<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 1995
REGISTRATION NOS. 33-60417
33-60417-01
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C>
ENRON CORP. ENRON CAPITAL RESOURCES, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER) IN ITS CHARTER)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION (STATE OR OTHER JURISDICTION OF INCORPORATION
OR ORGANIZATION) OR ORGANIZATION)
47-0255140 76-0438160
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
JAMES V. DERRICK, JR., ESQ. C/O JAMES V. DERRICK, JR., ESQ.
ENRON CORP. ENRON CORP.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL SENIOR VICE PRESIDENT AND GENERAL COUNSEL
1400 SMITH STREET, HOUSTON, TEXAS 77002 1400 SMITH STREET, HOUSTON, TEXAS 77002
(713) 853-6161 713-853-6161
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES AND AGENT FOR SERVICE) EXECUTIVE OFFICES AND AGENT FOR SERVICE)
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED IN
LIGHT OF MARKET CONDITIONS AND OTHER FACTORS.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. / /
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. /X/
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY PRICE FEE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Enron Corp. Debt Securities.....................
------------------------------------------------
Warrants to Purchase Debt Securities............
------------------------------------------------
Warrants to Purchase Common Stock(1)............
------------------------------------------------
Enron Corp. Second Preferred Stock.............. $525,000,000(4) (5) $525,000,000(6) $129,312(7)
------------------------------------------------
Enron Corp. Preference Stock.................... $ 51,725(8)
------------------------------------------------
Enron Corp. Depositary Shares(2)................
------------------------------------------------
Enron Capital Resources, L.P. Preferred
Securities....................................
------------------------------------------------
Enron Corp. Backup Undertakings with respect to
Enron Capital Resources, L.P. Preferred
Securities(3).................................
===============================================================================
</TABLE>
(1) Consists of warrants to purchase up to 7.5 million shares of Enron Corp.
Common Stock previously registered.
(2) The consideration for the Enron Corp. Depositary Shares is included in that
for the Enron Corp. Second Preferred Stock and Preference Stock.
(3) No separate consideration will be received for the Enron Corp. Backup
Undertakings with respect to Enron Capital Resources, L.P. Preferred
Securities.
(4) Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement contains a combined prospectus that also relates to 7.5 million
shares of Enron Corp. Common Stock and $75,000,000 of other securities
previously registered on Form S-3, Registration No. 33-53877. The maximum
aggregate offering price of securities covered by such combined prospectus
(in addition to the 7.5 million shares of Enron Corp. Common Stock
previously registered) is $600,000,000. Without limitation as to class of
securities, securities of the classes listed in the above table may be
offered pursuant to such combined prospectus at a maximum aggregate offering
price (or, in the case of Warrants to Purchase Debt Securities, offering
price plus warrant exercise price) of $600,000,000.
(5) The proposed maximum offering price per security is equal to (a) 100% of the
principal amount thereof in the case of Enron Corp. Debt Securities and (b)
the proposed maximum aggregate offering price divided by the number of
shares offered in the case of other securities.
(6) Estimated solely for the purposes of calculating the registration fee.
(7) Previously paid.
(8) Paid herewith.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement contains a combined prospectus that also relates to (i) 7.5 million
shares of Enron Corp. Common Stock and (ii) $75,000,000 of other securities
registered on Form S-3, Registration No. 33-53877, which was declared effective
on July 14, 1994 (the "Previously Registered Securities"). This Registration
Statement constitutes Post-Effective Amendment No. 1 to Registration Statement
No. 33-53877, pursuant to which the total amount of unsold Previously Registered
Securities (other than the 7.5 million shares of Enron Corp. Common Stock)
registered on Registration Statement No. 33-53877, without limitation as to
class of securities, may be offered and sold as Debt Securities, Warrants to
Purchase Debt Securities, Warrants to Purchase Common Stock, Enron Corp. Second
Preferred Stock, Enron Corp. Preference Stock, Enron Corp. Depositary Shares,
Enron Capital Resources, L.P. Preferred Securities and Enron Corp. Backup
Undertakings with respect to Enron Capital Resources, L.P. Preferred Securities,
together with the securities registered hereunder, and up to 7.5 million shares
of Enron Corp. Common Stock, through the use of the combined Prospectus included
herein. In the event such Previously Registered Securities are offered and sold
prior to the effective date of this Registration Statement, the amount of such
Previously Registered Securities so sold will not be included in the prospectus
hereunder.
================================================================================
<PAGE> 2
-------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
-------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED AUGUST 31, 1995
PROSPECTUS
[ENRON CORP LOGO]
DEBT SECURITIES
SECOND PREFERRED STOCK
PREFERENCE STOCK
COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK
WARRANTS TO PURCHASE DEBT SECURITIES
------------------------
Enron Corp. ("Enron") may offer from time to time (i) secured or unsecured
debt securities ("Debt Securities") consisting of debentures, notes or other
secured or unsecured evidences of indebtedness in one or more series, (ii)
shares of second preferred stock, par value $1.00 per share ("Second Preferred
Stock"), in one or more series, which may be represented by depositary shares
("Depositary Shares") evidenced by depositary receipts, (iii) shares of
preference stock, par value $1.00 per share ("Preference Stock"), in one or more
series, which may be represented by Depositary Shares evidenced by depositary
receipts, (iv) warrants to purchase Debt Securities ("Debt Warrants") and Debt
Securities issuable upon exercise of Debt Warrants, or (v) any combination of
the foregoing, at an aggregate initial public offering price not to exceed
$600,000,000, at prices and on terms to be determined at or prior to the time of
sale. In addition, Enron or certain selling stockholders (the "Selling
Stockholders") may offer from time to time up to 7.5 million shares of Enron
common stock, par value $.10 per share ("Common Stock"), at prices and on terms
to be determined at or prior to the time of sale. Enron may offer from time to
time warrants to purchase up to 7.5 million shares of Common Stock ("Stock
Warrants") and Common Stock issuable upon exercise of Stock Warrants, at prices
and on terms to be determined at or prior to the time of sale.
Specific terms of the securities in respect of which this Prospectus is
being delivered ("Offered Securities") will be set forth in an accompanying
Prospectus Supplement ("Prospectus Supplement"), together with the terms of the
offering of the Offered Securities, the initial price thereof and the net
proceeds from the sale thereof. The Prospectus Supplement will set forth with
regard to the particular Offered Securities, without limitation, the following:
(i) in the case of Debt Securities, the specific designation, aggregate
principal amount, authorized denomination, maturity, rate (which may be fixed or
variable) or method of calculation of interest and dates for payment thereof,
and any exchangeability, conversion, redemption, prepayment or sinking fund
provisions and any listing on a securities exchange, (ii) in the case of Second
Preferred Stock and Preference Stock, the designation, number of shares or
fractional interests therein, liquidation preference per share, initial public
offering price, dividend rate (or method of calculation thereof), dates on which
dividends shall be payable and dates from which dividends shall accrue, any
redemption or sinking fund provisions and any listing on a securities exchange
and (iii) in the case of Common Stock, whether the seller thereof is Enron or
one or more Selling Stockholders. If shares of Second Preferred Stock or
Preference Stock are to be represented by Depositary Shares, the Prospectus
Supplement will set forth the fraction of a share of such Second Preferred Stock
or Preference Stock represented by one Depositary Share. With regard to Stock
Warrants and Debt Warrants, if any, the Prospectus Supplement will contain a
description of the Common Stock and Debt Securities, respectively, for which
each warrant is exercisable and the offering price, if any, exercise price,
duration, detachability, call provisions, and other principal terms of the
warrants.
As part of the Offered Securities, Enron Capital Resources, L.P. ("Enron
Capital Resources"), a Delaware limited partnership of which Enron is the
general partner, may also offer from time to time limited partner interests
designated as preferred securities, preferred units or preferred shares or
having such other designation as Enron shall establish ("Preferred Securities").
The Preferred Securities may be offered in one or more series, at an aggregate
initial public offering price not to exceed $600,000,000 at the time of sale. In
connection therewith, Enron may offer back-up undertakings ("Backup
Undertakings") with respect to the Preferred Securities, as described in this
Prospectus under "Enron Capital Resources, L.P." Enron Capital Resources exists
solely for purposes of issuing Preferred Securities and lending the net proceeds
thereof to Enron. If Enron fails to make interest payments on the loans, Enron
Capital Resources will have insufficient funds to make distributions to holders
of Preferred Securities. The terms of the Backup Undertakings, the rights of
holders of Preferred Securities to cause acceleration of the loans and other
rights of the holders of Preferred Securities will be set forth in the related
Prospectus Supplement. The term "Offered Securities" as used herein shall also
refer to such Preferred Securities and any related Backup Undertakings. Any
issue of Preferred Securities and related Backup Undertakings shall
correspondingly reduce the amount of other Offered Securities available for
offer and sale hereunder.
Enron and/or Enron Capital Resources may sell the Offered Securities
directly, through agents designated from time to time or through underwriters or
dealers. See "Plan of Distribution." If any agents of Enron and/or Enron Capital
Resources or any underwriters or dealers are involved in the sale of the Offered
Securities, the names of such agents, underwriters or dealers and any applicable
commissions and discounts will be set forth in the related Prospectus
Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1995.
<PAGE> 3
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
IN A PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ENRON OR
ENRON CAPITAL RESOURCES. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT
CONSTITUTES AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE HEREUNDER
OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THEREOF.
AVAILABLE INFORMATION
Enron is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the following Regional Offices of the Commission: Midwest
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Northeast Regional Office, 7 World Trade Center, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Enron's Common Stock and Cumulative
Second Preferred Convertible Stock are listed on the New York and Midwest Stock
Exchanges, and Enron's Common Stock is also listed on the Pacific Stock
Exchange. Reports, proxy statements and other information concerning Enron can
be inspected and copied at the respective offices of these exchanges at 20 Broad
Street, New York, New York 10005; 120 South LaSalle Street, Chicago, Illinois
60603; and 301 Pine Street, San Francisco, California 94014.
