Purchase Agreement") relating to the purchase by the several Underwriters
named in Schedule A thereto of the above shares of 9% Cumulative Preferred
Securities, Series A (the Preferred Securities) of Enron Capital Resources,
L.P. (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company and the
Guarantor agree with the Underwriters as follows:
1. The initial public offering price per share of the
Preferred Securities shall be $25.00.
2. The purchase price per share for the Preferred Securities
to be paid by the several Underwriters shall be $25.00, being an
amount equal to the initial public offering price set forth above.
3. The compensation per share of Preferred Securities to be
paid by the Guarantor to the several Underwriters in respect of their
commitments hereunder shall be $.7875, provided that such compensation
per share for sales of 10,000 or more shares of Preferred Securities
to any single purchaser will be $.50.
This agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed in said State.
23
<PAGE> 24
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters and us in accordance with its terms.
Very truly yours,
ENRON CAPITAL RESOURCES, L.P.
By Enron Corp., as general partner
By________________________________
Name:
Title:
ENRON CORP.
By_______________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
PAINEWEBBER INCORPORATED,
PRUDENTIAL SECURITIES INCORPORATED,
RAUSCHER PIERCE REFSNES, INC.,
SMITH BARNEY INC.,
as Representatives of the several Underwriters
By Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By_____________________________
Title:
Investment Banking Group
24
<PAGE> 1
EXHIBIT 3.1
===============================================================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENRON CAPITAL RESOURCES, L.P.
================================================================================
<PAGE> 2
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENRON CAPITAL RESOURCES, L.P.
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ENRON
CAPITAL RESOURCES, L.P. (this "Agreement") is made and entered into as of
August 3, 1994, by and among Enron Corp., a Delaware corporation ("Enron"),
as the General Partner, and Organizational Partner, Inc., a Delaware
corporation, as the Organizational Limited Partner, together with any other
Persons who become Partners (as defined below) in the Company (as defined
below) or parties hereto as provided herein.
FOR AND IN CONSIDERATION OF the mutual covenants, rights and
obligations set forth in this Agreement, the benefits to be derived therefrom
and other good and valuable consideration, the receipt and the sufficiency of
which each Partner acknowledges and confesses, the Partners agree as follows:
ARTICLE I
DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"Act" means the Delaware Revised Uniform Limited Partnership
Act and any successor statute, as amended from time to time.
"Action" has the meaning set forth in Section 3.04(c).
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with that
first Person. As used in this definition, the term "control" includes
(a) with respect to any corporation or other Entity having voting
shares or the equivalent and elected directors, managers or Persons
performing similar functions, the ownership or power to vote, directly
or indirectly, shares or the equivalent representing 50% or more of the
power to vote in the election of directors, managers or Persons
performing similar functions, (b) ownership of 50% or more of the
equity or beneficial interest in any other Entity and (c) the ability
to direct the business and affairs of any Entity by acting as a general
partner, manager or otherwise.
"Agreement" has the meaning given that term in the
introductory paragraph hereof.
"Beneficiaries" has the meaning given that term in Section
5.03(a) hereof.
<PAGE> 3
"Book Entry Interest" means a beneficial interest in
the Preferred Security Certificates, ownership and transfers of which
shall be made through book entries by a Clearing Agency as described in
Section 3.07. ``Business Day'' means any day other than a day on which
banking institutions in The City of New York are authorized or
required by law to close.
"Capital Contribution" means any contribution or
contributions by one or more Partners to the capital of the Company.
"Cause" means a court of competent jurisdiction has entered a
final, non-appealable judgment finding the General Partner liable for
actual fraud, gross negligence or willful or wanton misconduct in its
capacity as general partner of the Company.
"Certificate" means the certificate of limited partnership of
the Company filed on May 26, 1994 with the Secretary of State of
Delaware, as amended or restated from time to time.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is
acting as depository for the Series A Preferred Securities and in whose
name shall be registered a global Preferred Security Certificate and
which shall undertake to effect book entry transfers and pledges of the
Series A Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time
the Clearing Agency effects book entry transfers and pledges of
securities deposited with the Clearing Agency.
"Closing Time" means the time of issuance of the Series A
Preferred Securities pursuant to the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986 and any
successor statute, as amended from time to time.
"Company" has the meaning given that term in Section 2.01(a).
"Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, employees,
representatives or agents of a Partner or its respective Affiliates, or
any employee or agent of the Company or its Affiliates.
"Departing Partner" has the meaning given that term in Section
11.03.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Dispose," "Disposing," or "Disposition" means a sale,
assignment, transfer, exchange, mortgage, pledge, grant of a security
interest or other disposition or encumbrance or the acts thereof.
-2-
<PAGE> 4
"Dividends" means all distributions, other than distributions
on liquidation, of income paid or payable to any Limited Partner who is
a Preferred Security holder pursuant to the terms of the Preferred
Securities held by such Limited Partner, including any additional
distributions payable on Dividends in arrears.
"Enron" means Enron Corp., a Delaware corporation.
"Entity" means a corporation, limited liability company,
partnership, limited partnership, venture, trust, estate, governmental
entity or other entity.
"Event of Withdrawal" has the meaning given that term in
Section 11.01.
"Final Supplemented Prospectus" means the Company's
Prospectus Supplement (including the Prospectus dated July 15, 1994)
dated July 27, 1994, as filed with the Securities and Exchange
Commission, relating to the public offering of the Series A Preferred
Securities by the Company.
"General Interest Rate" means a rate per annum equal to the
lesser of (a) a varying rate per annum that is equal to the interest
rate publicly quoted by Chemical Bank, N.A. from time to time as its
prime commercial or similar reference interest rate, with adjustments
in that varying rate to be made on the same date as any change in that
rate and (b) the maximum rate permitted by applicable law.
"General Partner" means Enron as general partner as provided
in this Agreement.
"Guarantee" means the Payment and Guarantee Agreement dated
as of the date hereof executed and delivered by Enron for the benefit
of the holders from time to time of the Series A Preferred Securities.
"Indemnified Person" means the General Partner, any Affiliate
of the General Partner or any officers, directors, shareholders,
partners, employees, representatives or agents of the General Partner
or any of its Affiliates, or any employee or agent of the Company or
its Affiliates.
"Limited Partner" means the Organizational Limited Partner or
any Person hereafter admitted to the Company as a limited partner as
provided in this Agreement, but does not include any Person who has
ceased to be a limited partner in the Company.
"Loan" means the loan to Enron of the proceeds of the Series
A Preferred Securities and the General Partner's contribution referred
to in Section 3.01(c).
"Loan Agreement" means the Loan Agreement dated as of the
date hereof executed and delivered by Enron and the Company governing
the Loan.
-3-
<PAGE> 5
"majority in liquidation preference of the Preferred
Securities" means the holders of a series of Preferred Securities
entitled to vote on a proposal (or if there is more than one series of
Preferred Securities entitled to vote on such proposal the holders of
all series of Preferred Securities so entitled to vote, voting as a
class) whose liquidation preference (including the stated preferential
amount payable upon liquidation, plus accrued and unpaid Dividends to
the date upon which voting rights are determined) represents more than
50% of the total liquidation preference of all of the Preferred
Securities of such series (or of all such series entitled to vote on
such proposal).
"Net Income" and "Net Loss" mean, respectively, for any
period the income and loss of the Company for such period as determined
in accordance with the method of accounting followed by the Company for
federal income tax purposes, including, for all purposes, any income
exempt from tax and any expenditures of the Company which are described
in Code Section 705(a)(2)(B).
"Obligations" has the meaning given that term in Section
5.03(a) hereof.
"Organizational Limited Partner" means Organizational
Partner, Inc., a Delaware corporation, in its capacity as the
organizational limited partner of the Company pursuant to this
Agreement.
"Partner" means any General Partner or Limited Partner.
"Partnership Interest" means the interest of a Partner in the
Company, including, without limitation, rights to distributions
(liquidating or otherwise), allocations and information and to consent
or approve.
"Person" has the meaning given that term in Section
17-101(12) of the Act.
"Preferred Security Certificate" means a certificate in such
form as may be adopted by the General Partner in its sole discretion,
issued by the Company evidencing ownership of one or more Preferred
Securities.
"Preferred Securities" means the Partnership Interests of
Limited Partners issued pursuant to Section 3.04; provided, that each
Preferred Security of any series of Preferred Securities at any time
outstanding shall represent the same fractional part of the Partnership
Interests of all Limited Partners holding Preferred Securities of such
series as each other Preferred Security of such series.
"Preferred Security Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency).
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"Purchase Price" means the price to be paid to the Company
for the Series A Preferred Securities to be issued at the Closing Time
pursuant to the Underwriting Agreement and, with respect to Preferred
Securities other than the Series A Preferred Securities, the price
determined by the General Partner at which the Preferred Securities
will be sold by the Company.
"Record Holder" and "holder" means the Person in whose name
a Preferred Security is registered on the books of the Transfer Agent
as contemplated in Section 3.06(a).
"Series A Preferred Securities" means the series of Preferred
Securities created pursuant to the Action in Article IV hereof.
"Series A Dividends" means Dividends paid or payable on
Series A Preferred Securities.
"Sharing Ratio" means, from and after the Closing Time, 21%
with respect to the General Partner and 79% with respect to the Limited
Partners.
"66-2/3% in liquidation preference of the Preferred
Securities" means the holders of a series of Preferred Securities
entitled to vote on a proposal (or if there is more than one series of
Preferred Securities entitled to vote on such proposal the holders of
all series of Preferred Securities so entitled to vote, voting as a
class) whose liquidation preference (including the stated preferential
amount payable upon liquidation, plus accrued and unpaid Dividends to
the date upon which voting rights are determined) represents more than
66-2/3% of the total liquidation preference of all of the Preferred
Securities of such series (or of all such series entitled to vote on
such proposal).
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Company pursuant to Section 3.06 in place
of and with all the rights of a Limited Partner and who is shown as a
Limited Partner on the books and records of the Company.
"Transfer Agent" means the Company or such bank, trust
company or other Person (including, without limitation, the General
Partner or one of its Affiliates) as shall be appointed from time to
time by the General Partner to act as registrar and transfer agent for
the Preferred Securities.
"Underwriting Agreement" means the Purchase Agreement and
related Pricing Agreement, each dated July 27, 1994, among Enron, the
Company and the underwriters named therein.
"Withdrawal Opinion of Counsel" has the meaning given that
term in Section 11.01(b).
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1.02 OTHER DEFINITIONS. Other terms defined herein have the meanings
so given them.
1.03 REFERENCES. All references herein to one gender shall include the
others and the singular shall include the plural and vice versa as appropriate.
All references to an Entity shall be deemed to include its successors and
assigns, to the extent succession or assignment is not restricted by this
Agreement. Whenever the context requires, the gender of all words used in this
Agreement includes the masculine, feminine and neuter. Unless otherwise
specified, all references to "Articles" and "Sections" refer to articles
and sections of this Agreement.
ARTICLE II
ORGANIZATION
2.01 FORMATION. (a) The General Partner and the Organizational
Limited Partner have previously formed Enron Capital Resources, L.P. as a
limited partnership, referred to herein as the "Company," pursuant to the
provisions of the Delaware Act and hereby amend and restate the original
Agreement of Limited Partnership of Enron Capital Resources, L.P. in its
entirety. Subject to the provisions of this Agreement, the General Partner and
the Organizational Limited Partner hereby continue the Company as a limited
partnership pursuant to the provisions of the Delaware Act. Except as
expressly provided to the contrary in this Agreement, the rights and
obligations of the Partners and the administration, dissolution and termination
of the Company shall be governed by the Delaware Act. All Partnership
Interests shall constitute personal property of the owner thereof for all
purposes.
(b) In connection with the formation of the Company, Enron has been
admitted as a general partner of the Company, and the Organizational Limited
Partner has been admitted as a limited partner of the Company. As of the
Closing Time, after giving effect to the transactions contemplated by Section
4.01 hereof, the interest in the Company of the Organizational Limited Partner
shall be terminated and the Organizational Limited Partner shall withdraw as a
limited partner of the Company.
2.02 NAME. The name of the Company is "Enron Capital Resources,
L.P." and all Company business must be conducted in that name or such other
names that comply with applicable law as the General Partner may select from
time to time.
2.03 REGISTERED OFFICE; REGISTERED AGENT; OTHER OFFICES. The
registered office of the Company in the State of Delaware shall be at such
place as the General Partner may designate from time to time. The registered
agent for service of process on the Company in the State of Delaware or any
other jurisdiction shall be such Person or Persons as the General Partner may
designate from time to time. The Company may have such other offices as the
General Partner may designate from time to time.