This Prospectus constitutes a part of Registration Statements on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statements") filed with the Commission under the Securities Act of 1933 (the
"Securities Act") with respect to the Offered Securities. This Prospectus does
not contain all of the information set forth in such Registration Statements,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Reference is made to such Registration Statements and to the
exhibits relating thereto for further information with respect to Enron, Enron
Capital Resources and the Offered Securities. Any statements contained herein
concerning the provisions of any document filed as an exhibit to any of the
Registration Statements or otherwise filed with the Commission or incorporated
by reference herein are not necessarily complete, and in each instance reference
is made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
No separate financial statements of Enron Capital Resources have been
included herein. Enron and Enron Capital Resources do not consider that such
financial statements would be material to holders of Preferred Securities of
Enron Capital Resources because Enron Capital Resources is a special purpose
entity, has no operating history and no independent operations and is not
engaged in, and does not propose to engage in, any activity other than the
issuance of its securities and the lending of the proceeds thereof to Enron. See
"Enron Capital Resources, L.P." Furthermore, Enron guarantees payment of
dividends on, any redemption of and any liquidation distribution with respect
to, outstanding Preferred Securities, and will guarantee such payments on any
Preferred Securities issued hereunder. Enron Capital Resources is a limited
partnership organized in May 1994 under the Delaware Revised Uniform Limited
Partnership Act. Enron is the sole general partner of Enron Capital Resources,
and all of the limited partner interests in Enron Capital Resources are
beneficially owned by holders of outstanding Preferred Securities.
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Enron (File No.
1-3423) pursuant to Section 13(a) of the Exchange Act are incorporated herein by
reference as of their respective dates:
(a) Annual Report on Form 10-K for the year ended December 31, 1994;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1995; and
(c) Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
Each document filed by Enron pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Offered Securities pursuant hereto shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such document. Any statement contained herein or in a document
all or a portion of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Enron will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the request of any such person, a copy of any or all
of the foregoing documents incorporated herein by reference other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to Secretary Division,
Enron Corp., at its principal executive offices, 1400 Smith Street, Houston,
Texas 77002 (telephone: 713-853-6161).
3
<PAGE> 5
BUSINESS OF ENRON CORP.
Enron Corp. ("Enron"), a Delaware corporation organized in 1930, is an
integrated natural gas company with headquarters in Houston, Texas. Essentially
all of Enron's operations are conducted through its subsidiaries and affiliates
which are principally engaged in the gathering, transportation and wholesale
marketing of natural gas to markets throughout the United States and
internationally through approximately 44,000 miles of natural gas pipelines; the
exploration for and production of natural gas and crude oil in the United States
and internationally; the production, purchase, transportation and worldwide
marketing of natural gas liquids and refined petroleum products; the independent
(i.e., non-utility) development, promotion, construction and operation of power
plants, natural gas liquids facilities and pipelines in the United States and
internationally; and the non-price regulated purchasing and marketing of energy
related commitments.
TRANSPORTATION AND OPERATION. Enron's operations include the interstate
transmission of natural gas, construction, management and operation of natural
gas and natural gas liquids pipelines, liquids plants, clean fuel plants and
power facilities. Enron and its subsidiaries operate domestic interstate
pipelines extending from Texas to the Canadian border and across the southern
United States from Florida to California. Included in Enron's domestic
interstate natural gas pipeline operations are Northern Natural Gas Company
("Northern"), Transwestern Pipeline Company ("Transwestern"), and Florida Gas
Transmission Company ("Florida Gas") (indirectly 50% owned by Enron), and all
such pipelines are subject to the regulatory jurisdiction of the Federal Energy
Regulatory Commission. Each pipeline serves customers in a specific geographical
area: Northern, the upper Midwest; Florida Gas, the State of Florida; and
Transwestern, principally the California market. In addition, Enron holds a 13%
interest in Northern Border Partners, L.P., which owns a 70% interest in the
Northern Border Pipeline system. An Enron subsidiary operates the Northern
Border Pipeline system, which transports gas from western Canada to delivery
points in the midwestern United States. Also, Enron has an approximately 15%
interest in Enron Liquids Pipeline, L.P., which is engaged in pipeline
transportation of natural gas liquids, refined petroleum products and carbon
dioxide, operates coal terminalling, gas processing and natural gas liquids
fractionation facilities, and is operated by a wholly owned subsidiary of Enron.
DOMESTIC GAS AND POWER SERVICES. Enron Capital & Trade Resources Corp. and
its affiliated companies ("ECT") purchase natural gas, gas liquids and power
through a variety of contractual arrangements, including both short and long
term contracts, the arrangement of production payment and other financing
transactions, and other contractual arrangements. ECT markets these energy
products to local distribution companies, electric utilities, cogenerators, and
both commercial and industrial end-users. ECT also provides price risk
management services in connection with natural gas, gas liquids and power
transactions through both physical delivery and financial arrangements.
ECT offers a broad range of non-price regulated natural gas merchant
services by tailoring a variety of supply and marketing options to its
customers' specific needs. ECT's strategy is to provide predictable pricing,
reliable delivery and low cost capital to its customers. ECT provides these
services through a variety of instruments, including forward contracts, swap
agreements and other contractual commitments.
Certain Enron subsidiaries are engaged domestically in the extraction of
natural gas liquids (ethane, propane, normal butane, isobutane and natural
gasoline), which are typically extracted from natural gas in liquid form under
low temperature and high pressure conditions. Ethane, propane, normal butane,
isobutane and natural gasoline are used as feedstocks for petrochemical plants
in the production of plastics, synthetic rubber and other products. Normal
butane and natural gasoline are used by refineries in the blending of motor
gasoline. Isobutane is used in the alkylation process to enhance the octane
content of motor gasoline and is also used in the production of MTBE, which is
used to produce cleaner burning motor gasoline. Propane is used as fuel for home
heating and cooking, crop drying and industrial facilities and as an engine fuel
for vehicles, and ethane is used as a feedstock for synthetic fuels production.
4
<PAGE> 6
INTERNATIONAL GAS AND POWER SERVICES. Enron's international activities
principally involve the independent (non-utility) development, acquisition,
promotion and operation of natural gas and power projects and the marketing of
natural gas liquids. As is the case in the United States, Enron's emphasis is on
businesses in which natural gas or its components play a significant role.
Development projects are focused on power plants, gas processing and terminaling
facilities, and gas pipelines, while marketing activities center on fuels used
by or transported through such facilities. Enron's international activities
include management of direct and indirect ownership interests in and operation
of power plants in England, Germany, Guatemala and the Philippines; a pipeline
system in southern Argentina; retail gas and propane sales in the Caribbean
basin; processing of natural gas liquids at Teesside, England; and marketing of
natural gas liquids worldwide. Enron is also involved in power and pipeline
projects in varying stages of development in India, China, the Dominican
Republic, Colombia, Turkey, Bolivia and Brazil, Indonesia and elsewhere.
Enron Global Power & Pipelines L.L.C., a Delaware limited liability company
("EPP"), was formed in November 1994 by Enron to own and manage Enron's
operating power plant and natural gas pipeline business conducted outside the
United States, Canada and Western Europe, and to expand such business through
acquisitions. EPP's initial assets consist of interests contributed by Enron in
two power plants in the Philippines (with 226 megawatts of aggregate net
generating capacity), a power plant in Guatemala (with 110 megawatts of net
generating capacity) and a 6,548 kilometer (4,069 mile) natural gas pipeline
system in Argentina. The public offering of common shares of EPP was completed
in November 1994. Enron owns approximately 52% of the common shares of EPP.
Enron formed EPP to attract public equity capital to emerging market
infrastructure projects, to enable public investors to better evaluate and
participate directly in the growth of Enron's operating power plant and natural
gas pipeline activities in emerging markets and to generate additional capital
for Enron to reinvest in future development efforts and for other corporate
purposes.
EXPLORATION AND PRODUCTION. Enron's natural gas and crude oil exploration
and production operations are conducted by its subsidiary, Enron Oil & Gas
Company ("EOG"). Enron currently owns 80% of the outstanding common stock of
EOG. EOG is engaged in the exploration for, and development, production and
marketing of, natural gas and crude oil primarily in major producing basins in
the United States, as well as in Canada, Trinidad, India and to a lesser extent,
selected other international areas. At December 31, 1994, EOG had estimated net
proved natural gas reserves of 1,910 billion cubic feet and estimated net proved
crude oil, condensate and natural gas liquids reserves of 37 million barrels,
and at such date, approximately 70% of EOG's reserves (on a natural gas
equivalent basis) was located in the United States, 16% in Canada, 11% in
Trinidad and 3% in India.
Enron, a Delaware corporation, has its principal executive offices at 1400
Smith Street, Houston, Texas 77002, and its telephone number is 713-853-6161.
5
<PAGE> 7
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities will be added to
Enron's general funds and are expected to be used to retire existing
indebtedness and for general corporate purposes, except as may be stated in an
amendment or supplement hereto.
RATIOS OF ENRON'S EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.......... 3.22 2.40 1.98 1.74 1.66 1.58
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................. 2.75 2.18 1.87 1.64 1.54 1.47
</TABLE>
The ratios of earnings to fixed charges and earnings to fixed charges and
preferred stock dividends are based on continuing operations. "Earnings"
represent the aggregate of (a) the pre-tax income of Enron and its majority
owned subsidiaries, (b) Enron's share of pre-tax income of its 50% owned
companies, (c) any income actually received from less than 50% owned companies,
and (d) fixed charges, net of interest capitalized. "Fixed Charges" represent
interest (whether expensed or capitalized), amortization of debt discount and
expense and that portion of rentals considered to be representative of the
interest factor. "Fixed Charges and Preferred Stock Dividends" represent fixed
charges (as described above) and preferred stock dividend requirements of Enron
and its majority owned subsidiaries.
6
<PAGE> 8
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate (the "Offered Debt Securities"). The particular
terms of the Offered Debt Securities and the extent, if any, to which such
general provisions may apply to the Offered Debt Securities will be described in
the Prospectus Supplement relating to such Offered Debt Securities.
The Offered Debt Securities will be secured or unsecured obligations of
Enron. Any such unsecured obligations will be issued under an Indenture (the
"Indenture") between Enron and Harris Trust and Savings Bank, as Trustee (the
"Trustee"), dated as of November 1, 1985. The following statements are summaries
of certain provisions contained in the Indenture, the form of which is filed as
an exhibit to the Registration Statements of which this Prospectus is a part.