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<PAGE> 8
2.04 PURPOSES. The purpose and nature of the business to be
conducted by the Company shall be to issue Preferred Securities from time to
time in accordance with this Agreement and to lend the net proceeds of the sale
thereof (together with the Capital Contributions required to be made by the
General Partner in respect thereof) to Enron (or any Affiliate of Enron
designated by it, provided that the obligations of such Affiliate to repay such
loan and interest thereon are guaranteed by Enron under an agreement containing
subordination provisions similar to the subordination provisions of the Loan
Agreement) and to engage in any other business or activity that now or
hereafter may be necessary, incidental, proper, advisable or convenient to
accomplish the foregoing purposes and that is not forbidden by the law of the
jurisdiction in which the Company engages in that business; provided that the
Company shall have no power to borrow money, to become liable for the
borrowings of any third party or to engage in any financial or other trade or
business. Specifically, the Company may invest in investment assets, such as
the Loan, but may not invest in assets which are likely to result in Company
liabilities, such as active business assets.
2.05 FOREIGN QUALIFICATION. Prior to the Company's conducting business
in any jurisdiction other than Delaware, the General Partner shall cause the
Company to comply, to the extent those matters are reasonably within the
control of the General Partner, with all requirements necessary to qualify the
Company as a foreign limited partnership (or a partnership in which the Limited
Partners have limited liability) in that jurisdiction. At the request of the
General Partner, each Partner shall execute, acknowledge, swear to and deliver
all certificates and other instruments conforming with this Agreement that are
necessary or appropriate to continue and terminate the Company as a limited
partnership under the law of the State of Delaware and to qualify, continue and
terminate the Company as a foreign limited partnership (or a partnership in
which the Limited Partners have limited liability) in all other jurisdictions
in which the Company may conduct business, and to this end the General Partner
may use the power of attorney described in Section 7.07.
2.06 TERM. The Company shall continue in existence until its business
and affairs are wound up following dissolution automatically at the close of
Company business on December 31, 2084, or such earlier time as this Agreement
may specify.
2.07 MERGER OR CONSOLIDATION. Except as otherwise provided in Section
3.06(f), the Company may merge or consolidate with or into another limited
partnership or other Entity, or enter into an agreement to do so, only with the
consent of the General Partner and the holders of 66-2/3% in liquidation
preference of the Preferred Securities.
ARTICLE III
ISSUANCE AND DISPOSITION OF INTERESTS
3.01 PARTNERS. (a) The General Partner and the Organizational Limited
Partner have previously formed the Company as a limited partnership pursuant to
the provisions of the Delaware Act and were admitted to the Company as a
general partner and a limited partner, respectively.
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(b) Without necessity for execution of this Agreement, upon receipt by
a Person of a Preferred Security Certificate and payment of the Purchase Price
for the Preferred Securities represented by such Preferred Security Certificate
in connection with the initial issuance by the Company of such Preferred
Securities, which shall be deemed to constitute a request by such Person that
the books and records of the Company reflect such Person's admission as a
Limited Partner, such Person shall be admitted to the Company as a Limited
Partner and shall become bound by this Agreement.
(c) At the Closing Time, the General Partner will pay to the Company
as a Capital Contribution an aggregate of $19,936.709 in cash, which amount is
equal to 21% of the total Capital Contributions to be made at the Closing Time,
including the Capital Contributions of the holders of Series A Preferred
Securities issued at the Closing Time, as provided in Section 4.01 hereof; and
each Person who acquires a Series A Preferred Security in connection with the
initial issuance by the Company of Series A Preferred Securities will pay to
the Company as a Capital Contribution cash in an amount equal to the Purchase
Price for such Series A Preferred Security. After the Closing Time, the
General Partner may issue no additional Limited Partner interests in the
Company other than Preferred Securities authorized as provided in Section 3.04
hereof and issued for cash paid to the Company as a Capital Contribution, and
upon each such issuance of additional Preferred Securities the General Partner
shall pay to the Company as a Capital Contribution cash in an amount equal to
21% of the sum of (i) the total amount paid to the Company as a Capital
Contribution for such additional Preferred Securities and (ii) such Capital
Contribution of the General Partner. The General Partner agrees that it will
take such action as is necessary, including the making of additional Capital
Contributions, to ensure that at all times at least 21% of the total value of
the Company and at least 21% of each item of capital, income, gain, loss,
deduction and credit of the Company will be attributable to its interest as
General Partner.
(d) The name and mailing address of each Partner and the amount paid
by such Partner to the Company as a Capital Contribution shall be listed on the
books and records of the Company. The General Partner shall be required to
update the books and records from time to time as necessary to accurately
reflect the information therein. A Series A Preferred Security holder's
interest in the Company shall be represented by the Preferred Security
Certificates held by such Series A Preferred Security holder. No Limited
Partner, including a Series A Preferred Security Holder, shall have an interest
in specific Company property.
3.02 REPRESENTATIONS AND WARRANTIES. Each of the General Partner and
the Organizational Partner represents and warrants to the Company and each
other Partner that (a) it is duly organized, validly existing and in good
standing under the law of the state of its incorporation and is duly qualified
and in good standing as a foreign corporation in the jurisdiction of its
principal place of business, (b) that it has full corporate power and authority
to enter into this Agreement and to perform its obligations hereunder, and all
necessary actions by its board of directors, shareholders and other Persons
necessary for the due authorization, execution, delivery and performance of
this Agreement by it have been duly taken, (c) that it has duly executed and
delivered this Agreement, and (d) that its
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authorization, execution, delivery and performance of this Agreement do not
conflict with any other agreement or arrangement to which it is a party or by
which it is bound.
3.03 ADDITIONAL PARTNERS. Additional Persons may be admitted to the
Company and new Partnership Interests issued to existing or new Partners only
in accordance with the provisions of this Article III. To be effective, any
such creation of Partnership Interests and admissions must be reflected in an
Action as provided in Section 3.04 hereof.
3.04 ISSUANCES OF PREFERRED SECURITIES. (a) The General Partner is
hereby authorized to cause the Company to issue, in addition to the Partnership
Interests issued pursuant to Section 3.01(a), Preferred Securities, in one or
more series, for any Company purpose, at any time or from time to time, for
such consideration and on such terms and conditions as shall be established by
the General Partner in its sole discretion, all without the approval of any
Limited Partners except as otherwise provided in this Agreement or any Action
creating any series of Preferred Securities. The General Partner shall have
sole discretion, subject to the guidelines set forth in this Section 3.04 and
the requirements of the Delaware Act, in determining the consideration and
terms and conditions with respect to any issuance of Preferred Securities.
(b) Notwithstanding the foregoing, the proceeds received by the
Company from the issuance of any series of Preferred Securities, together with
the proceeds of any Capital Contribution of the General Partner made at the
time of such issuance as required by Section 3.01(c) hereof, shall be loaned by
the Company:
(i) upon issuance of the Series A Preferred Securities to be
issued at the Closing Time, to Enron pursuant to the Loan Agreement; or
(ii) upon issuance of any series of Preferred Securities
issued after the Closing Time, either (x) to Enron pursuant to a loan
agreement containing terms and provisions similar to the Loan Agreement
and ranking pari passu with the Loan Agreement or (y) to an Affiliate
of Enron designated by it, provided that the obligations of such
Affiliate to repay such loan and interest thereon are guaranteed by
Enron under an agreement ranking pari passu with the Loan Agreement and
containing subordination provisions similar to the subordination
provisions of the Loan Agreement.
(c) Preferred Securities to be issued by the Company shall be issuable
from time to time in one or more series, with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties as shall be fixed by the General Partner in the exercise of its sole
discretion (subject to the limitations herein and under Delaware law) and
reflected in a written action or actions approved by the General Partner (each,
an ``Action,'' each of which shall be deemed an amendment to this Agreement).
The Action with respect to the Series A Preferred Securities is set forth in
Article IV. Each Action shall provide for the issue of Preferred Securities of
a particular series and shall set forth, without limitation, (i) the
allocations of items of Company income, gain, loss, deduction and credit to
such series of Preferred Securities; (ii) the right of such series of Preferred
Securities to share in Company Dividends; (iii) the rights of such series of
Preferred
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Securities upon dissolution and liquidation of the Company; (iv) whether such
series of Preferred Securities is redeemable by the Company and, if so, the
price at which, and the terms and conditions upon which, such series of
Preferred Securities may be redeemed by the Company; (v) whether such series of
Preferred Securities is issued with the privilege of conversion and, if so, the
rate at which, and the terms and conditions upon which, such series of
Preferred Securities may be converted into any other series of Preferred
Securities or other property; (vi) the terms and conditions upon which such
series of Preferred Securities will be issued, evidenced by certificates and
assigned or transferred; and (vii) the right, if any, of such series of
Preferred Securities to vote on Company matters, including, without limitation,
matters relating to the relative rights, preferences and privileges of such
series. Without the consent of the holders of 66-2/3% in liquidation
preference of the Preferred Securities, however, the General Partner may not
authorize the issuance of any Preferred Securities or any other Limited Partner
interest in the Company, unless such interest is a series of Preferred
Securities that ranks pari passu with each other series of Preferred Securities
then outstanding with respect to participation in the profits and assets of the
Company, including the right to receive Dividends and the right to receive
payments out of the assets of the Company upon voluntary or involuntary
dissolution, winding up or termination of the Company. The General Partner may
execute, swear to, acknowledge, deliver, file and record whatever documents may
be required in connection with the issue from time to time of Preferred
Securities so ranking pari passu in one or more series as shall be necessary,
convenient or desirable to reflect the issue of such series. The General
Partner shall do all things it deems to be appropriate or necessary to comply
with the Act and is authorized and directed to do all things it deems to be
necessary or permissible in connection with any such future issuance, including
compliance with any statute, rule, regulation or guideline of any federal,
state or other governmental agency or any securities exchange. All Preferred
Securities shall rank senior to the General Partner's Partnership Interest with
respect to participation in the profits and assets of the Company, including
the right to receive distributions and the right to receive payments out of the
assets of the Company upon voluntary or involuntary dissolution, winding up or
termination of the Company. All Preferred Securities redeemed, purchased or
otherwise acquired by the Company (including Preferred Securities surrendered
for conversion or exchange) shall be cancelled.
3.05 NO PREEMPTIVE RIGHTS. No Person shall have any preemptive,
preferential or other similar right with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued or hereafter created; (c) issuance of any
obligations, evidences of indebtedness or other securities of the Company
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase or subscribe to, any such Partnership Interests; (d)
issuance of any right of subscription to or right to receive, or any warrant or
option for the purchase of, any such Partnership Interests; or (e) issuance or
sale of any other securities that may be issued or sold by the Company.
3.06 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (a) The
General Partner shall cause to be kept on behalf of the Company a register in
which, subject to such reasonable regulations as it may prescribe and subject
to the provisions of Section 3.06(b),
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the General Partner will provide for the registration and transfer of Preferred
Securities. The General Partner shall have the right to appoint a Transfer
Agent for the purpose of registering Preferred Securities and transfers of such
Preferred Securities as herein provided, and the General Partner hereby
appoints itself as initial Transfer Agent. The Company shall not recognize
transfers of Preferred Security Certificates unless same are effected in the
manner described in this Section 3.06. Upon surrender for registration of
transfer of any Preferred Securities evidenced by a Preferred Security
Certificate, and subject to the provisions of Section 3.06(b), the Company
shall execute, and the Transfer Agent shall countersign (provided that no such
countersignature shall be required so long as the Company or the General
Partner is the Transfer Agent) and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Preferred Security Certificates evidencing the
same aggregate number of Preferred Securities as was evidenced by the Preferred
Security Certificate so surrendered.
(b) The Company shall not recognize any transfer of Preferred
Securities until the Preferred Security Certificates evidencing such Preferred
Securities are surrendered for registration of transfer. No charge shall be
imposed by the Company for such transfer, provided, that, as a condition to the
issuance of any new Preferred Security Certificate under this Section 3.06, the
General Partner may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed with respect thereto.
(c) By transfer of a Preferred Security in accordance with this
Section 3.06, the transferor shall be deemed to have given the transferee the
right to seek admission as a Substituted Limited Partner, and each transferee
of a Preferred Security (including, without limitation, any nominee holder or
an agent acquiring such Preferred Security for the account of another Person)
shall become a Substituted Limited Partner with respect to the Preferred
Securities so transferred to such Person when any such admission is shown on
the books and records of the Transfer Agent.
(d) Preferred Securities may be transferred only in the manner
described in this Section 3.06. The transfer of any Preferred Securities and
the admission of any new Partner shall not constitute an amendment to this
Agreement.
(e) Each distribution in respect of Preferred Securities shall be paid
by the Company, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holders thereof as of the record date set
for the distribution. Such payment shall constitute full payment and
satisfaction of the Company's liability in respect of such payment, regardless
of any claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.
(f) The General Partner may not transfer all or any part of its
Partnership Interest to any Person without the prior consent of the holders of
66-2/3% in liquidation preference of the Preferred Securities; provided that
the General Partner may merge with or into another entity, or permit another
entity to merge with or into it, or sell, transfer or lease all or
substantially all of its assets to another entity, in each case without the
consent
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of the holders of Preferred Securities, if: (i) at such time no Event of
Default (as defined in the Loan Agreement) has occurred and is continuing, or
would occur as a result of such merger, sale, transfer or lease, (ii) Dividends
on Preferred Securities are not in arrears and (iii) the General Partner is the
survivor of such merger or the survivor of such merger or entity to which the
General Partner's assets are sold, transferred or leased is an entity organized
under the laws of the United States or any state thereof, assumes all of the
General Partner's obligations under this Agreement, the Loan Agreement and the
Guarantee (and similar agreements relating to any series of Preferred
Securities that may be issued after the Closing Time) and becomes the General
Partner.
3.07 BOOK ENTRY INTERESTS. Unless otherwise stated in the Action
creating a series of Preferred Securities, the Preferred Security Certificates,
on original issuance, will be issued in the form of one or more global
Preferred Security Certificate or Preferred Security Certificates representing
the Book Entry Interests, to be delivered to DTC, the initial Clearing Agency,
by, or on behalf of, the Company. Such Preferred Security Certificate or
Preferred Security Certificates shall initially be registered on the books and
records of the Company in the name of Cede & Co., the nominee of DTC, and no
Preferred Security Owner will receive a definitive Preferred Security
Certificate representing such Preferred Security Owner's interests in such
Preferred Security Certificate, except as provided in Section 3.10. Unless and
until definitive, fully registered Preferred Security Certificates (the
``Definitive Preferred Security Certificates'') have been issued to the
Preferred Security Owners pursuant to Section 3.10:
(i) The provisions of this Section 3.07 shall be in full
force and effect;
(ii) The Company and the General Partner shall be entitled to
deal with the Clearing Agency for all purposes of this Agreement
(including the payment of Dividends on the Preferred Security
Certificates and receiving approvals, votes or consents hereunder) as
the Preferred Security holder and the sole holder of the Preferred
Security Certificates and shall have no obligation to any Preferred
Security Owner;
(iii) To the extent that the provisions of this Section 3.07
conflict with any other provisions of this Agreement, the provisions of
this Section 3.07 shall control; and
(iv) The rights of the Preferred Security Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred Security
Owners and the Clearing Agency Participants. DTC will make book entry
transfers among the Clearing Agency Participants and receive and
transmit payments of Dividends on the Preferred Security Certificates
to such Clearing Agency Participants.
3.08 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Preferred Security holders is required under this
Agreement, unless and until Definitive
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Preferred Security Certificates shall have been issued to the Preferred
Security Owners pursuant to Section 3.10, the General Partner shall give all
such notices and communications specified herein to be given to the Preferred
Security holders to the Clearing Agency and shall have no obligations to the
Preferred Security Owners.
3.09 APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If any Clearing Agency
elects to discontinue its services as securities depository with respect to the
Preferred Securities, the General Partner may, in its sole discretion, appoint
a successor Clearing Agency with respect to the Preferred Securities.
3.10 DEFINITIVE PREFERRED SECURITY CERTIFICATES; APPOINTMENT OF PAYING
AGENT(S). If (i) a Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities or any series
thereof and a successor Clearing Agency is not appointed within 90 days after
such discontinuance pursuant to Section 3.09 or (ii) the Company elects to
terminate the book entry system through the Clearing Agency, then (a)
Definitive Preferred Security Certificates shall be prepared by the Company and
(b) the General Partner shall authorize one or more Persons (each, a "Paying
Agent") to pay Dividends, redemption payments or liquidation payments on
behalf of the Company with respect to the Preferred Securities or such series,
as applicable. Upon surrender of the global Preferred Security Certificate or
Preferred Security Certificates representing the Book Entry Interests by the
Clearing Agency, accompanied by registration instructions, the General Partner
shall cause Definitive Preferred Security Certificates to be delivered to
Preferred Security Owners in accordance with the instructions of the Clearing
Agency. Neither the General Partner nor the Company shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on such instructions. Any Person receiving a
Definitive Preferred Security Certificate in accordance with this Section 3.10
shall be admitted to the Company as a Limited Partner upon issuance of such
Definitive Preferred Security Certificate and shall be registered on the books
and records of the Company as a Preferred Security holder. The Clearing Agency
or the nominee of the Clearing Agency, as the case may be, shall cease to be a
Limited Partner under this Section 3.10 at the time that at least one
additional Person is admitted to the Company as a Limited Partner in accordance
with this Section 3.10. The Definitive Preferred Security Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the General Partner, as evidenced by its execution
thereof.
ARTICLE IV
ACTION AUTHORIZING SERIES A PREFERRED SECURITIES
4.01 AUTHORIZATION FOR ISSUANCE. A total of 3,000,000 of Series A
Preferred Securities are hereby authorized for issuance at the Closing Time
pursuant to the terms of the Underwriting Agreement. At the Closing Time, the
Company shall issue such Series A Preferred Securities upon receipt of the
Purchase Price as provided in the Underwriting Agreement. The designations,
preferences and relative, participating, optional or other
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special rights, powers and duties relating to the Series A Preferred
Securities are as set forth in this Article IV.
4.02 DIVIDENDS. (a) Series A Dividends are cumulative, accrue from
August 3, 1994 and are payable monthly in arrears on the last day of each
calendar month of each year, commencing August 31, 1994, out of moneys held by
the Company and legally available therefor, except as otherwise provided
herein. The Series A Dividends are fixed at a rate per annum of 9% of $25 per
Series A Preferred Security. Series A Dividends in arrears for more than one
month will accumulate additional Series A Dividends thereon at the rate per
annum of 9% thereof. The amount of Series A Dividends payable for any period
will be computed on the basis of twelve 30-day months and a 360-day year and,
for any period shorter than a full monthly dividend period, will be computed on
the basis of the actual number of days elapsed in such period. Series A
Dividends must be paid on the dates payable to the extent that the General
Partner reasonably anticipates that at the time of payment the Company will
have, and must be paid by the Company to the extent that at the time of
proposed payment it has, (x) funds legally available for the payment of such
Series A Dividends and (y) cash on hand sufficient to permit such payments.
(b) Series A Dividends will be payable to the record holders of Series
A Preferred Securities as they appear on the security register maintained by
the Transfer Agent on the relevant record dates, which will be one Business Day
prior to the relevant payment dates. In the event that any date on which
Series A Dividends are payable is not a Business Day, then payment of the
Series A Dividends payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
4.03 PROHIBITION ON PAYMENTS IN CERTAIN EVENTS. If Series A Dividends
have not been paid in full, the Company shall not:
(a) pay, or set aside for payment, any Dividends on any other
series of Preferred Securities, unless the amount of any Dividends on
any other series of Preferred Securities is paid on such other series
of Preferred Securities and the Series A Preferred Securities on a
pro rata basis on the date such Dividends are paid on such other
series of Preferred Securities, so that
(i) the aggregate amount of Series A Dividends paid on
the Series A Preferred Securities bears to the aggregate amount
of Dividends paid on such other series of Preferred Securities
the same ratio as
(ii) the aggregate of all accrued and unpaid Series A
Dividends in respect of the Series A Preferred Securities bears
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to the aggregate of all accrued and unpaid Dividends in
respect of such other series of Preferred Securities; or
(b) redeem, purchase or otherwise acquire any Preferred
Securities other than the redemption of all outstanding Series A
Preferred Securities at the Redemption Price (as hereinafter defined);
until, in each case, such time as all accrued and unpaid Series A Dividends
shall have been paid in full for all dividend periods terminating on or prior
to, in the case of clause (a), such payment and, in the case of clause (b), the
date of such redemption, purchase or acquisition.
4.04 REDEMPTION. (a) The Series A Preferred Securities are redeemable,
at the option of the Company, in whole or in part from time to time, on or
after August 31, 1999, upon not less than 30 nor more than 60 days' notice, at
the redemption price of $25 per Series A Preferred Security, plus accumulated
and unpaid Series A Dividends to the date fixed for redemption (the
"Redemption Price"). In the event that fewer than all the outstanding Series
A Preferred Securities are to be so redeemed, the Preferred Securities to be
redeemed will be selected as described under "Book-Entry-Only Issuance--The
Depository Trust Company" in the Final Supplemented Prospectus. The Company
may not redeem fewer than all of the outstanding Series A Preferred Securities
unless all accumulated and unpaid Series A Dividends have been paid on all
Series A Preferred Securities for all monthly dividend periods terminating on
or prior to the date of redemption. If a partial redemption would result in a
delisting of the Series A Preferred Securities on any national securities
exchange on which such securities are listed, the Company may only redeem the
Series A Preferred Securities in whole.
(b) If at any time Enron repays or prepays the Loan, the proceeds from
such repayment will be applied to redeem the Series A Preferred Securities at
the Redemption Price upon not less than 30 nor more than 60 days' notice,
provided that no such redemption shall occur if such amounts are reloaned to
Enron in accordance with the following sentence. Such amounts may be reloaned
to Enron, and not used for such redemption, if at the time of each such loan,
and as determined in the judgment of the General Partner and its financial
advisor, (i) Enron is not in bankruptcy, (ii) Enron is not in default on any
loan pertaining to the Series A Preferred Securities, (iii) Enron has made
timely payments on the repaid Loan for the immediately preceding 18 months,
(iv) the Company is not in arrears on payments of Series A Dividends on the
Series A Preferred Securities, (v) Enron is expected to be able to make timely
payment of principal and interest on such loan, (vi) such loan is being made on
terms, and under circumstances, that are consistent with those which a lender
would require for a loan to an unrelated party, (vii) such loan is being made
at a rate sufficient to provide payments equal to or greater than the amount of
Series A Dividends that accrue on the Series A Preferred Securities, (viii) the
senior unsecured long-term debt of Enron is rated BBB- or better by Standard &
Poor's Corporation or "Baa3" or better by Moody's Investors Service, Inc. or
the equivalent by any other nationally recognized statistical rating
organization, (ix) such loan is being made for a term that is consistent with
market circumstances and Enron's financial condition, (x) the term
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of such loan is no more than 30 years, and (xi) the final maturity of such
loan is not later than the 49th anniversary of the issuance of the Series A
Preferred Securities.
(c) In the event that, after the Closing Time, legislation is enacted
or existing law is modified or interpreted in a manner that causes the Company
to be treated as an association taxable as a corporation or otherwise taxable
as an entity for federal or state income tax purposes with respect to its
operations for any period prior to August 31, 1999, the Company, subject to the
consent of Enron, may redeem all, but not less than all, of the Series A
Preferred Securities upon not less than 30 nor more than 60 days' notice at the
Redemption Price, even if such redemption occurs prior to August 31, 1999. For
purposes of the foregoing, such right to redeem shall exist in the event that
the General Partner is advised by independent legal counsel that a substantial
risk exists that the Company will be so treated or taxed as a result of such
legislation, modification or interpretation that occurred after the Closing
Time. If the Company exercises its redemption right pursuant to this Section
4.04(c), the date fixed for redemption shall be no earlier than one Business
Day prior to the first day of the earliest period with respect to which Company
may be so treated as an association taxable as a corporation or otherwise
taxable as an entity for federal or state income tax purposes.
(d) If the Company gives a notice of redemption in respect of Series A
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York time, on the redemption date, the Company will irrevocably pay to the
Record Holders of the Series A Preferred Securities funds sufficient to pay the
applicable Redemption Price or will deposit such funds with the Clearing Agency
(or if no Person acts as Clearing Agency, a bank or trust company having
capital, surplus and undivided profits of at least $100 million) for the
benefit of such Record Holders. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit all rights
of holders of such Series A Preferred Securities so called for redemption will
cease, except the right of the holders of such Preferred Securities to receive
the Redemption Price, but without interest. In the event that any date fixed
for redemption of Series A Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Series A Preferred Securities is improperly withheld or refused and
not paid either by the Company or by Enron pursuant to the Guarantee, Series A
Dividends on such Preferred Securities will continue to accrue at the then
applicable rate, from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
4.05 LIQUIDATION, DISSOLUTION OR WINDING UP. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Series A Preferred Securities at the time outstanding will
be entitled to receive, out of the assets of the Company available for
distribution to Partners after satisfaction of liabilities to creditors as
required by the Delaware Act, an amount equal to $25 per Series A
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Preferred Security and all accumulated and unpaid Series A Dividends to the
date of payment (the "Liquidation Distribution").
(b) If, upon any such liquidation, dissolution or winding up, the
Liquidation Distribution and amounts payable in such event to holders of any
other series of Preferred Securities can be paid only in part because the
Company has insufficient assets available to pay in full the aggregate
Liquidation Distribution and the aggregate maximum liquidation distributions on
any other series of Preferred Securities, then the amounts payable by the
Company on the Series A Preferred Securities and on such other series of
Preferred Securities shall be paid on a pro rata basis, so that
(i) the aggregate amount paid in respect of the Liquidation
Distribution bears to the aggregate amount paid as liquidation
distributions on the other series of Preferred Securities the same
ratio as
(ii) the aggregate Liquidation Distribution bears to the
aggregate maximum liquidation distributions on the other series of
Preferred Securities.