Reference is hereby made to the Indenture for full and complete statements of
such terms and provisions, including the definitions of certain terms used
herein. Wherever reference is made in the following statements to a particular
section of the Indenture, such section shall be deemed to be incorporated in
such statements as a part thereof. If Offered Debt Securities will be secured
obligations of Enron, they will be issued under a separate indenture, which will
be described in the Prospectus Supplement relating to such Offered Debt
Securities.
GENERAL
The Indenture does not limit the aggregate principal amount of unsecured
debentures, notes or other evidences of indebtedness of Enron (the "Indenture
Securities") which may be issued thereunder from time to time in one or more
series by Enron, and Enron may in the future issue additional Indenture
Securities (in addition to the Offered Debt Securities) under the Indenture. At
August 15, 1995, an aggregate of $1,350,000,000 principal amount of Indenture
Securities of Enron was issued and outstanding under the Indenture. Reference is
made to the Prospectus Supplement for the following terms of the Offered Debt
Securities: (i) the title of the Offered Debt Securities; (ii) any limit upon
the aggregate principal amount of the Offered Debt Securities; (iii) the date or
dates on which the principal of the Offered Debt Securities is payable; (iv) the
rate or rates (which may be fixed or variable), or the method by which such rate
or rates shall be determined, at which the Offered Debt Securities shall bear
interest, if any, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the interest payment
dates on which such interest shall be payable and the regular record date for
the interest payable on any interest payment date; (v) the place or places where
the principal of (and premium, if any) and interest on Offered Debt Securities
shall be payable; (vi) the period or periods within which, the price or prices
at which and the terms and conditions upon which Offered Debt Securities may be
redeemed, in whole or in part, at the option of Enron, if Enron is to have that
option; (vii) the obligation, if any, and the option, if any, of Enron to
redeem, purchase or repay Offered Debt Securities pursuant to any sinking fund
or analogous provisions or at the option of a holder thereof and the period or
periods within which, the price or prices at which and the terms and conditions
upon which Offered Debt Securities shall be redeemed, purchased or repaid in
whole or in part, pursuant to such obligation or option; (viii) any trustees,
paying agents, transfer agents or registrars with respect to Offered Debt
Securities; and (ix) any other terms of the Offered Debt Securities (which terms
shall not be inconsistent with the provisions of the Indenture). (Section 301.)
Enron will maintain in each place specified by it for payment of any series
of Offered Debt Securities an office or agency where Offered Debt Securities of
that series may be presented or surrendered for payment, where Offered Debt
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon Enron in respect of the
Offered Debt Securities of that series and the Indenture may be served.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or integral multiples thereof.
(Section 302.) No service charge will be made for any transfer or exchange of
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<PAGE> 9
such Offered Debt Securities, but Enron may require payment of a sum sufficient
to cover any tax or other governmental charge payable in relation thereto.
(Section 305.)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
principal amount. Material federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof as a result of the occurrence of an Event
of Default and the continuation thereof. (Section 101.)
LIMITATIONS ON MORTGAGES AND LIENS
The Indenture provides that so long as any of the Indenture Securities
issued under the Indenture (including the Offered Debt Securities) are
outstanding, Enron will not, and will not permit any Subsidiary (as defined in
the Indenture and herein) to, pledge, mortgage or hypothecate, or permit to
exist, except in favor of Enron or any Subsidiary, any mortgage, pledge or other
lien upon, any Principal Property (as defined in the Indenture and herein) at
any time owned by it, to secure any indebtedness (as defined in the Indenture),
unless effective provision is made whereby outstanding Indenture Securities
(including the Offered Debt Securities) will be equally and ratably secured with
any and all such indebtedness and with any other indebtedness similarly entitled
to be equally and ratably secured. This restriction does not apply to prevent
the creation or existence of: (a) mortgages, pledges, liens or encumbrances on
any property held or used by Enron or a Subsidiary in connection with the
exploration for, development of or production of, oil, gas, natural gas
(including liquified gas and storage gas), other hydrocarbons, helium, coal,
metals, minerals, steam, timber, geothermal or other natural resources or
synthetic fuels, such properties to include, but not be limited to, Enron's or a
Subsidiary's interest in any mineral fee interests, oil, gas or other mineral
leases, royalty, overriding royalty or net profits interests, production
payments and other similar interests, wellhead production equipment, tanks,
field gathering lines, leasehold or field separation and processing facilities,
compression facilities and other similar personal property and fixtures; (b)
mortgages, pledges, liens or encumbrances on oil, gas, natural gas (including
liquified gas and storage gas), other hydrocarbons, helium, coal, metals,
minerals, steam, timber, geothermal or other natural resources or synthetic
fuels produced or recovered from any property, an interest in which is owned or
leased by Enron or a Subsidiary; (c) mortgages, pledges, liens or encumbrances
(or certain extensions, renewals or refundings thereof) upon any property
acquired before or after the date of the Indenture, created at the time of
acquisition or within one year thereafter to secure all or a portion of the
purchase price thereof, or existing thereon at the date of acquisition, whether
or not assumed by Enron or a Subsidiary, provided that every such mortgage,
pledge, lien or encumbrance applies only to the property so acquired and fixed
improvements thereon; (d) mortgages, pledges, liens or encumbrances upon any
property acquired before or after the date of the Indenture by any corporation
that is or becomes a Subsidiary after the date of the Indenture ("Acquired
Entity"), provided that every such mortgage, pledge, lien or encumbrance (1)
shall either (i) exist prior to the time the Acquired Entity becomes a
Subsidiary or (ii) be created at the time the Acquired Entity becomes a
Subsidiary or within one year thereafter to secure all or a portion of the
acquisition price thereof and (2) shall only apply to those properties owned by
the Acquired Entity at the time it becomes a Subsidiary or thereafter acquired
by it from sources other than Enron or any other Subsidiary; (e) pledges of
current assets, in the ordinary course of business, to secure current
liabilities; (f) deposits to secure public or statutory obligations; (g) liens
to secure indebtedness other than Funded Debt (as defined in the Indenture and
herein); (h) mortgages, pledges, liens or encumbrances upon any office, data
processing or transportation equipment; (i) mortgages, pledges, liens or
encumbrances created or assumed by Enron or a Subsidiary in connection with the
issuance of debt securities the interest on which is excludable from gross
income of the holder of such security pursuant to the Internal Revenue Code of
1986, as amended, for the purpose of financing the acquisition or construction
of property to be used by Enron or a Subsidiary; (j) pledges or assignments of
accounts receivable or conditional sales contracts or chattel mortgages and
evidences of indebtedness secured thereby, received in connection with the sale
by Enron or a
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<PAGE> 10
Subsidiary of goods or merchandise to customers; or (k) certain other liens or
encumbrances. (Section 1007.)
Notwithstanding the foregoing, Enron or a Subsidiary may issue, assume or
guarantee indebtedness secured by a mortgage which would otherwise be subject to
the foregoing restrictions in an aggregate amount which, together with all other
indebtedness of Enron or a Subsidiary secured by a mortgage which (if originally
issued, assumed or guaranteed at such time) would otherwise be subject to the
foregoing restrictions (not including secured indebtedness permitted under the
foregoing exceptions), does not at the time exceed 10% of the Consolidated Net
Tangible Assets (total assets less (a) total current liabilities, excluding
indebtedness due within 12 months, and (b) goodwill, patents and trademarks) of
Enron, as shown on the audited consolidated financial statements of Enron as of
the end of the fiscal year preceding the date of determination. (Section 1007.)
The holders of at least 50% in principal amount of the outstanding
Indenture Securities under the Indenture (including the Offered Debt Securities)
may waive compliance by Enron with the covenant contained in Section 1007 of the
Indenture (and certain other covenants of Enron). (Section 1009.)
The Indenture defines the term "Subsidiary" to mean a corporation all of
the voting shares (that is, shares entitled to vote for the election of
directors, but excluding shares entitled so to vote only upon the happening of
some contingency unless such contingency shall have occurred) of which shall be
owned by Enron or by one or more Subsidiaries or by Enron and one or more
Subsidiaries. The term "Principal Property" is defined to mean any oil or gas
pipeline, gas processing plant or chemical plant located in the United States,
except any such property, pipeline or plant that in the opinion of the Board of
Directors of Enron is not of material importance to the total business conducted
by Enron and its Subsidiaries. "Principal Property" does not include any oil or
gas property or the production or any proceeds of production from an oil or gas
producing property or the production or any proceeds of production of gas
processing plants or oil or gas or petroleum products in any pipeline. (Section
101.)
The term "indebtedness", as applied to Enron or any Subsidiary, is defined
to mean bonds, debentures, notes and other instruments representing obligations
created or assumed by any such corporation for the repayment of money borrowed
(other than unamortized debt discount or premium). All indebtedness secured by a
lien upon property owned by Enron or any Subsidiary and upon which indebtedness
any such corporation customarily pays interest, even though such corporation has
not assumed or become liable for the payment of such indebtedness, is also
deemed to be indebtedness of any such corporation. All indebtedness for money
borrowed incurred by other persons which is directly guaranteed as to payment of
principal by Enron or any Subsidiary is for all purposes of the Indenture deemed
to be indebtedness of any such corporation, but no other contingent obligation
of any such corporation in respect of indebtedness incurred by other persons is
for any purpose deemed indebtedness of such corporation. Indebtedness of Enron
or any Subsidiary does not include (i) amounts which are payable only out of all
or a portion of the oil, gas, natural gas, helium, coal, metals, minerals,
steam, timber or other natural resources produced, derived or extracted from
properties owned or developed by such corporation; (ii) any amount representing
capitalized lease obligations; (iii) any indebtedness incurred to finance oil,
gas, natural gas, helium, coal, metals, minerals, steam, timber, hydrocarbons or
geothermal or other natural resources or synthetic fuel exploration or
development, payable, with respect to principal and interest, solely out of the
proceeds of oil, gas, natural gas, helium, coal, metals, minerals, steam,
timber, hydrocarbons or geothermal or other natural resources or synthetic fuel
to be produced, sold and/or delivered by Enron or any Subsidiary; (iv) indirect
guarantees or other contingent obligations in connection with the indebtedness
of others, including agreements, contingent or otherwise, with such other
persons or with third persons with respect to, or to permit or ensure the
payment of, obligations of such other persons, including, without limitation,
agreements to purchase or repurchase obligations of such other persons,
agreements to advance or supply funds to or to invest in such other persons or
agreements to pay for property, products or services of such other persons
(whether or not conferred, delivered or rendered) and any demand charge,
throughput, take-or-pay, keep-well, make-whole, cash deficiency, maintenance of
working capital or earnings or similar agreements; and (v) any guarantees with
respect to lease or other similar periodic payments to be made by other persons.