4.06 RIGHT OF HOLDERS TO APPOINT TRUSTEE. If (i) the Company fails to
pay Series A Dividends in full on the Series A Preferred Securities for 18
consecutive monthly dividend periods; (ii) an Event of Default (as defined in
the Loan Agreement relating to the Loan) occurs and is continuing on the Loan;
(iii) Enron is in default on any of its payments or other obligations under the
Guarantee, then the holders of a majority in liquidation preference of the
outstanding Series A Preferred Securities, together with the holders of any
other series of Preferred Securities outstanding having the right to vote for
the appointment of a trustee in such event, acting as a single class, shall be
entitled to appoint and authorize a trustee to enforce the Company's creditor
rights under the Loan against Enron, enforce the obligations undertaken by
Enron under the Guarantee and Section 5.03 hereof, enforce any similar
obligations of Enron relating to any such other series and pay Series A
Dividends and distributions on any such other series to the extent the Company
has funds available to pay such amounts. For purposes of determining whether
the Company has failed to pay Series A Dividends in full for 18 consecutive
monthly Series A Dividends periods, Series A Dividends shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative Series A Dividends have been or contemporaneously are paid with
respect to all monthly Series A Dividend periods terminating on or prior to the
date of payment of such full cumulative Series A Dividends. Not later than 30
days after such right to appoint a trustee arises, the General Partner will
convene a general meeting for the above purpose. If the General Partner fails
to convene such meeting within such 30-day period, the holders of 10% in
liquidation preference of the outstanding Preferred Securities will be entitled
to convene such meeting. The provisions of the Partnership Agreement relating
to the convening and conduct of the general meetings of the partners will apply
with respect to any such meeting. Any trustee so appointed (i) shall not be
admitted as a Partner in the Company or otherwise be deemed a Partner in the
Company, (ii) shall have no liabilities for the debts, liabilities or
obligations of the Company, (iii) shall vacate office immediately if the
Company (or Enron pursuant to the Guarantee) shall have paid in full all
accumulated and unpaid Series A Dividends and
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distributions on any such other series or such default or breach by Enron, as
the case may be, shall have been cured, and the General Partner will continue
the business of the Company without dissolution.
4.07 VOTING. (a) If any amendment to this Agreement is proposed for
adoption by the Partners of the Company providing for, or the General Partner
otherwise proposes to effect, (x) any variation or abrogation of the rights,
preferences and privileges of the Series A Preferred Securities, whether by way
of amendment to this Agreement or otherwise (including, without limitation, the
authorization or issuance of any securities of the Company ranking, as to
participation in the profits or assets of the Company, senior or junior to the
Series A Preferred Securities) or (y) the liquidation, dissolution or winding
up of the Company, then the holders of outstanding Series A Preferred
Securities will be entitled to vote on such proposal as a class with all other
holders of any series of Preferred Securities similarly affected, and such
action shall not be effective except with the approval of the holders of
66-2/3% in liquidation preference of the Preferred Securities; provided,
however, that no such approval shall be required if the liquidation,
dissolution or winding up of the Company is proposed or initiated upon the
initiation of proceedings, or after proceedings have been initiated, for the
liquidation, dissolution or winding up of Enron.
(b) The rights attached to the Series A Preferred Securities will be
deemed not to be varied by the creation or issue of, and no vote will be
required for the creation or issue of, any series of Preferred Securities
ranking pari passu with the Series A Preferred Securities as provided in
Section 3.04. Holders of Series A Preferred Securities will have no preemptive
rights.
ARTICLE V
CAPITAL CONTRIBUTIONS
5.01 CAPITAL CONTRIBUTIONS. Except as otherwise provided in this
Agreement, a Partner shall not have a right to make any Capital Contributions
to the Company. No Capital Contribution may be made other than in cash.
5.02 RETURN OF CONTRIBUTIONS. A Partner is not entitled to the return
of any part of its Capital Contributions or to be paid interest in respect of
either its capital account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Partner. A Partner is
not required to contribute or to lend any cash or property to the Company to
enable the Company to return any Partner's Capital Contributions; provided that
nothing herein shall be deemed to affect the obligations of Enron in Section
5.03 hereof.
5.03 EXPENSE REIMBURSEMENT. (a) Subject to the terms and conditions
hereof, Enron hereby irrevocably and unconditionally guarantees to each person
or entity to whom the Company is now or hereafter becomes indebted or liable
(the "Beneficiaries") (other than obligations to holders of the Preferred
Securities in such holders' capacities as holders of such Preferred Securities;
such obligations being separately guaranteed to the extent set
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forth in the Guarantee), the full payment, when and as due, of any and all such
indebtedness and liabilities of the Company to such Beneficiaries
(collectively, the "Obligations"). The provisions of this Section 5.03 are
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
(b) The provisions of this Section 5.03 will remain in effect until
such time as all of the Preferred Securities issued by the Company shall have
been redeemed in accordance with their terms or shall have been purchased and
cancelled by the Company or Enron; provided, however, that at any time after
the Preferred Securities shall have been so redeemed or purchased and
cancelled, Enron may cancel this Section 5.03 upon 30 days' notice in writing
to the Company. Except as provided in the preceding sentence, this Section
5.03 is continuing, irrevocable, unconditional and absolute.
(c) Enron hereby waives notice of acceptance of this Section 5.03 and
of any Obligation to which it applies or may apply, and Enron hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
(d) The obligations, covenants, agreements and duties of Enron under
this Section 5.03 shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(i) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Company of any express or
implied agreement, covenant, term or condition relating to the
Obligations to be performed or observed by the Company;
(ii) the extension of time for the payment by the Company of
all or any portion of the Obligations or for the performance of any
other obligation under, arising out of, or in connection with, the
Obligations;
(iii) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Beneficiaries with respect
to the Obligations or any action on the part of the Company granting
indulgence or extension of any kind, except that nothing herein shall
require payment by Enron or the Company to any third party of any
obligation barred by any applicable statute of limitations;
(iv) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Company or any of the assets of the Company; or
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(v) the settlement or compromise of any Obligation guaranteed
hereby or any obligation hereby incurred.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, Enron with respect to the happening of any of the foregoing.
(e) A Beneficiary may enforce the provisions of this Section 5.03
directly against Enron, and Enron waives any right or remedy to require that
any action be brought against the Company or any other person or entity before
proceeding against Enron.
5.04 CAPITAL ACCOUNTS. A capital account shall be established and
maintained for each Partner in compliance with Treasury Regulation
Section 1.704-1(b)(2)(iv).
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.01 ALLOCATIONS. Except as provided in Section 6.02,
(a) the Company's Net Income for each calendar month shall be
allocated as follows:
(i) First, to the Record Holders of each series of
Preferred Securities as of the record date in such calendar
month for the payment of Dividends on such series of Preferred
Securities in an amount equal to the excess of (x) all
Dividends accrued on such series of Preferred Securities (in
accordance with the Action creating such series) from their
date of issuance through and including the close of such
calendar month over (y) the amount of Net Income allocated to
the Record Holders of such series of Preferred Securities
pursuant to this Section 6.01(a)(i) in all prior calendar
months; amounts allocated to all Record Holders of any series
of Preferred Securities shall be allocated among such Record
Holders in proportion to the number of Preferred Securities of
such series held by such Record Holders; and
(ii) All remaining Net Income shall be allocated to the
General Partner.
(b) The Company's Net Loss for any fiscal period shall be
allocated solely to the General Partner.
6.02 OTHER ALLOCATION PROVISIONS. (a) For purposes of determining
the profits, losses or any other items allocable to any period, profits, losses
and any such other items shall be determined on a daily, monthly or other
basis, as determined by the General
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Partner using any method that is permissible under Section 706 of the Code and
Treasury Regulations thereunder.
(b) Notwithstanding anything to the contrary that may be expressed or
implied in this Article VI, the interest of the General Partner in each item of
income, gain, loss, deduction and credit will be equal to at least 1%
of each such item.
(c) All items of income, gain, loss, deduction and credit allocable to
any Partnership Interest that may have been transferred shall be allocated
between the transferor and the transferee based on the portion of the calendar
year during which each was recognized as owning that Partnership Interest,
without regard to the results of Company operations during any particular
portion of that calendar year and without regard to whether cash distributions
were made to the transferor or the transferee during that calendar year;
provided, however, that this allocation must be made in accordance with a
method permissible under Section 706 of the Code and the Treasury Regulations
thereunder.
6.03 ALLOCATIONS FOR INCOME TAX PURPOSES. The income, gains, losses,
deductions and credits of the Company shall be allocated in the same manner as
the items entering into the computation of Net Income and Net Loss were
allocated under Sections 6.01 and 6.02; provided, however, that solely for
federal, state and local income and franchise tax purposes and not for book or
capital account purposes, income, gain, loss and deduction with respect to any
property properly carried on the Company's books at a value other than the tax
basis of such property shall be allocated in a manner determined in the General
Partner's discretion, so as to take into account (consistently with Code
Section 704(c) principles) the difference between such property's book value
and its tax basis.
6.04 WITHHOLDING. The Company shall comply with withholding
requirements under federal, state and local law and shall remit amounts
withheld to and file required forms with applicable jurisdictions. To the
extent that the Company is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Partner, the
amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Partner. In the event of any claimed over-withholding,
Partners shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual distributions,
the Company may reduce subsequent distributions by the amount of such
withholding. Each Partner agrees to furnish the Company with any
representations and forms as shall reasonably be requested by the Company to
assist it in determining the extent of, and in fulfilling, its withholding
obligations.
6.05 DISTRIBUTIONS. Limited Partners shall receive periodic Dividends,
if any, redemption payments and liquidation distributions in accordance with
the applicable terms of the Preferred Securities. Subject to the rights of the
holders of Preferred Securities, all remaining cash shall be distributed to the
General Partner at such time as the General Partner shall determine.
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ARTICLE VII
MANAGEMENT AND OPERATION
7.01 MANAGEMENT OF COMPANY AFFAIRS. (a) Except for situations in
which the consent of other Partners is expressly required by this Agreement or
by nonwaivable provisions of applicable law, the General Partner shall have
full, complete and exclusive authority to manage and control the business,
affairs and properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incident to the management of the Company's business. The General Partner may
make all decisions and take all actions for the Company not otherwise provided
for in this Agreement, including, without limitation, the following:
(i) entering into, making and performing contracts,
agreements and other undertakings binding the Company that may be
necessary, appropriate or advisable in furtherance of the purposes of
the Company and making all decisions and waivers thereunder;
(ii) opening and maintaining bank and investment accounts and
arrangements, drawing checks and other orders for the payment of money
and designating individuals with authority to sign or give instructions
with respect to those accounts and arrangements;
(iii) maintaining the assets of the Company in good order;
(iv) collecting sums due the Company;
(v) to the extent that funds of the Company are available,
paying debts and obligations of the Company;
(vi) selecting, removing and changing the authority and
responsibility of lawyers, accountants and other advisers and
consultants; and
(vii) making all decisions and exercising all rights for the
General Partner under other provisions of this Agreement.
(b) Notwithstanding the provisions of Section 7.01(a), the General
Partner may not cause the Company to do any of the following without the
consent of the holders of a 66-2/3% in liquidation preference of the Preferred
Securities:
(i) engage in any business other than those permitted as
described in Section 2.04; and
(ii) merge, consolidate or combine the Company with or into
any other Entity, except as otherwise provided in Section 3.06(f).
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(c) No Partner (other than the General Partner) has the authority or
power to act for or on behalf of the Company, to do any act that would be
binding on the Company or to incur any expenditures on behalf of the Company.
(d) Any Person dealing with the Company, other than a Partner, may
rely on the authority of the General Partner in taking any action in the name
of the Company without inquiry into the provisions of this Agreement or
compliance herewith, regardless of whether that action actually is taken in
accordance with the provisions of this Agreement.
7.02 COMPENSATION. The General Partner is not entitled to compensation
for its services as General Partner.
7.03 EXCULPATION. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Company or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on
behalf of the Company and in a manner reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Agreement
or by law except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Company, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which distributions to Partners might properly be paid.
7.04 FIDUCIARY DUTY. (a) To the extent, that at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to any other Covered Person, an Indemnified
Person acting under this Agreement shall not be liable to the Company or to any
other Covered Person for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise existing at law
or in equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Covered Persons, or (ii) whenever
this Agreement or any other agreement contemplated herein or therein provides
that an Indemnified Person shall act in a manner that is, or provides terms
that are, fair and reasonable to the Company or any Partner, the Indemnified
Person shall resolve such conflict of interest, taking such action or providing
such terms, considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement, transaction or
situation and the
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benefits and burdens relating to such interests, any customary or accepted
industry practices and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Agreement an Indemnified Person is permitted or
required to make a decision (i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to consider only
such interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any interest of
or factors affecting the Company or any other Person, or (ii) in its "good
faith" or under another express standard, the Indemnified Person shall act
under such express standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
7.05 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, the Company shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Agreement, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence or willful misconduct
with respect to such acts or omissions; provided, however, that any indemnity
under this Section 7.05 shall be provided out of and to the extent of Company
assets only, and no Covered Person shall have any personal liability on account
thereof.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be advanced
by the Company prior to the final disposition to such claim, demand, action,
suit or proceeding upon receipt by the Company of an undertaking by or on
behalf of the Indemnified Person to repay such amount if it shall be determined
that the Indemnified Person is not entitled to be indemnified as authorized in
Section 7.05(a).