(Section 101.)
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<PAGE> 11
The term "Funded Debt" as applied to any corporation means all indebtedness
incurred, created, assumed or guaranteed by such corporation, or upon which it
customarily pays interest charges, which matures, or is renewable by such
corporation to a date, more than one year after the date as of which Funded Debt
is being determined; provided, however, that the term "Funded Debt" shall not
include (i) indebtedness incurred in the ordinary course of business
representing borrowings, regardless of when payable, of such corporation from
time to time against, but not in excess of the face amount of, its installment
accounts receivable for the sale of appliances and equipment sold in the regular
course of business or (ii) advances for construction and security deposits
received by such corporation in the ordinary course of business. (Section 101.)
The foregoing limitations on mortgages, pledges and liens are intended to
limit other creditors of Enron from obtaining preference or priority over
holders of the Indenture Securities issued under the Indenture, but are not
intended to prevent other creditors from sharing equally and ratably and without
preference ("pari passu") over the holders of such Indenture Securities. While
such limitations on mortgages and liens do provide protection to the holders of
the Indenture Securities, there are a number of exceptions to such restrictions
which could result in certain assets of Enron and its Subsidiaries being
encumbered without equally and ratably securing the Indenture Securities issued
under the Indenture. Specifically, the restrictions apply only to pledges,
mortgages or liens upon "Principal Property" (as defined in the Indenture and
herein) to secure any "indebtedness" (as defined in the Indenture and herein),
unless effective provision is made whereby outstanding Securities will be
equally and ratably secured with any such indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. There are
certain exceptions to the definition of "indebtedness," which are enumerated in
the Indenture and herein. In addition, the restrictions do not apply to prevent
the creation or existence of mortgages, pledges, liens or encumbrances on
certain types of properties or pursuant to certain types of transactions, all as
enumerated in the Indenture and above. Also, up to 10% of Consolidated Net
Tangible Assets (as defined in the Indenture and herein) is not subject to the
mortgage and lien limitations contained in the Indenture.
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Indenture Securities would not necessarily
afford holders of the Indenture Securities protection in the event of a highly
leveraged or other transaction involving Enron that may adversely affect
holders.
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture provides that, with the consent of
the holders of not less than 50% in principal amount of all outstanding
Indenture Securities (including, where applicable, the Offered Debt Securities)
affected thereby, Enron and the Trustee may enter into a supplemental indenture
for the purpose of adding to, changing or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of
Indenture Securities under the Indenture. Notwithstanding the foregoing, the
consent of the holder of each outstanding Indenture Security affected thereby
will be required to: (a) change the Stated Maturity (as defined in the
Indenture) of the principal of, or any installment of principal of or interest
on, any Indenture Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof, or
change any Place of Payment (as defined in the Indenture) where, or change the
coin or currency in which, any Indenture Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date, as defined in the Indenture); (b)
reduce the percentage in principal amount of the outstanding Indenture
Securities of any series, the consent of whose holders is required for any
supplemental indenture or for any waiver provided for in the Indenture; or (c)
with certain exceptions, modify any of the provisions of the sections of the
Indenture which concern waivers of past defaults, waivers of certain covenants
or consent to supplemental indentures, except to increase the percentage of
principal amount of Indenture Securities of any series, the holders of which are
required to effect such waiver or consent, or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each outstanding Indenture Security affected
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<PAGE> 12
thereby. The Indenture provides that a supplemental indenture which changes or
eliminates any covenant or other provision of the Indenture which has expressly
been included solely for the benefit of one or more particular series of
Indenture Securities, or which modifies the rights of the holders of Indenture
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under the Indenture of the holders of
Indenture Securities of any other series. (Section 902.)
EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT
Under the Indenture, the term "Event of Default" with respect to any series
of Indenture Securities, means any one of the following events which shall have
occurred and is continuing: (a) default in the payment of any interest upon any
Indenture Security of that series when it becomes due and payable or default in
the payment of any mandatory sinking fund payment provided for by the terms of
any series of Indenture Securities, and continuance of such default for a period
of 30 days; (b) default in the payment of the principal of (or premium, if any,
on) any Indenture Security of that series at its maturity; (c) default in the
performance, or breach, of any covenant or warranty of Enron in the Indenture
(other than a covenant or warranty a default in the performance of which or the
breach of which is otherwise specifically dealt with in the Indenture or which
has been expressly included in the Indenture solely for the benefit of one or
more series of Indenture Securities other than that series), and continuance of
such default or breach for 60 days after there has been given to Enron by the
Trustee, or to Enron and the Trustee by the holders of at least 25% in principal
amount of all outstanding Indenture Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" under the Indenture; or (d) certain events involving
Enron in bankruptcy, receivership or other insolvency proceedings or an
assignment for the benefit of creditors. (Section 501.)
If an Event of Default described in clause (a) or (b) in the foregoing
paragraph has occurred and is continuing with respect to Indenture Securities of
any series, the Indenture provides that the Trustee or the holders of not less
than 25% in principal amount of the outstanding Indenture Securities of that
series may declare the principal amount of all of the Indenture Securities of
that series to be due and payable immediately, and upon any such declaration
such principal amount shall become immediately due and payable. If an Event of
Default described in clause (c) or (d) of the foregoing paragraph occurs and is
continuing, the Trustee or the holders of not less than 25% in principal amount
of all of the Indenture Securities then outstanding may declare the principal
amount of all of the Indenture Securities to be due and payable immediately, and
upon any such declaration such principal amount shall become immediately due and
payable. (Section 502.)
A default under other indebtedness of Enron is not an Event of Default
under the Indenture, and an Event of Default under one series of Indenture
Securities will not necessarily be an Event of Default under another series.
At any time after such a declaration of acceleration with respect to
Indenture Securities of any series (or of all series, as the case may be) has
been made and before judgment or decree for payment of the money due has been
obtained by the Trustee, the holders of a majority in principal amount of the
outstanding Indenture Securities of that series (or of all series, as the case
may be) may rescind and annul such declaration and its consequences, if, subject
to certain conditions, all Events of Default with respect to Indenture
Securities of that series (or of all series, as the case may be), other than the
non-payment of the principal of the Indenture Securities due solely by such
declaration of acceleration, have been cured or waived and all payments due
(other than by acceleration) have been paid or deposited with the Trustee.
(Section 502.) With certain exceptions, the holders of not less than a majority
in principal amount of the outstanding Indenture Securities of any series, on
behalf of the holders of all the Indenture Securities of such series, may waive
any past default described in clause (a) or (b) of the first paragraph of this
heading "Events of Default and Rights Upon Default" (or, in the case of a
default described in clause (c) or (d) of such paragraph, the holders of a
majority in principal amount of all outstanding Indenture Securities may waive
any such past default), and its consequences, except a default (a) in the
payment of the principal of (or premium, if any) or interest on any Indenture
Security, or (b) in respect of a covenant or provision of the Indenture which
under the Indenture cannot be
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modified or amended without the consent of the holder of each outstanding
Indenture Security of such series affected. (Section 513.)
The holders of not less than a majority in principal amount of the
Indenture Securities of any series at the time outstanding are empowered under
the terms of the Indenture, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. (Section
512.)
The Indenture further provides that no holder of an Indenture Security of
any series may enforce the Indenture except in the case of failure by the
Trustee to act for 60 days after notice of a continuing Event of Default with
respect to the Indenture Securities of that series and after request by the
holders of not less than 25% in principal amount of the outstanding Indenture
Securities of such series and the offer to the Trustee of reasonable indemnity,
but this provision will not prevent a holder of any Indenture Security from
enforcing the payment of the principal of, and interest on, such holder's
Indenture Security. (Sections 507 and 508.)
The Indenture requires that Enron deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officer's Certificate, stating whether to
the best knowledge of the signers thereof Enron is in default in the performance
and observance of certain of the terms of the Indenture and, if so, specifying
each such default and the nature and status thereof of which the signers may
have knowledge. (Section 1008.)
DISCHARGE OF INDENTURE
With certain exceptions, Enron may discharge its obligations under the
Indenture with respect to any series of Indenture Securities by (i) paying or
causing to be paid the principal of (and premium, if any) and interest on all
the Indenture Securities of such series outstanding, as and when the same shall
become due and payable; (ii) delivering to the Trustee all outstanding Indenture
Securities of such series for cancellation; or (iii) entering into an agreement
in form and substance satisfactory to Enron and the Trustee providing for the
creation of an escrow fund and depositing in trust with the Trustee, as escrow
agent of such fund, sufficient funds in cash and/or Eligible Obligations and/or
U.S. Government Obligations, maturing as to principal and interest in such
amounts and at such times as will be sufficient to pay at the Stated Maturity or
Redemption Date all such Indenture Securities of such series not previously
delivered to the Trustee for cancellation, including principal (and premium, if
any) and interest to the Stated Maturity or Redemption Date. (Section 401.)
The Indenture defines "Eligible Obligations" to mean interest bearing
obligations as a result of the deposit of which the Indenture Securities are
rated in the highest generic long-term debt rating category assigned to legally
defeased debt by one or more nationally recognized rating agencies. (Section
101.)
For federal income tax purposes, there is a substantial risk that a legal
defeasance of a series of Indenture Securities by the deposit of cash, Eligible
Obligations or U.S. Government Obligations in a trust would be characterized by
the Internal Revenue Service or a court as a taxable exchange by the holders of
the Indenture Securities of that series for either (i) an issue of obligations
of the defeasance trust or (ii) a direct interest in the cash and/or Eligible
Obligations and/or U.S. Government Obligations held in the defeasance trust. If
the defeasance were so characterized, then a holder of an Indenture Security of
the series defeased would be: (i) required to recognize gain or loss (which
would be capital gain or loss if the Indenture Securities were held as a capital
asset) at the time of the defeasance as if the Indenture Security had been sold
at such time for an amount equal to the amount of cash and the fair market value
of the Eligible Obligations and/or U.S. Government Obligations held in the
defeasance trust; (ii) required to include in income in each taxable year the
interest and any original issue discount or gain or loss attributable to either
such defeasance trust obligations or such securities, as the case may be; and
(iii) subject to the market discount provisions of the Internal Revenue Code as
they may pertain to such defeasance trust obligations or such securities. As a
result, a holder of an Indenture Security may be required to pay taxes on any
such gain or income even though such holder may not have received any cash
therefrom. Prospective investors are urged to consult their own advisors as to
the tax consequences
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of an actual or legal defeasance, including the applicability and effect of tax
laws other than federal income tax law.
CONCERNING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture. Such bank
also acts as a depository of funds for, makes loans to, and performs other
services for, Enron in the normal course of business, including acting as
trustee under other indentures of Enron.
The Indenture contains the provisions required by the Trust Indenture Act
of 1939 with reference to the disqualification of the Trustee if it shall have
or acquire any "conflicting interest", as therein defined. (Section 608.) The
Indenture also contains certain limitations on the right of the Trustee, as a
creditor of Enron, to obtain payment of claims in certain cases, or to realize
on certain property received by it in respect of any such claims, as security or
otherwise. (Section 613.)
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
number of shares of Common Stock which may be regarded as beneficially owned by
such Selling Stockholder and the maximum number of shares which may be offered
hereby by such Selling Stockholder as of the date hereof.
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF
BENEFICIALLY SHARES
SELLING STOCKHOLDER OWNED(1) OFFERED
------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Enron Corp. Flexible Equity Trust.................................. 7,087,000 (2)
Enron Corp. Savings Plan........................................... 7,462,061 (2)
</TABLE>
---------------
(1) Amounts shown reflect record ownership. The Enron Corp. Flexible Equity
Trust and the Enron Corp. Savings Plan have been established in connection
with Enron's employee benefit programs.
(2) The aggregate number of shares of Common Stock to be offered hereby by the
Selling Stockholders and Enron shall not exceed 7.5 million shares.
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DESCRIPTION OF ENRON CORP. CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
At July 31, 1995, the authorized capital stock of Enron was 616,500,000
shares, consisting of:
(a) 1,500,000 shares of Preferred Stock, par value $100 per share (the
"Preferred Stock"), of which no shares were outstanding;
(b) 5,000,000 shares of Second Preferred Stock, par value $1 per share
(the "Second Preferred Stock"), of which (i) 1,391,546 shares of Cumulative
Second Preferred Convertible Stock (the "Convertible Preferred Stock") were
outstanding, and (ii) 35.568509 shares of 9.142% Perpetual Second Preferred
Stock (the "Perpetual Second Preferred Stock") were issued and held by an
Enron subsidiary;
(c) 10,000,000 shares of Preference Stock, par value $1 per share (the
"Preference Stock"), of which no shares were outstanding; and
(d) 600,000,000 shares of Common Stock, par value $.10 per share (the
"Common Stock"), of which 252,460,435 shares were outstanding.
In general, the classes of authorized capital stock are afforded
preferences with respect to dividends and liquidation rights in the order listed
above. The Board of Directors of Enron is empowered, without approval of the
stockholders, to cause the Preferred Stock, Second Preferred Stock and
Preference Stock to be issued in one or more series, with the numbers of shares
of each series and the rights, preferences and limitations of each series to be
determined by it. Among the specific matters that may be determined by the Board
of Directors are: the annual rate of dividends; the redemption price, if any;
the terms of a sinking or purchase fund, if any; the amount payable in the event
of any voluntary liquidation, dissolution or winding up of the affairs of Enron;
conversion rights, if any; and voting powers, if any, in addition to those
described below. The descriptions set forth below do not purport to be complete
and are qualified in their entirety by reference to the Restated Certificate of
Incorporation of Enron, as amended (the "Restated Certificate of
Incorporation").
No holders of any class of Enron's capital stock are entitled to preemptive
rights.
SECOND PREFERRED STOCK
The following is a general description of the terms of the Second Preferred
Stock of Enron. The particular terms of any series of Second Preferred Stock
offered hereby ("Offered Second Preferred Stock") will be set forth in the
Prospectus Supplement relating thereto. The rights, preferences, privileges and
restrictions, including dividend rights, voting rights, terms of redemption and
liquidation preferences, of the Offered Second Preferred Stock of each series
will be fixed or designated pursuant to a certificate of designations adopted by
the Board of Directors or a duly authorized committee thereof. The description
of Second Preferred Stock set forth below and the description of the terms of a
particular series of Offered Second Preferred Stock that will be set forth in a
Prospectus Supplement do not purport to be complete and are qualified in their
entirety by reference to the certificate of designations relating to such
series.
The Offered Second Preferred Stock shall rank junior to the Preferred
Stock, if issued, and on a parity with each other series of Second Preferred
Stock, but in all respects, regardless of series, the Offered Second Preferred
Stock shall rank in preference to the Common Stock and Preference Stock, if
issued, as to payment of dividends and as to distribution of assets of Enron
upon the liquidation, dissolution or winding up of Enron. Upon issuance against
full payment of the purchase price therefor, shares of Offered Second Preferred
Stock will be fully paid and nonassessable.
DIVIDENDS. Holders of Offered Second Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors of Enron
out of any funds legally available for that purpose, dividends in cash at the
respective rate for such series, as stated in the certificate of
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designations for such series of Offered Second Preferred Stock, before any
dividends may be declared or paid or set apart for payment upon the Common
Stock, Preference Stock, if issued, or any other class of stock ranking junior
to such series of Offered Second Preferred Stock as to dividends. Dividends will
be payable on the first day of January, April, July and October of each year. No
dividend may be declared or paid on any series of Offered Second Preferred Stock
unless (a) all dividends on all series of Preferred Stock outstanding, if any,
for all past quarterly dividend periods and for the then current quarterly
dividend period shall have been paid or declared and a sum sufficient for the
payment thereof set apart and (b) Enron is not in arrears with respect to any
sinking fund payment on any series of Preferred Stock outstanding. No dividend
may be declared or paid on any series of Offered Second Preferred Stock unless
at the same time a dividend in like proportion to the respectively designated
dividend amounts shall be declared or paid on each other series of Second
Preferred Stock then issued and outstanding. Dividends on Offered Second
Preferred Stock shall be cumulative.
The annual rate of dividends payable on shares of the Convertible Preferred
Stock is the greater of $10.50 per share or the dividend amount payable on the
number of shares of Common Stock into which one share of Convertible Preferred
Stock is convertible (currently 13.652 shares). Such dividends are payable
quarterly on the first days of January, April, July and October. These dividend
rights are superior to the dividend rights of the Common Stock and will rank
equally with the dividend rights on the Offered Second Preferred Stock.
The annual rate of dividends payable on shares of the 9.142% Perpetual
Second Preferred Stock is $91,420 per share. Such dividends are payable
quarterly on the first days of January, April, July and October. These dividend
rights are superior to the dividend rights of the Common Stock and rank equally
with the dividend rights on all other series of Second Preferred Stock.
LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or
winding up of Enron, whether voluntary or involuntary, holders of Offered Second
Preferred Stock of each series (if any shares thereof are then issued and
outstanding) will be entitled to payment of the applicable liquidation price or
prices plus accrued dividends, out of the available assets of Enron, in
preference to the holders of the Common Stock or any other class of stock
ranking junior to such series of Offered Second Preferred Stock upon
liquidation, dissolution or winding up. Enron's Restated Certificate of
Incorporation provides that a sale, lease or conveyance of all or a part of the
property or assets of Enron or a consolidation or merger of Enron with one or
more corporations shall not be deemed to be a liquidation, dissolution or
winding up of Enron.
The amount payable on shares of the Convertible Preferred Stock in the
event of any involuntary or voluntary liquidation, dissolution or winding up of
the affairs of Enron is $100.00 per share, together with accrued dividends to
the date of distribution or payment. The liquidation rights of the Convertible
Preferred Stock will rank equally with the liquidation rights of Offered Second
Preferred Stock.
The amount payable on shares of the 9.142% Perpetual Second Preferred Stock
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of Enron is $1,000,000 per share, together with accrued
dividends. The liquidation rights have the same preferences and relationships to
other classes and series as described above with respect to dividend rights.
REDEMPTION AND CONVERSION. Any series of Offered Second Preferred Stock may
be subject to redemption on such terms and at such prices as may be provided in
the applicable certificate of designations.
The Convertible Preferred Stock is redeemable at the option of Enron at any
time, in whole or in part, at a redemption price of $100.00 per share, together
with accrued dividends to the date of distribution or payment. Each share of
Convertible Preferred Stock is convertible into 13.652 shares of Common Stock at
any time at the option of the holder.
The 9.142% Perpetual Second Preferred Stock is not redeemable at the option
of Enron. Pursuant to an agreement between Enron and its subsidiary, however,
such subsidiary has the right, exercisable at
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any time, in whole or in part, for a 180-day period commencing January 31, 2004,
to cause Enron to redeem 18 shares for $1,000,000 per share, together with
accrued dividends.
VOTING RIGHTS. The holders of the Second Preferred Stock (including the
Offered Second Preferred Stock) have no voting rights except as specifically
required by statute and except for certain voting rights specifically provided
in Enron's Restated Certificate of Incorporation and the certificates of
designations creating the various series of such stock. Enron's Restated
Certificate of Incorporation provides that the vote or consent of the holders of
at least a majority of the then outstanding shares of Second Preferred Stock
(including the Offered Second Preferred Stock), irrespective of series, is
required to effect (a) any change in the Restated Certificate of Incorporation
or bylaws which affects adversely the voting powers, rights or preferences of
the Second Preferred Stock (if only certain series are affected, separate votes
by the series affected are required); (b) the authorization or creation of, or
increase in the authorized amount of, any stock of any class, or any security
convertible into stock of any class, ranking prior to the Second Preferred
Stock; (c) the voluntary dissolution, liquidation or winding up of the affairs
of Enron, or the sale, lease or conveyance by Enron of all or substantially all
of its property or assets; (d) the purchase or redemption of less than all of
the Second Preferred Stock unless the full dividend on all shares of Second
Preferred Stock has been paid or declared and a sum sufficient for payment
thereof set apart; (e) the increase of the authorized amount of Second Preferred
Stock or the authorization or creation of or the increase in the authorized
amount of any stock of any class, or any security convertible into stock of any
class, ranking on a parity with the Second Preferred Stock; (f) any merger or
consolidation of Enron, except under certain conditions. Further, in the event
dividend payments on the Second Preferred Stock shall be in default in an amount
equivalent to six full quarterly dividends, then the holders of Second Preferred
Stock, voting separately as a class, shall be entitled to elect two directors of
Enron until such time as such dividends shall have been paid or funds sufficient
therefor deposited in trust.