7.06 OUTSIDE BUSINESSES. Any Partner or Affiliate thereof may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Company, and the Company and the Partners shall have no rights
by virtue of this Agreement in and to such independent ventures or the income
or profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Company, shall not be deemed wrongful or
improper. No Partner or Affiliate thereof shall be obligated to present any
particular investment opportunity to the Company even if such opportunity is of
a character that, if presented to the Company, could be taken by the Company,
and any Partner or Affiliate
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thereof shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
opportunity.
7.07 POWER OF ATTORNEY. Each Partner appoints the General Partner (and
any liquidator appointed pursuant to Section 12.02) as that Partner's
attorney-in-fact for the purpose of executing, swearing to, acknowledging and
delivering all certificates, documents and other instruments as may be
necessary, appropriate or advisable in the judgment of the General Partner (or
the liquidator) in furtherance of the business of the Company or complying with
applicable law, including, without limitation, filings of the type described in
Section 2.05. This power of attorney is irrevocable and is coupled with an
interest. On request by the General Partner (or the liquidator), a Partner
shall confirm its grant of this power of attorney or any use of it by the
General Partner (or the liquidator) and shall execute, swear to, acknowledge
and deliver any such certificate, document or other instrument.
ARTICLE VIII
RIGHTS OF OTHER PARTNERS
8.01 INFORMATION. In addition to the other rights set forth in this
Agreement, each Partner is entitled to all information to which that Partner is
entitled to have access pursuant to applicable law.
8.02 WITHDRAWAL. A Limited Partner does not have the right or power to
withdraw from the Company as a limited partner.
8.03 CONSENTS AND APPROVALS. (a) Subject to the provisions of Section
7.03(a) with respect to the General Partner in its capacity as such, a Partner
may grant or withhold its consent or vote its interest in its sole discretion,
without regard to the interests of the Company or any other Partner.
(b) In any request for consent or approval from another Partner, the
General Partner may specify a response period, ending no earlier than the 20th
Business Day and no later than the 60th Business Day following the date on
which the Partner whose consent or approval is given notice of the request as
described in Section 13.02.
8.04 MEETINGS. The General Partner at any time may call a meeting of
the Partners to transact business that the Partners may conduct as provided in
this Agreement. The call must be made by notice to all other Partners on or
before the 20th Business Day prior to the date of the meeting specifying the
location and the time and stating the business to be transacted at the meeting.
Any required consent or approval of holders of Series A Preferred Securities
may be given by vote at a separate meeting of such holders convened for such
purpose, at a general meeting of Partners or pursuant to written consent. The
Company will cause a notice of any meeting at which holders of the Series A
Preferred Securities are entitled to vote, or of any matter upon which action
by written consent of such holders is to be taken, to be mailed to each holder
of record of Series A Preferred Securities. Each such
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notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any action
proposed for adoption at such meeting on which such holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents. Notwithstanding that
holders of Series A Preferred Securities are entitled to vote or consent under
any of the circumstances provided herein, any of the Series A Preferred
Securities (and any other series of Preferred Securities entitled to vote or
consent with the holders of the Series A Preferred Securities, voting or
consenting as a single class) that are owned by Enron or any entity owned more
than 50% by Enron, either directly or indirectly, shall not be entitled to
vote or consent and shall, for the purposes of such vote or consent, be treated
as if they were not outstanding.
ARTICLE IX
TAXES
9.01 TAX RETURNS. The General Partner shall cause to be prepared and
filed all necessary federal and state income tax returns for the Company,
including making the elections described in Section 9.02. Each Partner shall
furnish to the General Partner all pertinent information in its possession
relating to Company operations that is necessary to enable the Company's income
tax returns to be prepared and filed.
9.02 TAX ELECTIONS. The Company shall make the following elections on
the appropriate tax returns:
(a) to adopt the calendar year as the Company's fiscal year;
(b) to adopt the accrual method of accounting and to keep the
Company's books and records on the accrual method; and
(c) any other election the General Partner may deem
appropriate and in the best interests of the Partners.
Neither the Company nor any Partner may make an election for the Company to be
excluded from the application of the provisions of subchapter K of chapter 1 of
subtitle A of the Code or any similar provisions of applicable state law.
9.03 TAX MATTERS PARTNER. The General Partner shall be the "tax
matters partner" of the Company pursuant to Section 6231(a)(7) of the Code.
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ARTICLE X
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
10.01 MAINTENANCE OF BOOKS. The books of account for the Company
shall be maintained on an accrual basis in accordance with the terms of this
Agreement, except that the capital accounts of the Partners shall be maintained
in accordance with Section 5.04. The calendar year shall be the accounting
year of the Company.
10.02 REPORTS AND OTHER INFORMATION. The General Partner shall
furnish such reports and other information as the Partners may agree from time
to time or as shall be required pursuant to any Action.
10.03 ACCOUNTING PRINCIPLES. All accounting of the Company (and all
other accounting done pursuant to this Agreement) shall be done in accordance
with generally accepted accounting principles at the time in effect, to the
extent applicable, except where generally accepted accounting principles are
inconsistent with the requirements of this Agreement.
10.04 ACCOUNTS. The General Partner shall establish and maintain one
or more separate bank and investment accounts and arrangements for Company
funds in the Company name with financial institutions and firms that the
General Partner determines.
ARTICLE XI
WITHDRAWAL AND REMOVAL
11.01 WITHDRAWAL. (a) Except as otherwise provided in Article IV or
in an Action or other amendment to this Agreement providing for the issuance of
Preferred Securities or any series thereof, the General Partner may in its sole
discretion at any time withdraw from the Company as a general partner within
the meaning of Section 17-602(a) of the Act, except that the General Partner
agrees not to withdraw from the Company as a general partner prior to September
1, 1999. The General Partner shall be deemed to have withdrawn from the
Company upon the occurrence of any one of the following events (each such event
herein referred to as an "Event of Withdrawal");
(i) the General Partner voluntarily withdraws from the
Company by giving written notice to the other Partners;
(ii) the General Partner is removed pursuant to Section 11.02;
(iii) the General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the
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material allegations of a petition filed against the General Partner
in a proceeding of the type described in clauses (A)-(C) of this
Section 11.01 (a)(iii); or (E) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the General
Partner or of all or any substantial part of its properties;
(iv) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(v) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in Section 11.01(a)(iii), (iv) or (v)
occurs, the withdrawing General Partner shall give notice to the Limited
Partners within 30 days after such occurrence. The Partners hereby agree that
only the Events of Withdrawal described in this Section 11.01 shall result in
the withdrawal of the General Partner from the Company.
(b) Except as otherwise provided in any Action providing for the
issuance of any series of Preferred Securities, withdrawal of the General
Partner from the Company upon the occurrence of an Event of Withdrawal shall
not constitute a breach of this Agreement except in the case of an Event of
Withdrawal referred to in Section 11.01(a)(i) prior to September 1, 1999,
provided, that, in the case of an Event of Withdrawal referred to in Section
11.01(a)(i) on or after September 1, 1999, prior to the effective date of such
withdrawal the General Partner delivers to the Company an opinion of counsel
("Withdrawal Opinion of Counsel") that such withdrawal (following the
selection of the successor General Partner) would not result in the loss of the
limited liability of any Limited Partner or cause the Company to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes. If the General Partner gives a notice of
withdrawal pursuant to Section 11.01(a)(i) or an Event of Withdrawal of the
type described in Sections 11.01(a)(iii)-(v) occurs, holders of at least a
majority in liquidation preference of the of the Preferred Securities and
Sharing Ratio of the Preferred Securities (excluding for purposes of such
determination Preferred Securities owned by the General Partner and its
Affiliates) may, prior to the effective date of such withdrawal, elect a
successor General Partner. If, prior to the effective date of the General
Partner's withdrawal, a successor is not selected by the holders of Preferred
Securities as provided herein or the Company does not receive a Withdrawal
Opinion of Counsel, the Company shall be dissolved in accordance with Article
XII. A successor General Partner approved pursuant to Section 11.01 or 11.02
shall be admitted to the Company as the General Partner, effective immediately
prior to the withdrawal or removal of the General Partner pursuant to
Section 11.01 or 11.02; provided, however, that no such successor shall be
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admitted to the Company until such successor has executed and delivered
such other documents or instruments as may be required to effect such
admission. Any such successor shall, subject to the terms hereof, carry on the
business of the Company without dissolution.
(c) A Limited Partner does not have the right or power to withdraw
from the Company as a limited partner, provided that upon issuance of Series A
Preferred Securities at the Closing Time, the Organizational Limited Partner
shall withdraw as a Limited Partner and, in connection therewith, shall be
entitled to the return of its Capital Contributions, if any.
11.02 REMOVAL OF GENERAL PARTNER. The General Partner may be removed
only if and to the extent provided for in any Action providing for the terms of
the Preferred Securities or any series thereof. Unless otherwise provided in
any such amendment to this Agreement, any such action for removal of the
General Partner must also provide for the election of a successor General
Partner by holders of at least a majority in liquidation preference of the
Preferred Securities and Sharing Ratio of the Preferred Securities (excluding
for purposes of such determination Preferred Securities owned by the General
Partner and its Affiliates). Such removal shall be effective immediately
following the admission of a successor General Partner. The right of the
holders of Preferred Securities to remove the General Partner shall not exist
or be exercised unless the Company has received an opinion opining as to the
matters covered by a Withdrawal Opinion of Counsel.
11.03 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER.
(a) In the event of withdrawal or removal of the General Partner, if a
successor General Partner is elected in accordance with the terms of Section
11.01 or 11.02, the withdrawing or removed General Partner (the "Departing
Partner") shall, at its option exercisable prior to the effective date of the
departure of such Departing Partner, promptly receive from its successor in
exchange for its Partnership Interest as a general partner in the Company an
amount in cash equal to the fair market value of such Partnership Interest,
such amount to be determined and payable as of the effective date of its
departure. Subject to Section 11.03(b), the Departing Partner shall, as of the
effective date of its departure, cease to share in any allocations or
distributions with respect to its Partnership Interest as a general partner in
the Company and Company income, gain, loss, deduction and credit will be
prorated and allocated as set forth in Section 6.02.
For purposes of this Section 11.03(a), the fair market value of the
Departing Partner's Partnership Interest shall be determined by agreement
between the Departing Partner and its successor or, failing agreement within 30
days after the effective date of such Departing Partner's departure, by an
independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts
and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other
independent expert within 45 days after the effective date of such departure,
then the Departing Partner shall designate an independent investment banking
firm or other independent expert, the Departing Partner's successor shall
designate an independent
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investment banking firm or other independent expert, and such firms or experts
shall mutually select a third independent investment banking firm or
independent expert, which shall determine the fair market value of the
Partnership Interest. In making its determination, such independent
investment banking firm or other independent expert shall consider the then
current trading price of Preferred Securities on any national securities
exchange on which Preferred Securities are then listed, the value of the
Company's assets, the rights and obligations of the General Partner and other
factors it may deem relevant.
(b) Any successor General Partner shall indemnify the Departing
Partner as to all debts and liabilities of the Company arising on or after the
date on which the Departing Partner withdraws or is removed.
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION
12.01 DISSOLUTION. The Company shall dissolve and its affairs shall
be wound up on the first to occur of the following (each a "Liquidation
Event"):
(a) the consent of the General Partner and the holders of a
majority in liquidation preference of the Preferred Securities;
(b) the date set forth in Section 2.06;
(c) the occurrence of an Event of Withdrawal specified in
Section 11.01(a)(iii), (iv) or (v);
(d) the occurrence of an Event of Withdrawal specified in
Section 11.01(a)(i) or (ii) if, prior to the effective date of the
General Partner's withdrawal or removal, a successor is not selected by
the holders of Preferred Securities as provided herein or the Company
does not receive a Withdrawal Opinion of Counsel;
(e) any other event causing dissolution as described in
Section 17-801 of the Act; or.
(f) any other event specified as a Liquidation Event in any
amendment to this Agreement providing for the issuance of Preferred
Securities or any series thereof.
12.02 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
General Partner shall act as liquidator or may appoint one or more other
Persons as liquidator; provided, however, that if the Company dissolves on
account of an event of the type described in Section 17-402(a)(4)-(10) of the
Act with respect to the General Partner, the liquidator shall be one or more
Persons selected by the holders of a majority in liquidation preference of the
Preferred Securities. The liquidator shall proceed diligently to wind up the
affairs of the Company and make final distributions as provided herein. The
costs of
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liquidation shall be borne as a Company expense. Until final distribution,
the liquidator shall continue to operate the Company properties with all of
the power and authority of the General Partner. The steps to be accomplished
by the liquidator are as follows:
(a) as promptly as possible after dissolution and again after
final liquidation, the liquidator shall cause a proper accounting to be
made by a recognized firm of certified public accountants of the
Company's assets, liabilities and operations through the last day of
the calendar month in which the dissolution occurs or the final
liquidation is completed, as applicable;
(b) the liquidator shall pay from Company funds all of the
debts and liabilities of the Company (including, without limitation,
all expenses incurred in liquidation) or otherwise make adequate
provision therefor (including, without limitation, the establishment of
a cash escrow fund for contingent liabilities in such amount and for
such term as the liquidator may reasonably determine); and
(c) all remaining assets of the Company shall be distributed
first to the holders of Series A Preferred Securities as provided in
Section 4.05 hereof and in any Action relating to any other series of
Preferred Securities, and any remaining assets shall be distributed to
the General Partner.