Holders of Convertible Preferred Stock are entitled to vote together with
the Common Stock on all matters submitted to a vote of Enron stockholders, with
each share of Convertible Preferred Stock having a number of votes equal to the
number of shares of Common Stock into which one share of Convertible Preferred
Stock is convertible (currently 13.652 shares).
Voting rights of the holders of the Convertible Preferred Stock and Common
Stock are, and the voting rights of the Offered Second Preferred Stock will be,
non-cumulative.
PREFERENCE STOCK
The following is a general description of the terms of the Preference Stock
of Enron. The particular terms of any series of Preference Stock offered hereby
("Offered Preference Stock") will be set forth in the Prospectus Supplement
relating thereto. The rights, preferences, privileges and restrictions,
including dividend rights, voting rights, terms of redemption and liquidation
preferences, of the Offered Preference Stock of each series will be fixed or
designated pursuant to a certificate of designations adopted by the Board of
Directors or a duly authorized committee thereof. The description of Preference
Stock set forth below and the description of the terms of a particular series of
Offered Preference Stock that will be set forth in a Prospectus Supplement do
not purport to be complete and are qualified in their entirety by reference to
the certificate of designations relating to such series.
The Offered Preference Stock shall rank junior to the Preferred Stock, if
issued, and Second Preferred Stock, but in all respects, regardless of series,
the Offered Preference Stock shall rank in preference to the Common Stock as to
payment of dividends and as to distribution of assets of Enron upon the
liquidation, dissolution or winding up of Enron. Upon issuance against full
payment of the purchase price therefor, shares of Offered Preference Stock will
be fully paid and nonassessable.
DIVIDENDS. Holders of Offered Preference Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors of Enron
out of any funds legally available for that purpose, dividends in cash at the
respective rate for such series, as stated in the certificate of designations
for such series of Offered Preference Stock, before any dividends may be
declared or paid or set apart for
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payment upon the Common Stock or any other class of stock ranking junior to such
series of Offered Preference Stock as to dividends. Dividends will be payable on
the first day of January, April, July and October of each year. No dividend may
be declared or paid on any series of Offered Preference Stock unless (a) all
dividends on all series of Preferred Stock, if any, and Second Preferred Stock
outstanding for all past quarterly dividend periods and for the then current
quarterly dividend period shall have been paid or declared and a sum sufficient
for the payment thereof set apart and (b) Enron is not in arrears with respect
to any sinking fund payment on any series of Preferred Stock or Second Preferred
Stock outstanding. No dividend may be declared or paid on any series of Offered
Preference Stock unless at the same time a dividend in like proportion to the
respectively designated dividend amounts shall be declared or paid on each other
series of Preference Stock then issued and outstanding. Dividends on Offered
Preference Stock shall be cumulative.
LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or
winding up of Enron, whether voluntary or involuntary, holders of Offered
Preference Stock of each series (if any shares thereof are then issued and
outstanding) will be entitled to payment of the applicable liquidation price or
prices plus accrued dividends, out of the available assets of Enron, in
preference to the holders of the Common Stock or any other class of stock
ranking junior to such series of Offered Preference Stock upon liquidation,
dissolution or winding up. Enron's Restated Certificate of Incorporation
provides that a sale, lease or conveyance of all or a part of the assets of
Enron or a consolidation or merger of Enron shall not be deemed to be such a
liquidation, dissolution or winding up of Enron.
REDEMPTION AND CONVERSION. Any series of Offered Preference Stock may be
subject to redemption, if applicable, on such terms and at such prices as may be
provided in the applicable certificate of designations.
VOTING RIGHTS. The holders of the Preference Stock (including the Offered
Preference Stock) have no voting rights except as specifically required by
statute and except for certain voting rights specifically provided in Enron's
Restated Certificate of Incorporation and the certificates of designations
creating the various series of such stock. Enron's Restated Certificate of
Incorporation provides that the vote or consent of the holders of at least
two-thirds of the then outstanding shares of Preference Stock (including the
Offered Preference Stock), irrespective of series, is required to effect (a) any
change in the Restated Certificate of Incorporation or bylaws which affects
adversely the voting powers, rights or preferences of the Preference Stock (if
only certain series are affected, separate votes by the series affected are
required); (b) the authorization or creation of, or increase in the authorized
amount of, any stock of any class, or any security convertible into stock of any
class, ranking prior to the Preference Stock; (c) the voluntary dissolution,
liquidation or winding up of the affairs of Enron, or the sale, lease or
conveyance by Enron of all or substantially all of its property or assets; and
(d) the purchase or redemption of less than all of the Preference Stock unless
the full dividend on all shares of Preference Stock has been paid or declared
and a sum sufficient for payment thereof set apart. In addition, the vote or
consent of the holders of a majority of the then outstanding shares of
Preference Stock (including the Offered Preference Stock) is required (i) to
increase the authorized amount of Preference Stock, or to authorize or create or
to increase the authorized amount of, any stock of any class, or any security
convertible into stock of any class, ranking on a parity with the Preference
Stock; or (ii) to approve any mergers or consolidations of Enron, except under
certain conditions. Further, in the event dividends payments on the Preference
Stock shall be in default in an amount equivalent to six full quarterly
dividends, then the holders of Preference Stock, voting separately as a class,
shall be entitled to elect two directors of Enron until such time as such
dividends shall have been paid or funds sufficient therefor deposited in trust.
OTHER PREFERRED STOCK
The holders of the Preferred Stock, when and if issued, will have no voting
rights except as specifically required by statute and except for certain voting
rights specifically provided in Enron's Restated Certificate of Incorporation
and the certificates of designations creating the various series of such stock.
In general, a vote of at least two-thirds of a class, voting as a class, will be
required to effect
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(a) any change in the Restated Certificate of Incorporation or bylaws which
affects adversely the voting powers, rights or preferences of such class (if
only certain series are affected, separate votes by the series affected are
required); (b) the authorization or creation of, or the increase in the
authorized amount of, any stock of any class, or any security convertible into
stock of any class, ranking prior to the Preferred Stock; (c) the voluntary
dissolution, liquidation or winding up of the affairs of Enron or the sale,
lease or conveyance by Enron of all or substantially all of its property or
assets; or (d) the purchase or redemption of less than all of the shares of
Preferred Stock unless the full dividend on all shares of Preferred Stock has
been paid or declared and a sum sufficient for payment thereof set apart. In
addition, the vote of a majority of a class, voting as a class, is required (i)
to increase the authorized amount of Preferred Stock, or to authorize or create
or to increase the authorized amount of, any stock of any class, or any security
convertible into stock of any class, ranking on a parity with the Preferred
Stock; or (ii) to approve mergers or consolidations, except under certain
conditions. Further, in the event dividends payable on any such class shall be
in default in an amount equivalent to six full quarterly dividends, then the
holders of such class, voting separately as a class, shall be entitled to elect
two directors of Enron until such time as such dividends shall have been paid or
funds sufficient therefor deposited in trust.
COMMON STOCK
So long as any shares of Preferred Stock, Second Preferred Stock or
Preference Stock shall be outstanding, no dividends, whether in cash or
property, shall be paid or declared, nor shall any distribution be made, on the
Common Stock, nor shall any shares of any Common Stock be purchased, redeemed or
otherwise acquired for value by Enron, nor shall Enron permit any distribution
to be made on any Common Stock or shares of Common Stock purchased, redeemed or
otherwise acquired by any subsidiary, unless all dividends on the Preferred
Stock, Second Preferred Stock and Preference Stock of all series for all past
quarterly dividend periods and for the then current quarterly period shall have
been paid or declared and a sum sufficient for the payment thereof set apart,
and unless Enron shall not be in arrears with respect to any sinking fund
requirement for any such shares. The foregoing provisions shall not, however,
apply to a dividend payable in Common Stock or the acquisition of shares of
Common Stock in exchange for or through application of the proceeds of the sale
of shares of Common Stock.
Subject to the prior rights of the Preferred Stock, the Second Preferred
Stock and the Preference Stock, the shares of Common Stock of Enron: (a) are
entitled to such dividends as may be declared by the Board of Directors out of
funds legally available therefor; (b) are entitled to one vote per share; (c)
have no preemptive or conversion rights; (d) are not subject to, or entitled to
the benefits of, any redemption or sinking fund provision; and (e) are entitled
upon liquidation to receive the assets of Enron remaining after the payment of
corporate debts and the satisfaction of the liquidation preferences of the
Preferred Stock, Second Preferred Stock and Preference Stock.
CERTAIN OTHER PROVISIONS OF ENRON'S RESTATED CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation of Enron limits the liability of
directors of Enron (in their capacity as directors but not in their capacity as
officers) to Enron or its stockholders to the fullest extent permitted by
Delaware law. Specifically, directors of Enron will not be personally liable for
monetary damages for breach of a director's fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to Enron or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Enron's Restated Certificate of Incorporation contains a "fair price"
provision which generally requires that certain mergers, business combinations
and similar transactions with a "Related Person" (generally the beneficial owner
of at least 10 percent of Enron's voting stock) be approved by the holders of at
least 80 percent of Enron's voting stock, unless (a) the transaction is approved
by at least 80 percent of the "Continuing Directors" of Enron, who constitute a
majority of the entire board, (b) the transaction occurs more than five years
after the last acquisition of Enron voting stock by the related
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person or (c) certain "fair price" and procedural requirements are satisfied.