The distribution in accordance with the provisions of this Section 12.02
constitutes a complete return to the Partner of its Capital Contributions and a
complete distribution to the Partner of its Partnership Interest and all the
Company's property and constitutes a compromise to which all Partners have
consented within the meaning of Section 17-502(b) of the Act. To the extent
that a Partner returns funds to the Company, it has no claim against any other
Partner for those funds.
12.03 CANCELLATION OF CERTIFICATE. On completion of the distribution
of Company assets as provided herein, the Company is terminated, and the
General Partner (or such other Person or Persons as the Act may require or
permit) shall cause the cancellation of the Certificate and any other filings
made as provided in Section 2.05 and shall take such other actions as may be
necessary to terminate the Company.
ARTICLE XIII
GENERAL PROVISIONS
13.01 OFFSET. Whenever the Company is to pay any sum to any Partner,
any amounts that Partner owes the Company may be deducted from that sum before
payment.
13.02 NOTICES. Any notice, demand, request, report or proxy materials
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first-class United States mail or by other means of written
communication to the Partner at the address
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described below. Any notice, payment or report to be given or made to a
Partner hereunder shall be deemed conclusively to have been given or made, and
the obligation to give such notice or report or to make such payment shall be
deemed conclusively to have been fully satisfied, upon sending of such notice,
payment or report to the Record Holder at his address as shown on the records
of the Transfer Agent or as otherwise shown on the records of the Company,
regardless of any claim of any Person who may have an interest in Preferred
Securities or the Partnership Interest of the General Partner by reason of any
assignment or otherwise. An affidavit or certificate of making of any notice,
payment or report in accordance with the provisions of this Section 13.02
executed by the General Partner, the Transfer Agent or the mailing organization
shall be prima facie evidence of the giving or making of such notice, payment
or report. If any notice, payment or report addressed to a Record Holder at
the address of such Record Holder appearing on the books and records of the
Transfer Agent or the Company is returned by the United States Post Office
marked to indicate that the United States Postal Service is unable to deliver
it, such notice, payment or report and any subsequent notices, payments and
reports shall be deemed to have been duly given or made without further mailing
(until such time as such Record Holder or another Person notifies the Transfer
Agent or the Company of a change in his address) if they are available for the
Partner at the principal office of the Company for a period of one year from
the date of the giving or making of such notice, payment or report to the other
Partners. Any notice to the Company shall be deemed given if received by the
General Partner at the principal office of the Company designated pursuant to
Section 2.03. The General Partner may rely and shall be protected in relying
on any notice or other document from a Partner or other Person if believed by
it to be genuine.
13.03 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement constitutes the
entire agreement of the Partners and their Affiliates relating to the Company
and supersedes all prior contracts, understandings, negotiations and agreements
with respect to the Company and the subject matter hereof whether oral or
written.
13.04 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or
implied, to or of any breach or default by any Person in the performance by
that Person of its obligations with respect to the Company is not a consent or
waiver to or of any other breach or default in the performance by that Person
of the same or any other obligations of that Person with respect to the
Company. Failure on the part of a Person to complain of any act of any Person
or to declare any Person in default with respect to the Company, irrespective
of how long that failure continues, does not constitute a waiver by that Person
of its rights with respect to that default until the applicable
statute-of-limitations period has run.
13.05 AMENDMENT OR MODIFICATION. This Agreement may be amended or
modified from time to time by the General Partner without the vote or consent
of holders of Preferred Securities, except that no amendment or modification
that adversely affects the rights of the holders of Preferred Securities or any
series thereof may be made without the consent of 66-2/3% in liquidation
preference of the Preferred Securities of all series so affected.
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13.06 BINDING EFFECT; NO THIRD-PARTY BENEFICIARIES. Subject to the
restrictions on Dispositions set forth in this Agreement, this Agreement is
binding on and inures to the benefit of the Partners and their respective
heirs, legal representatives, successors and assigns. Except as otherwise
provided in Section 5.03 and except for the rights of Indemnified Persons and
Covered Persons under Article VII, nothing in this Agreement shall provide any
benefit to any third party or entitle any third party to any claim, cause of
action, remedy or right of any kind, it being the intent of the parties that
this Agreement shall not be construed as a third party beneficiary contract.
13.07 GOVERNING LAW; SEVERABILITY. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE
GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER
JURISDICTION. If any provision of this Agreement or its application to any
Person or circumstance is held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of that provision to other
Persons or circumstances is not affected and that provision shall be enforced
to the greatest extent permitted by law.
13.08 FURTHER ASSURANCES. In connection with this Agreement and the
transactions contemplated by it, each Partner shall execute and deliver any
additional documents and instruments and perform any additional acts that may
be necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
13.09 WAIVER OF CERTAIN RIGHTS. Each Partner irrevocably waives any
right it may have to maintain any action for dissolution of the Company or for
partition of the property of the Company.
13.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
EXECUTED as of the date first set forth above.
GENERAL PARTNER: ENRON CORP.
By:______________________________
Name:____________________________
Title:___________________________
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LIMITED PARTNER: ORGANIZATIONAL PARTNER, INC.
By:______________________________
Name:____________________________
Title:___________________________
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<PAGE> 1
EXHIBIT 4.1
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as
of August 3, 1994, is executed and delivered by Enron Corp., a Delaware
corporation (the "Guarantor"), for the benefit of the Holders (as defined
below) from time to time of the Series A Preferred Securities (as defined
below) of Enron Capital Resources, L.P. (the "Issuer"), a limited partnership
formed under the Delaware Revised Uniform Limited Partnership Act (the
"Delaware Act").
WHEREAS, Issuer is issuing on the date hereof 3,000,000 shares of its
9% Cumulative Preferred Securities, Series A (the "Series A Preferred
Securities"), and the Guarantor desires to issue this Guarantee Agreement for
the benefit of the Holders, as provided herein;
WHEREAS, the Issuer pursuant to the Loan Agreement (as defined below)
will loan to the Guarantor the proceeds from the issuance and sale of the
Series A Preferred Securities and its contribution as general partner (the
"General Partner") in respect of its general partner interest (the "GP
Interest"); and
WHEREAS, the Guarantor desires hereby irrevocably and unconditionally
to agree to the extent set forth herein to pay to the Holders the Guarantee
Payments (as defined below) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Series A Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.
ARTICLE I
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Amended and Restated Agreement of Limited
Partnership of the Issuer dated as of August 3, 1994 (the "Partnership
Agreement").
"Dividends" shall mean any distribution on the Series A Preferred
Securities, including additional distributions in respect of distributions in
arrears, required to be made pursuant to the terms of the Partnership
Agreement, other than distributions on liquidation.
"Expense Agreement" shall mean the provisions of Section the 5.03 of
the Partnership Agreement pursuant to which the Guarantor has agreed to
guarantee the
<PAGE> 2
payment of any indebtedness or liabilities incurred by the Issuer (other
than obligations to Holders of Series A Preferred Securities in such Holders'
capacities as Holders of such Series A Preferred Securities).
"Guarantee Payments" shall mean the following payments, without
duplication, to the extent not paid by the Issuer: (i) any accumulated and
unpaid Dividends which have been theretofore required to be paid pursuant to
the terms of the Partnership Agreement, (ii) the Redemption Price payable with
respect to any Series A Preferred Securities called for redemption by the
Issuer, (iii) upon a liquidation of the Issuer, the lesser of (a) the
Liquidation Distribution and (b) the amount of assets of the Issuer available
for distribution to Holders in liquidation of the Issuer and (iv) any
Additional Interest (as defined below) payable by the Issuer in respect of the
Series A Preferred Securities.
"Holder" shall mean any holder (as defined in the Partnership
Agreement) from time to time of any Series A Preferred Securities of the
Issuer; provided, however, that in determining whether the Holders of the
requisite percentage of Series A Preferred Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor
or any entity owned more than 50% by the Guarantor, either directly or
indirectly.
"Liquidation Distribution" shall mean the aggregate of the liquidation
preference of $25 per Series A Preferred Security and all accumulated and
unpaid Dividends to the date of payment.
"Loan Agreement" shall mean the agreement, dated as of the date hereof,
pursuant to which the Issuer will loan to the Guarantor the proceeds received
by the Issuer from the issuance and sale of the Series A Preferred Securities
and the contribution of the General Partner in respect of the GP Interest.
"Paying Agent" shall mean Enron Corp., as registrar, transfer agent and
paying agent.
"Redemption Price" shall mean $25 per Preferred Security plus
accumulated and unpaid Dividends to the date fixed for redemption.
ARTICLE II
SECTION 2.01. (a) The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments, as and when due (except
to the extent paid by the Issuer), regardless of any defense, right of set-off
or counterclaim which
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the Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
(b) All Guarantee Payments shall be made without deduction for or on
account of any present or future taxes (other than withholding taxes), duties,
assessments or governmental charges of whatever nature imposed or levied upon
the Issuer by or on behalf of the United States, any state thereof or any other
jurisdiction through which or from which such payment is made, or any authority
therein or thereof having power to tax, unless the deduction of such taxes,
duties, assessments or governmental charges is required by law. In that event,
the Guarantor shall pay such additional amounts ("Additional Interest") as
may be necessary in order that the net amounts received by the Holders after
such deduction will equal the amount which would have been receivable in
respect of the Series A Preferred Securities in the absence of such deduction.
SECTION 2.02. The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 2.03. The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Series A
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Dividends, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Series A
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Series A Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Series A Preferred Securities, or any action on the part
of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt, of or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
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<PAGE> 4
(e) any invalidity of, or defect or deficiency in, any of the
Series A Preferred Securities; or
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.04. This is a guarantee of payment and not of collection. A
Holder may enforce this Guarantee Agreement directly against the Guarantor, and
the Guarantor will waive any right or remedy to require that any action be
brought against the Issuer or any other person or entity before proceeding
against the Guarantor. Subject to Section 2.05, all waivers herein contained
shall be without prejudice to the Holders' right at the Holders' option to
proceed against the Issuer, whether by separate action or by joinder. The
Guarantor agrees that this Guarantee Agreement shall not be discharged except
by payment of the Guarantee Payments in full (to the extent not paid by the
Issuer) and by complete performance of all obligations of the Guarantor
contained in this Guarantee Agreement.
SECTION 2.05. The Guarantor shall be subrogated to all (if any) rights
of the Holders against the Issuer in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement and shall have the right to
waive payment of any amount of Guaranty Payments in respect of which payment
has been made to the Holders by the Guarantor pursuant to Section 2.01;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of a payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to pay over such amount to the Holders.
SECTION 2.06. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Series A Preferred Securities and that the Guarantor shall be liable as
principal and sole debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.03 hereof.
ARTICLE III
SECTION 3.01. So long as any Series A Preferred Securities remain
outstanding, the Guarantor shall not declare or pay any dividend on, or redeem,
purchase,
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acquire or make a liquidation payment with respect to, any of its capital
stock (other than (i) payments under this Guarantee Agreement and (ii)
guarantee payments under guarantee agreements ranking pari passu with this
Guarantee Agreement) if at such time the Guarantor shall be in default with
respect to its payment or other obligations hereunder or under the Expense
Agreement or there shall have occurred any event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default under
the Loan Agreement.
SECTION 3.02. The Guarantor covenants, so long as any Series A
Preferred Securities remain outstanding: (i) to maintain direct or indirect
100% ownership of the GP Interest and to timely perform all of its duties as
General Partner of the Issuer; (ii) to cause at least 21% of the total value of
the Issuer and at least 21% of all interests in the capital, income, gain,
loss, deduction and credit of the Issuer to be represented by the GP Interest;
(iii) not to voluntarily dissolve, wind-up or liquidate the Issuer; (iv) to
remain the General Partner of the Issuer and to timely perform all of its
duties as General Partner (including the duty to pay Dividends on the Series A
Preferred Securities), provided that any permitted successor of the Guarantor
under the Loan Agreement may succeed to the Guarantor's duties as General
Partner; and (v) to use its reasonable efforts to cause the Issuer to remain a
limited partnership under the Delaware Act and otherwise continue to be treated
as a partnership for United States federal income tax purposes.
SECTION 3.03. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all liabilities of the Guarantor, other than the Payment and
Guarantee Agreement dated as of November 15, 1993 (the "Pari Passu Guarantee")
of the Guarantor relating to the 8% Cumulative Monthly Income Preferred Shares
of Enron Capital LLC, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor, with the Pari Passu
Guarantee and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any affiliate of
the Guarantor and (iii) senior to the Guarantor's common stock. For purposes
of clause (ii) herein, pari passu means that any payments to which
beneficiaries of this Guarantee Agreement are entitled must be shared with
holders of any preferred or preference stock or beneficiaries of any guaranty
for which this Guarantee Agreement is stated to be pari passu ("Pari Passu
Securities") to the same extent as would be required under applicable law if
instead this Guarantee Agreement constituted a class of preferred or preference
stock of the Guarantor ranking pari passu with such Pari Passu Securities
(and if such Pari Passu Securities are a guarantee of Enron affiliate stock,
as if such Pari Passu Securities were part of the most senior preferred or
preference stock of Enron) as to such payments. Each holder of Series A
Preferred Securities, by acceptance thereof, is deemed to agree to the
subordination provisions and other terms of this Guarantee Agreement.
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ARTICLE IV
This Guarantee Agreement shall terminate and be of no further force and
effect upon full payment of the Redemption Price of all Series A Preferred
Securities or upon full payment of the amounts payable to the Holders upon
liquidation of the Issuer; provided, however, that this Guarantee Agreement
shall continue to be effective or shall be reinstated, as the case may be, if
at any time any Holder of Series A Preferred Securities must restore payment of
any sums paid under the Series A Preferred Securities or under this Guarantee
Agreement for any reason whatsoever.
ARTICLE V
SECTION 5.01. All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
The Guarantor shall not assign its obligations hereunder without the prior
approval of the Holders of not less than 66-2/3% in liquidation preference (as
defined in the Partnership Agreement) of all Series A Preferred Securities then
outstanding.
SECTION 5.02. Except with respect to any changes which do not
adversely affect the rights of holders of Series A Preferred Securities (in
which case no vote will be required), this Guarantee Agreement may only be
amended by instrument in writing signed by the Guarantor with the prior
approval of the Holders of not less than 66-2/3% in liquidation preference of
the Series A Preferred Securities then outstanding.
SECTION 5.03. Any notice, request or other communication required or
permitted to be given hereunder to the Guarantor shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail) or telex, addressed to the Guarantor, as follows (and if so
given, shall be deemed given when mailed or upon receipt of an answer-back, if
sent by telex), to it:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Facsimile No.: (713) 853-3920
Attention: Treasurer
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders pursuant to the Partnership
Agreement.
SECTION 5.04. The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
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SECTION 5.05. This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Series A Preferred
Securities.
SECTION 5.06. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
ENRON CORP.
By:__________________________
Name:
Title:
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EXHIBIT 4.2
LOAN AGREEMENT
LOAN AGREEMENT, dated as of August 3, 1994, between Enron Corp., a
Delaware corporation ("Enron"), and Enron Capital Resources, L.P.
("Resources"), a limited partnership formed under the Delaware Revised Uniform
Limited Partnership Act (the "Delaware Act").
WHEREAS, Enron, as general partner of Resources (the "General
Partner"), intends to make a capital contribution to Resources in respect of
its general partner interest in Resources (the "GP Interest") in an aggregate
amount of $19,936,709 (the "GP Capital Contributions"), and Resources intends
to issue and sell 3,000,000 shares of its 9% Cumulative Preferred Securities,
Series A (the "Series A Preferred Securities"), with a liquidation preference
equal to $25 per Preferred Security (the "Liquidation Preference").
WHEREAS, Enron is guaranteeing the payment of Dividends (as defined in
the Guarantee Agreement) on the Series A Preferred Securities required to be
paid pursuant to the terms of the Amended and Restated Agreement of Limited
Partnership of Resources dated as of August 3, 1994 (the "Partnership
Agreement"), the Redemption Price (as defined in the Guarantee Agreement) and
the Liquidation Distribution (as defined in the Guarantee Agreement) on the
Series A Preferred Securities all to the extent set forth in the Payment and
Guarantee Agreement, dated as of August 3, 1994 (the "Guarantee Agreement");
WHEREAS, Enron has asked Resources to make a loan to Enron in an
aggregate principal amount equal to the sum of the aggregate GP Capital
Contributions and the aggregate Liquidation Preference of the Series A
Preferred Securities issued and sold by Resources; and
WHEREAS, Resources is willing to make the aforementioned loan to
Enron, on the terms and conditions hereinafter stated.
NOW THEREFORE, Enron and Resources hereby agree as follows:
ARTICLE I
THE LOAN
Section 1.01 The Loan. Subject to the terms and conditions herein,
Resources agrees to make a loan to Enron on the date hereof in an aggregate
principal amount of $94,936,709 in next day funds. Such loan shall be
referred to herein as the "Loan."
<PAGE> 2
Section 1.02. Term of the Loan; Mandatory Prepayment. (a) If
Resources redeems Series A Preferred Securities in accordance with the terms
thereof, the Loan shall become due and payable in a principal amount equal to
the aggregate stated Liquidation Preference of the Series A Preferred
Securities so redeemed, together with any and all accrued interest thereon.
Any payment pursuant to this Section 1.02(a) shall be made in next-day funds
prior to 12:00 noon, New York time, on the date fixed for such redemption or at
such other time on such earlier date as Resources and Enron shall agree.
(b) The entire principal amount of the Loan shall become due and
payable, together with any accrued and unpaid interest thereon, including
Additional Interest as defined below, if any, on the earliest of August 31,
2024 or the date upon which Enron is dissolved, wound-up or liquidated or the
date upon which Resources is dissolved, wound-up or liquidated.
Section 1.03. Optional Prepayment. Enron shall have the right to
prepay the Loan, without premium or penalty,
(i) in whole or in part (together with any accrued but
unpaid interest, including Additional Interest, if any, on the portion
being prepaid) at any time on or after August 31, 1999; and
(ii) in whole (together with all accrued and unpaid
interest, including Additional Interest thereon) at any time if,
subsequent to the date hereof, legislation is enacted or existing law
is modified or interpreted in a manner that causes Resources to be
treated as an association taxable as a corporation or otherwise taxable
as an entity for federal or state income tax purposes with respect to
its operations for any period prior to August 31, 1999, provided that
Resources, with the consent of Enron, has elected to redeem all of the
Series A Preferred Securities. For purposes of the foregoing, such
right to redeem shall exist in the event that Enron is advised by
independent legal counsel that a substantial risk exists that Resources
will be so treated or taxed as a result of such legislation,
modification or interpretation that occurred after the date hereof. If
Enron exercises its right to prepay the Loan pursuant to this Section
1.03(ii), the date of such prepayment shall be no earlier than one
Business Day prior to the first day of the earliest period with respect
to which Resources may be so treated as an association taxable as a
corporation or otherwise taxable as an entity for federal or state
income tax purposes.
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<PAGE> 3
ARTICLE II
INTEREST
Section 2.01. Interest on the Loan. The Loan shall bear interest at
an annual rate equal to 9% from the date they are made until maturity. Such
interest shall be payable on the last day of each calendar month of each year,
commencing August 31, 1994. In the event that any date on which interest is
payable on the Loan is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" shall
mean any day other than a day on which banking institutions in The City of New
York are authorized or required by law to close.
Section 2.02. Additional Interest. If at any time Resources shall be
required to pay any Additional Amounts in respect of the Series A Preferred
Securities pursuant to the terms thereof, then, in any such case, Enron will
pay as interest an amount equal to such Additional Amounts ("Additional
Interest") as may be necessary in order that the net amounts received and
retained by Resources after paying such Additional Amounts shall result in
Resources' having such funds as it would have had in the absence of the
obligation to pay such Additional Amounts. The term "Additional Amounts" shall
mean any additional distributions required to be made pursuant to the
Partnership Agreement in respect of distributions (other than distributions on
liquidation) that are in arrears. In addition, if Resources is required to pay
any taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States, or any other
taxing authority, then, in any such case, Enron will also pay as Additional
Interest such amounts as shall be required so that the net amounts received and
retained by Resources after paying any such taxes, duties, assessments or
governmental charges will be not less than the amounts Resources would have
received and retained had no such taxes, duties, assessments or governmental
charges been imposed.
Section 2.03. Extension of Interest Payment Period. Notwithstanding
the provisions of Section 2.01, Enron shall have the right at any time during
the term of the Loan, so long as Enron is not in default in the payment of
interest on the Loan, to extend the interest payment period to up to 60 months,
at the end of which period Enron shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Loan to the
extent permitted by applicable law); and provided that, during any such
extended interest payment period Enron shall not
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<PAGE> 4
declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock. Prior to the
termination of any such extended interest payment period, Enron may further
extend the interest payment period, provided that such extended interest
payment period together with all such further extensions thereof may not
exceed 60 months. Enron shall give Resources notice of its selection of such
extended interest payment period one Business Day prior to the earlier of (i)
the date on which a Dividend on the Series A Preferred Securities is payable
or (ii) the date Resources is required to give notice of the record or payment
date of such related Dividend to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Series A
Preferred Securities, but in any event not less than two Business Days
prior to such record date. Enron shall cause Resources to give such notice of
Enron's selection of such extended interest payment period to the holders of
the Series A Preferred Securities.
ARTICLE III
PAYMENTS
Section 3.01. Method and Date of Payment. Each payment by Enron of
principal and interest (including Additional Interest, if any) on the Loan
shall be made to Resources in lawful money of the United States, in next-day
funds for principal payments and in same day funds for interest payments, at
such place and to such account as may be designated by Resources.
Section 3.02. Set-off. Notwithstanding anything to the contrary
herein, Enron shall have the right to set-off any payment it is otherwise
required to make hereunder with and to the extent Enron has theretofore made,
or is concurrently on the date of such payment making, a payment under the
Guarantee Agreement.
ARTICLE IV
SUBORDINATION
Section 4.01. Subordination. Enron and Resources covenant and agree,
and the holders of the Series A Preferred Securities (and any trustee appointed
by such holders) by their acceptance of such Series A Preferred Securities
likewise agree, that the Loan is subordinate and junior in right of payment to
all Senior Indebtedness as provided herein. The term "Senior Indebtedness"
shall mean the principal, premium, if any, and interest on (i) all indebtedness
of Enron, whether outstanding on the date hereof or hereafter created, incurred
or assumed,
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<PAGE> 5
which is for money borrowed, or evidenced by a note or similar instrument
given in connection with the acquisition of any business, properties or assets,
including securities, (ii) any indebtedness of others of the kinds described in
the preceding clause (i) for the payment of which Enron is responsible or
liable (directly or indirectly, contingently or otherwise) as guarantor or
otherwise, (iii) any indebtedness secured by a lien upon property owned by
Enron and upon which indebtedness Enron customarily pays interest, even though
Enron has not assumed or become liable for the payment of such indebtedness and
(iv) amendments, renewals, extensions and refundings of any such indebtedness,
unless in any instrument or instruments evidencing or securing such
indebtedness or pursuant to which the same is outstanding, or in any such
amendment, renewal, extension or refunding, it is expressly provided that such
indebtedness is not superior in right of payment to the Loan and except that
Senior Indebtedness shall not include the indebtedness pursuant to the Loan
Agreement dated as of November 15, 1993 between Enron and Enron Capital LLC
and any extensions or refundings thereof (the "Pari Passu Debt"). Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of these subordination provisions irrespective of (i) any amendment,
modification or waiver of any term of the Senior Indebtedness or extension or
renewal of the Senior Indebtedness, (ii) any exchange or release of, or non-
perfection of any lien on or security interest in, any collateral, or any
release from, amendment or waiver of or consent to departure from any guaranty,
for all or any of the Senior Indebtedness, (iii) any other circumstance which
might otherwise constitute a defense available to or discharge of Resources to
the holders of the Series A Preferred Securities (or any trustee appointed by
such holders) in respect of the provisions of this Section 4.01, or (iv) any
act or failure to act on the part of Enron or by any act or failure to act, in
good faith, by any holder of Senior Indebtedness, or by any noncompliance by
Enron with the terms of this Agreement, regardless of any knowledge thereof
which any person may have or be otherwise charged with.
Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration (unless waived) or otherwise (including all installments of
principal and interest), all Senior Indebtedness then due and owing shall first
be paid in full, or such payment duly provided for in cash (or in securities or
other property satisfactory to all of the holders of such Senior Indebtedness),
before any payment is made on the account of the Loan.
In the event that (i) Enron shall default in the payment of any
principal, or premium, if any, or interest on any Senior Indebtedness when the
same becomes due and payable, whether at maturity or at a date fixed for
prepayment or declaration or otherwise or (ii) an event of default occurs with
respect to any Senior Indebtedness permitting the holders thereof to
accelerate the maturity thereof and written notice describing such event of
default, and requesting commencement of
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<PAGE> 6
payment blockage on the Loan, is given to Enron by the holders of Senior
Indebtedness, then unless and until such default in payment or event of
default shall have been cured or waived or shall have ceased to exist,
no direct or indirect payment (in cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made on account of the Loan or
interest thereon or in respect of any repayment, redemption, retirement,
purchase or other acquisition of the Loan. Enron will give prompt written
notice to Resources of any default in the payment of any Senior Indebtedness
and of any dissolution, winding up or reorganization of Enron.