Enron's Restated Certificate of Incorporation defines "Business Transaction" as
(a) any merger or consolidation involving Enron or a subsidiary of Enron, (b)
any sale, lease, exchange, transfer or other disposition (in one transaction or
a series of transactions), including without limitation a mortgage or any other
security device, of all or any substantial part of the assets either of Enron or
of a subsidiary of Enron, (c) any sale, lease, exchange, transfer or other
disposition of all or any substantial part of the assets of an entity to Enron
or a subsidiary of Enron, (d) the issuance, sale, exchange, transfer or other
disposition by Enron or a subsidiary of Enron of any securities of Enron or any
subsidiary of Enron, (e) any recapitalization or reclassification of Enron's
securities (including without limitation, any reverse stock split) or other
transaction that would have the effect of increasing the voting power of a
Related Person, (f) any liquidation, spinoff, splitoff, splitup or dissolution
of Enron, and (g) any agreement, contract or other arrangement providing for any
of the transactions described in this definition of Business Transaction.
Continuing Director is defined to mean a director who either was a member of the
Board of Directors of Enron prior to the time such Related Person became a
Related Person or who subsequently became a director of Enron and whose
election, or nomination for election by Enron's stockholders, was approved by a
vote of at least 80 percent of the Continuing Directors then on the Board,
either by a specific vote or by approval of the proxy statement issued by Enron
on behalf of the Board of Directors in which such person is named as nominee for
director, without an objection to such nomination; provided, however, that in no
event shall a director be considered a "Continuing Director" if such director is
a Related Person and the Business Transaction to be voted upon is with such
Related Person or is one in which such Related Person otherwise has an interest
(except proportionately as a stockholder of Enron).
GENERAL
The foregoing statements are summaries of certain provisions contained in
the Restated Certificate of Incorporation of Enron, the form of which is filed
as an exhibit to the Registration Statements of which this Prospectus is a part.
They do not purport to be complete statements of all the terms and provisions of
the Restated Certificate of Incorporation, and reference is hereby made to the
Restated Certificate of Incorporation for full and complete statements of such
terms and provisions, including the definitions of certain terms used herein.
Whenever reference has been made to the Restated Certificate of Incorporation,
such Restated Certificate of Incorporation shall be deemed to be incorporated in
such statements as a part thereof, and such statements are qualified in their
entirety by such reference.
The transfer agent and registrar of the Convertible Preferred Stock, the
Preference Stock and the Common Stock is First Chicago Trust Company of New
York.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Enron may, at its option, elect to offer fractional interests in the
Offered Second Preferred Stock and the Offered Preference Stock. In the event
such option is exercised, Enron will offer depositary shares ("Depositary
Shares"), each of which will represent a fraction (to be set forth in the
Prospectus Supplement relating to a particular series of Offered Second
Preferred Stock or Offered Preference Stock) of a share of a particular series
of Offered Second Preferred Stock or Offered Preference Stock as described
below.
The Offered Second Preferred Stock and the Offered Preference Stock of any
series represented by Depositary Shares will be deposited under a deposit
agreement (the "Deposit Agreement") between Enron and a bank or trust company
selected by Enron having its principal office in the United States and having,
alone or together with its affiliates, a combined capital and surplus of at
least $50,000,000 (the "Depositary"). Subject to the terms of the Deposit
Agreement, each registered holder of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Offered Second Preferred
Stock or Offered Preference Stock represented by such Depositary Share, to all
the rights and preferences of
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the Offered Second Preferred Stock or Offered Preference Stock represented
thereby (including dividend, voting, redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts ("Depositary
Receipts") issued pursuant to the Deposit Agreement. Depositary Receipts will be
distributed to those persons purchasing the fractional interests in Offered
Second Preferred Stock or Offered Preference Stock in accordance with the terms
of the offering set forth in the applicable Prospectus Supplement. A copy of the
form of Deposit Agreement is filed as an exhibit to the Registration Statements
of which this Prospectus is a part, and the following summary is qualified in
its entirety by reference to such exhibit.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all dividends or other cash distributions
received in respect of the Offered Second Preferred Stock and the Offered
Preference Stock to the record holders of Depositary Shares relating to such
Offered Second Preferred Stock or Offered Preference Stock in proportion to the
number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash or rights, preferences or
privileges upon the Offered Second Preferred Stock and Offered Preference Stock,
the Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto in proportion to the number of such
Depositary Shares owned by such holders, unless the Depositary determines that
such distribution cannot be made proportionately among such holders or that it
is not feasible to make such distribution, in which case the Depositary may,
with the approval of Enron, sell such securities or property and distribute the
net proceeds from such sale to such holders or adopt such other method as it
deems equitable and practicable for effecting such distribution.
WITHDRAWAL OF THE OFFERED SECOND PREFERRED STOCK OR THE OFFERED PREFERENCE STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary (unless the related Offered Second Preferred Stock or Offered
Preference Stock or Depositary Shares have previously been called for
redemption), and upon payment of the charges provided in the Deposit Agreement
and subject to the terms hereof, the holder of the Depositary Shares evidenced
thereby is entitled to delivery at such office to or upon his order the number
of whole shares of Offered Second Preferred Stock or Offered Preference Stock
and any money or other property represented by such Depositary Shares. If the
Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of Offered Second Preferred Stock or Offered Preference Stock to be
withdrawn, the Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of Offered Second Preferred Stock or Offered Preference Stock thus withdrawn,
and any subsequent holders of those shares, will not thereafter be entitled to
deposit such shares under the Deposit Agreement or to receive Depositary Shares
therefor.
REDEMPTION OF DEPOSITARY SHARES
Upon redemption of Offered Second Preferred Stock and Offered Preference
Stock represented by Depositary Shares, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing Offered Second
Preferred Stock and Offered Preference Stock so redeemed, provided Enron shall
have paid in full to the Depositary the redemption price of the Offered Second
Preferred Stock or Offered Preference Stock to be redeemed (which redemption
price shall include an amount equal to any accrued and unpaid dividends thereon
to the date fixed for redemption). The redemption price per Depositary Share
will be equal to the applicable fraction of the redemption price and any other
amounts per share payable with respect to the Offered Second Preferred Stock or
Offered Preference Stock. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by the
Depositary by lot or pro rata or by any other equitable method, in each case as
may be determined by Enron.
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VOTING OF THE OFFERED SECOND PREFERRED STOCK AND THE OFFERED PREFERENCE STOCK
Upon receipt of notice of any meeting at which the holders of the Offered
Second Preferred Stock or Offered Preference Stock are entitled to vote, the
Depositary will mail the information contained in such notice of meeting to the
record holders of the Depositary Shares. Each record holder of such Depositary
Shares on the record date (which will be the same date as the record date for
the Offered Second Preferred Stock or Offered Preference Stock) will be entitled
to instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Offered Second Preferred Stock or Offered Preference Stock
represented by such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Offered Second Preferred
Stock or Offered Preference Stock represented by such Depositary Shares in
accordance with such instructions, and Enron will agree to take all reasonable
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting Offered Second
Preferred Stock or Offered Preference Stock (but, at its discretion, not from
appearing at any meeting with respect to such Offered Second Preferred Stock or
Offered Preference Stock) to the extent it does not receive specific
instructions from the holders of Depositary Shares representing Offered Second
Preferred Stock or Offered Preference Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between Enron and the Depositary. However, any amendment which materially and
adversely alters the rights of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the Depositary Shares then outstanding.
The Deposit Agreement may be terminated by Enron upon not less than 60
days' notice, whereupon the Depositary shall deliver or make available to each
holder of Depositary Receipts, upon surrender of the Depositary Receipts held by
such holder, such number of whole or fractional shares of Offered Second
Preferred Stock or Offered Preference Stock represented by such Depositary
Receipts. The Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares have been redeemed, or (ii) there has been a final
distribution in respect of the Offered Second Preferred Stock or Offered
Preference Stock in connection with any liquidation, dissolution or winding up
of Enron and such distribution has been made to the holders of Depositary
Receipts.
CHARGES OF DEPOSITARY
Enron will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Depositary arrangements. Enron will pay
the fees and expenses of the Depositary in connection with the performance of
its duties under the Deposit Agreement, to the extent specified in the Deposit
Agreement. Holders of Depositary Receipts will pay transfer and other taxes and
governmental charges.
MISCELLANEOUS
Enron will forward to holders of Depositary Shares any reports and
communications that it sends to holders of Offered Second Preferred Stock and
Offered Preference Stock.
Neither the Depositary nor Enron will be liable if it is prevented from or
delayed in, by law or any circumstances beyond its control, performing its
obligations under the Deposit Agreement. The obligations of Enron and the
Depositary under the Deposit Agreement will be limited to performing their
duties thereunder without negligence or willful misconduct, and Enron and the
Depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or any Offered Second Preferred Stock or
Offered Preference Stock unless satisfactory indemnity is furnished. Enron and
the Depositary may rely on advice of counsel or accountants, on information
provided by holders of
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Depositary Shares or other persons believed to be authorized or competent and on
documents believed to be genuine.
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and
Enron, on the other hand, the Depositary shall be entitled to act on such
claims, requests or instructions received from Enron.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Enron notice of its
election to do so, and Enron may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having, alone or together with its affiliates, a combined
capital and surplus of at least $50,000,000.
DESCRIPTION OF WARRANTS TO PURCHASE COMMON STOCK
The following statements with respect to the Stock Warrants are summaries
of, and subject to, the detailed provisions of a warrant agreement ("Stock
Warrant Agreement") to be entered into by Enron and a warrant agent to be
selected at the time of issue (the "Stock Warrant Agent"), and having the terms
described in the Prospectus Supplement relating thereto.