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, composition or other similar proceeding relating
to Enron or its property or for the benefit of its creditors, (ii) any
proceeding for the liquidation, dissolution or other winding up of Enron,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by Enron for the benefit of creditors, or
(iv) any other marshalling of the assets of Enron, all Senior Indebtedness
(including, without limitation, interest accruing after the commencement of any
such proceeding, assignment or marshalling of assets) shall first be paid in
full before any payment or distribution, whether in cash, securities or other
property, shall be made on the Loan. Any payment or distribution, whether in
cash, securities or other property (other than securities of Enron or any other
corporation provided for by a plan of reorganization, the payment of which is
subordinate, at least to the extent provided in the subordination provisions
hereof with respect to the indebtedness evidenced by the Loan, to the payment
of all Senior Indebtedness at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization), which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Loan (including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of
Enron being subordinated to the payment of the Loan) shall be paid or delivered
directly to the holders of Senior Indebtedness or to their representative, or
to the trustee under the indenture or agreement (if any) pursuant to which such
Senior Indebtedness may have been issued, in accordance with the priorities
then existing among such holders until all Senior Indebtedness shall have been
paid in full. No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness
constituting the Loan by any act or failure to act on the part of Enron.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash (or securities or other
property satisfactory to such holders) in full payment of such Senior
Indebtedness then outstanding. Upon the payment in full of all Senior
Indebtedness, Resources shall be subrogated to all the rights of any holders of
Senior Indebtedness to receive any further payments or distributions applicable
to the Senior Indebtedness until the
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<PAGE> 7
Loan shall have been paid in full, and such payments or distributions of cash,
securities or other property received by Resources, by reason of such
subrogation, which otherwise would be paid or distributed to the holders of
Senior Indebtedness, shall, as between Enron and its creditors other than the
holders of Senior Indebtedness, on the one hand, and Resources, on the other,
be deemed to be a payment by Enron on account of Senior Indebtedness, and not
on account of the Loan.
In the event that notwithstanding the provisions of this Section 4.01
Enron shall make any payment on the Loan to Resources or Resources receives any
payment or distribution of assets of Enron (other than securities of Enron or
any other corporation provided for by a plan of reorganization, the payment of
which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Loan, to the
payment of all Senior Indebtedness at the time outstanding and to any
securities issued in respect thereof under any such plan of reorganization), at
any time before all Senior Indebtedness is paid in full, then such payment
shall be held by Resources, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Indebtedness or their
representative or the trustee under the indenture or other agreement (if any)
pursuant to which Senior Indebtedness may have been issued, in accordance with
the priorities then existing among such holders, for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all
Senior Indebtedness in full accordance with its terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
The Loan shall not be subordinate in right of payment to, and shall
rank pari passu with, the Pari Passu Debt.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties. Enron represents and
warrants to Resources that:
(a) Good Standing. Enron is a corporation duly
incorporated and validly existing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as now being conducted.
(b) Power and Authority. Enron has full power and
authority to enter into this Agreement and to incur and perform the
obligations provided
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<PAGE> 8
for herein, all of which have been duly authorized
by all proper and necessary action.
(c) No Conflict. The execution and delivery of this
Agreement and the performance by Enron of all its obligations hereunder
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which Enron is a party or by which Enron is bound or
subject, nor will this Agreement result in a violation of the
provisions of Enron's Restated Certificate of Incorporation or by-laws.
(d) Binding Agreement. This Agreement constitutes the
valid and legally binding obligation of Enron enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
ARTICLE VI
COVENANTS
Section 6.01. Covenants. (a) Enron agrees (i) that it shall not
declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock if at such time
(a) there shall have occurred any event that, with the giving of notice or the
lapse of time or both, would constitute an Event of Default hereunder or (b)
Enron shall be in default with respect to its payment or other obligations
under the Guarantee Agreement, (ii) to maintain direct or indirect 100%
ownership of the GP Interest and to timely perform all of its duties as General
Partner of Resources, (iii) to cause at least 21% of the total value of
Resources and at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of Resources to be represented by the GP Interest, (iv)
not to voluntarily dissolve, wind-up or liquidate Resources, (v) to remain the
General Partner of Resources and to timely perform all of its duties as General
Partner of Resources (including the duty to pay Dividends on the Series A
Preferred Securities), and (vi) to use its reasonable efforts to cause
Resources to remain a limited partnership formed under the Delaware Act and
otherwise continue to be treated as a partnership for United States federal
income tax purposes.
(b) Enron agrees that its obligations under this Agreement will also
be for the benefit of the holders from time to time of Series A Preferred
Securities, and Enron acknowledges and agrees that such holders will be
entitled to enforce this Agreement directly against Enron as provided in
Article VII.
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<PAGE> 9
(c) Enron agrees not to merge with or into another entity, or
permit another entity to merge with or into it, and agrees not to sell,
transfer or lease all or substantially all of its assets to another entity
unless: (i) at such time no Event of Default hereunder has occurred and is
continuing, or would occur as a result of such merger, sale, transfer or lease,
and (ii) Enron is the survivor of such merger or the survivor of such merger or
entity to which Enron's assets are sold, transferred or leased is an entity
organized under the laws of the United States or any state thereof, assumes all
of Enron's obligations under this Agreement and becomes the General Partner.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. If one or more of the following
events (each an "Event of Default") shall occur and be continuing:
(a) default in the payment of interest on the Loan, including
any Additional Interest in respect of the Loan, when due for 10 days
(whether by virtue of the provisions described under Article IV hereof
or otherwise); provided that a valid extension of the interest payment
period by Enron pursuant to Section 2.03 hereof shall not constitute a
default in the payment of interest for this purpose; or
(b) default in the payment of principal on the Loan when due;
or
(c) the dissolution, winding up or liquidation of Resources;
or
(d) the bankruptcy, insolvency or liquidation of Enron; or
(e) breach of any covenants contained herein continued for 30
days after notice to Enron from any Preferred Securityholder;
then, in every such event, and at any time thereafter during the continuance of
such event, Resources will have the right to declare the principal of and the
interest on the Loan (including any Additional Interest and any interest
subject to an extension of the interest payment period) and any other amounts
payable on the Loan to be forthwith due and payable, whereupon the same shall
become and be forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived, anything in
this Agreement to the contrary notwithstanding. Enron expressly acknowledges
that under the terms of the Series A Preferred Securities, the holders of the
outstanding Series A Preferred Securities
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shall have the right to appoint a trustee, which trustee shall be authorized
to exercise Resources's creditor rights under this Agreement, and Enron agrees
to cooperate with such Trustee.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices. All notices hereunder shall be deemed given by
a party hereto if in writing and delivered personally or by telegram or
facsimile transmission or by registered or certified mail (return receipt
requested) to the other party at the following address for such party (or at
such other address as shall be specified by like notice):
If to Resources, to:
Enron Capital Resources, L.P.
c/o Enron Corp., as General Partner
1400 Smith Street
Houston, Texas 77002
Fax No.: (713) 853-3920
Attention: Treasurer
If to Enron, to:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Fax No.: (713) 853-3920
Attention: Treasurer
Any notice given by mail or telegram or facsimile transmission shall be
effective when received.
Section 8.02. Binding Effect. Enron shall have the right at all times
to assign any of its rights or obligations under this Agreement to a direct or
indirect wholly-owned subsidiary of Enron; provided that, in the event of any
such assignment, Enron shall remain jointly and severally liable for all such
obligations. Resources may not assign any of its rights hereunder without the
prior written consent of Enron. Subject to the foregoing, this Agreement shall
be binding upon and inure to
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<PAGE> 11
the benefit of Enron and Resources and their respective successors and
assigns. This Agreement may not otherwise be assigned by Enron or Resources.
Section 8.03. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 8.04. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
Section 8.05. Amendments. This Agreement may be amended by mutual
consent of the parties in the manner the parties shall agree; provided that,
so long as any of the Series A Preferred Securities remain outstanding, no such
amendment shall be made that adversely affects the holders of Series A
Preferred Securities, and no termination of this Agreement shall occur, and no
Event of Default or compliance with any covenant under this Agreement may be
waived by Resources, without the prior approval of the holders of at least
66-2/3% in liquidation preference (as defined in the Partnership Agreement) of
the Series A Preferred Securities, unless and until the Loan and all accrued
and unpaid interest thereon (including Additional Interest, if any) shall have
been paid in full.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
ENRON CORP.
By:_____________________________
Name:
Title:
ENRON CAPITAL RESOURCES, L.P.
By: Enron Corp.,
as General Partner
By:_____________________________
Name:
Title:
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EXHIBIT 5.1
August 2, 1994
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Enron Capital Resources, L.P.
c/o Enron Corp., as General Partner
1400 Smith Street
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel to Enron Corp. ("Enron") and Enron Capital
Resources, L.P. ("Enron Capital Resources") in connection with the offering of
3,000,000 shares of Enron Capital Resources' 9% Cumulative Preferred
Securities, Series A (the "Series A Preferred Securities"), pursuant to the
registration statement of Enron and Enron Capital Resources on Form S-3 (No.
33-53877) filed with the Securities and Exchange Commission. In connection with
the opinions expressed below, we have examined the Restated Certificate of
Incorporation, as amended, of Enron, the Certificate of Limited Partnership of
Enron Capital Resources, the form of Amended and Restated Agreement of Limited
Partnership of Enron Capital Resources, dated as of August 3, 1994 (the
"Partnership Agreement"), resolutions of the Board of Directors of Enron and
such other documents and records as we have deemed necessary or advisable for
purposes of the opinions expressed below. In addition, we have reviewed certain
certificates of officers of Enron and of public officials, and we have relied on
such certificates with respect to certain factual matters which we have not
independently established. In such examination and review, we have assumed the
genuineness of all signatures and the authenticity of all documents, records
and instruments submitted to us as copies.
Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:
(1) Enron has been duly incorporated and is validly existing
under the Delaware General Corporation Law;
(2) The Guarantee, the Loan Agreement and the Partnership
Agreement have been duly authorized by all necessary action of Enron
and Enron Capital Resources and upon execution and delivery will
constitute valid and binding obligations of the parties thereto;
<PAGE> 2
Enron Corp.
Enron Capital LLC
November 4, 1993
Page 2
(3) Enron Capital Resources has been duly formed and is validly
existing as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act; and
(4) The Partnership Agreement has been duly authorized by all
necessary corporate action of the partners of Enron Capital Resources,
and upon execution thereof and receipt by Enron Capital Resources of
the intial public offering price thereof as described in the Prospectus
Supplement (to Prospectus dated July 15, 1994) dated July 27, 1994 (the
"Prospectus Supplement"), the Series A Preferred Securities will be
duly authorized, validly issued, fully paid and nonassessable (except
as such nonassessability may be affected by matters described under the
caption "Enron Capital Resources, L.P. -- The Partnership Agreement --
Limited Liability" in the Prospectus dated July 15, 1994 as filed
pursuant to Rule 424(b) under the Securities Act of 1933).
This opinion is limited in all respects to Delaware law.
We hereby consent to the filing of this opinion as part of the Enron
Form 8-K, as such term is defined in the Prospectus Supplement. This consent
does not constitute an admission that we are "experts" within the meaning of
such term as used in the Securities Act of 1933.
Very truly yours,
VINSON & ELKINS L.L.P.
<PAGE> 1
EXHIBIT 8.1
August 2, 1994
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Enron Capital Resources, L.P.
c/o Enron Corp., as General Partner
1400 Smith Street
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel to Enron Corp. ("Enron") and Enron Capital
Resources, L.P. ("Enron Capital Resources") in connection with the offering of
3,000,000 shares of Enron Capital Resources' 9% Cumulative Preferred
Securities, Series A, pursuant to the registration statement of Enron and Enron
Capital Resources on Form S-3 (No. 33-53877) filed with the Securities and
Exchange Commission. In that connection, we have reviewed the description of
certain federal income tax considerations under the heading "Taxation" in the
Prospectus Supplement to Prospectus dated July 15, 1994 (the "Prospectus
Supplement") dated July 27, 1994, filed with the Securities and Exchange
Commission. In our opinion the statements set forth in the Prospectus
Supplement under the heading "Taxation" reflect our opinion insofar as they
relate to matters of United States federal income tax law and legal
conclusions.
Our opinion is based and conditioned upon the initial and continuing
accuracy of the facts and assumptions set forth in the Prospectus Supplement
and of the representations of management as to the existence of certain facts.
Our opinion is also based upon existing provisions of the Internal Revenue Code
of 1986, regulations promulgated or proposed thereunder and interpretations
thereof by the Internal Revenue Service and the courts, all of which are
subject to change with prospective or retroactive effect, and our opinion could
be adversely affected or rendered obsolete by any such change.
We hereby consent to the use of our name in the Prospectus Supplement
and to the filing of this opinion as part of the Enron Form 8-K, as such term
is defined in the Prospectus Supplement. This consent does not constitute an
admission that we are "experts" within the meaning of such term as used in the
Securities Act of 1933.
<PAGE> 2
Enron Corp.
Enron Capital LLC
November 4, 1993
Page 2
Very truly yours,
VINSON & ELKINS L.L.P.