GENERAL
The Stock Warrants, evidenced by warrant certificates (the "Stock Warrant
Certificates"), may be issued under the Stock Warrant Agreement independently or
together with any Offered Securities and may be attached to or separate from
such Offered Securities. If Stock Warrants are offered, the Prospectus
Supplement will describe the terms of the warrants, including the following: (1)
the offering price, if any; (2) the number of shares of Common Stock purchasable
upon exercise of one Stock Warrant and the initial price at which such shares
may be purchased upon exercise; (3) the date on which the right to exercise the
Stock Warrants shall commence and the date on which such right shall expire; and
(4) any other terms of the Stock Warrants. The shares of Common Stock issuable
upon exercise of the Stock Warrants will, when issued in accordance with the
Stock Warrant Agreement, be fully paid and nonassessable.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering to the Stock Warrant Agent
the Stock Warrant Certificate signed by the warrantholder, or his duly
authorized agent, indicating the warrantholder's election to exercise all or a
portion of the Stock Warrants evidenced by the certificate. Surrendered Stock
Warrant Certificates shall be accompanied by payment of the aggregate exercise
price of the Stock Warrants to be exercised, as set forth in the Prospectus
Supplement, which payment may be made in the form of cash or a check equal to
the exercise price. Certificates evidencing duly exercised Stock Warrants shall
be delivered by the Stock Warrant Agent to the transfer agent for the Common
Stock. Upon receipt thereof, the transfer agent shall deliver or cause to be
delivered, to or upon the written order of the exercising warrantholder, a
certificate representing the number of shares of Common Stock purchased. If
fewer than all of the Stock Warrants evidenced by any certificate are exercised,
the Stock Warrant Agent shall deliver to the exercising warrantholder a new
Stock Warrant Certificate representing the unexercised Stock Warrants.
ANTIDILUTION PROVISIONS
The exercise price payable and the number of shares of Common Stock
purchasable upon the exercise of each Stock Warrant will be subject to
adjustment in certain events, including (1) the issuance
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<PAGE> 24
of a stock dividend to holders of Common Stock or a combination, subdivision or
reclassification of Common Stock; (2) the issuance of rights, warrants or
options to all holders of Enron's Common Stock entitling the holders thereof to
purchase Common Stock for an aggregate consideration per share less than the
current market price per share of Common Stock; or (3) any distribution by Enron
to the holders of its Common Stock of evidences of indebtedness of Enron or of
assets (excluding cash dividends or distributions payable out of consolidated
earnings and earned surplus and dividends or distributions referred to in (1)
above). In lieu of adjusting the number of shares of Common Stock purchasable
upon exercise of each Stock Warrant, Enron may elect to adjust the number of
Stock Warrants. No adjustment in the number of shares purchasable upon exercise
of the Stock Warrants will be required until cumulative adjustments require an
adjustment of at least 1% thereof. Enron may, at its option, reduce the exercise
price at any time. No fractional shares will be issued upon exercise of Stock
Warrants, but Enron will pay the cash value of any fractional shares otherwise
issuable. Notwithstanding the foregoing, in case of any consolidation, merger or
sale or conveyance of the property of Enron as an entirety or substantially as
an entirety, the holder of each outstanding Stock Warrant upon exercise thereof
shall have the right to the kind and amount of shares of stock and other
securities and property (including cash) receivable by a holder of the number of
shares of Common Stock for which such Stock Warrant was exercisable immediately
prior thereto.
NO RIGHTS AS STOCKHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of Enron or any other matter or to exercise any rights whatsoever as
stockholders of Enron.
DESCRIPTION OF WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to the Debt Warrants are summaries
of, and subject to, the detailed provisions of a warrant agreement (the "Debt
Warrant Agreement") to be entered into by Enron and a warrant agent to be
selected at the time of issue (the "Debt Warrant Agent"), and having the terms
described in the Prospectus Supplement relating thereto.
GENERAL
The Debt Warrants, evidenced by warrant certificates (the "Debt Warrant
Certificates"), may be issued under the Debt Warrant Agreement independently or
together with any Offered Debt Securities and may be attached to or separate
from such Offered Debt Securities. If Debt Warrants are offered, the Prospectus
Supplement will describe the terms of the warrants, including the following: (1)
the offering price, if any; (2) the designation, aggregate principal amount and
terms of the Debt Securities purchasable upon exercise of the warrants; (3) if
applicable, the designation and terms of the Debt Securities with which the Debt
Warrants are issued and the number of warrants issued with each such Debt
Security; (4) if applicable, the date on and after which the Debt Warrants and
the related Debt Securities will be separately transferable; (5) the principal
amount of Debt Securities purchasable upon exercise of one Debt Warrant and the
price at which such principal amount of Debt Securities may be purchased upon
exercise; (6) the date on which the right to exercise the Debt Warrants shall
commence and the date on which such right shall expire; (7) federal income tax
consequences; (8) whether the warrants represented by the Debt Warrant
Certificates will be issued in registered or bearer form; and (9) any other
terms of the Debt Warrants.
Debt Warrant Certificates may be exchanged for new Debt Warrant
Certificates of different denominations and may (if in registered form) be
presented for registration of transfer at the corporate trust office of the Debt
Warrant Agent, which will be listed in the Prospectus Supplement relating
thereto, or at such other office as may be set forth therein. Warrantholders
will not have any of the rights of holders of Debt Securities (except to the
extent that the consent of warrantholders may be required for
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<PAGE> 25
certain modifications of the terms of an Indenture and the series of Debt
Securities issuable upon exercise of the Debt Warrants) and will not be entitled
to payments of principal of and interest, if any, on the Debt Securities.
EXERCISE OF DEBT WARRANTS
Debt Warrants may be exercised by surrendering the Debt Warrant Certificate
at the corporate trust office of the Debt Warrant Agent, with the form of
election to purchase on the reverse side of the Debt Warrant Certificate
properly completed and executed, and by payment in full of the exercise price,
as set forth in the Prospectus Supplement relating thereto. Upon the exercise of
Debt Warrants, the Debt Warrant Agent will, as soon as practicable, deliver the
Debt Securities in authorized denominations in accordance with the instructions
of the exercising warrantholder. If less than all of the Debt Warrants evidenced
by the warrant certificate are exercised, a new Debt Warrant Certificate will be
issued for the remaining amount of Debt Warrants.
ENRON CAPITAL RESOURCES, L.P.
GENERAL
Enron Capital Resources is a limited partnership organized in May 1994
under the Delaware Revised Uniform Limited Partnership Act (the "Delaware Act").
Enron is the sole general partner of Enron Capital Resources (the "General
Partner"). In January 1994, Enron Capital Resources issued 3,000,000 shares of
its 9% Cumulative Preferred Securities, Series A (the "Series A Preferred
Securities"), representing limited partner interests. The Series A Preferred
Securities entitle holders to receive cumulative preferential cash dividends, at
an annual rate of 9% of the liquidation preference of $25 per Series A Preferred
Security, accruing from the date of original issuance and payable monthly in
arrears on the last day of each calendar month of each year, commencing August
31, 1994. The Series A Preferred Securities are redeemable, at the option of
Enron Capital Resources (with Enron's consent), in whole or in part from time to
time, on or after August 31, 1999, at $25 per Series A Preferred Security plus
accumulated and unpaid dividends to the date fixed for redemption. In the event
of the liquidation of Enron Capital Resources, holders of Series A Preferred
Securities will be entitled to receive for each Series A Preferred Security a
liquidation preference of $25 plus accumulated and unpaid dividends to the date
of payment, subject to certain limitations. Enron has guaranteed, to the extent
set forth in the Payment and Guarantee Agreement (the "Guarantee Agreement")
dated as of August 3, 1994, executed by Enron for the benefit of the holders of
the Series A Preferred Securities, (i) the payment of dividends that are
required to be paid on the Series A Preferred Securities, (ii) the redemption
price payable with respect to Series A Preferred Securities called for
redemption by Enron Capital Resources, and (iii) upon the liquidation of Enron
Capital Resources, the lesser of (a) the liquidation distribution of $25 per
Series A Preferred Security and (b) the amount of assets of Enron Capital
Resources available for distribution to Series A Preferred Security holders in
liquidation of Enron Capital Resources. The form of Guarantee Agreement is filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
Reference is made to the form of such Guarantee Agreement for full and complete
statements of such terms and provisions.
Enron Capital Resources' executive offices are located at 1400 Smith
Street, Houston, Texas 77002, and its telephone number is (713) 853-6161. All of
the business and affairs of Enron Capital Resources are conducted by Enron, as
General Partner. Enron Capital Resources exists solely for the purpose of
issuing limited partner interests designated as Preferred Securities and lending
the net proceeds thereof to Enron.
PREFERRED SECURITIES
Enron Capital Resources may from time to time issue additional limited
partner interests designated as Preferred Securities, in one or more series,
having terms described in the Prospectus Supplement relating thereto. The
Preferred Securities may be designated as preferred securities, preferred units
or
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<PAGE> 26
preferred shares, or may have such other designation as Enron shall establish,
as described in the Prospectus Supplement relating thereto. Under Enron Capital
Resources' amended and restated agreement of limited partnership (the
"Partnership Agreement"), Enron, as General Partner, may establish the terms of
each series of Preferred Securities, including distribution, redemption, voting
and liquidation rights and such other preferred, deferred or other special
rights or such restrictions, as Enron may determine, such terms to be set forth
in the related Prospectus Supplement. The Preferred Securities of Enron Capital
Resources offered hereby will be guaranteed by Enron to the limited extent set
forth below under "Guarantee" and may also be entitled to the benefits of
certain undertakings of Enron as described below under "Backup Undertakings".
Any special federal income tax, accounting and other considerations applicable
to any offering of Preferred Securities and related Backup Undertakings will be
described in the Prospectus Supplement relating thereto.
GUARANTEE
Enron will irrevocably and unconditionally agree (the "Guarantee"), to the
extent set forth herein, to pay in full, to the holders of Preferred Securities
of any series, the Guarantee Payments (as defined below), as and when due,
regardless of any defense, right of set-off or counterclaim which Enron Capital
Resources may have or assert. The Guarantee will constitute a guarantee of
payment and not of collection and may be enforced by holders of Preferred
Securities directly against Enron. The following payments to the extent not paid
by Enron Capital Resources (the "Guarantee Payments") will be subject to the
Guarantee (without duplication): (i) any accumulated arrears and accruals of
unpaid distributions which have been declared on the Preferred Securities of any
series out of moneys legally available therefor, (ii) the redemption price
including all accumulated arrears and accruals of unpaid distributions payable,
out of moneys legally available therefor, with respect to any Preferred
Securities of any series called for redemption, (iii) upon a liquidation of
Enron Capital Resources, the lesser of (a) the aggregate of the liquidation
preference and all accumulated arrears and accruals of unpaid distributions
(whether or not declared) on the Preferred Securities of any series to the date
of payment and (b) the amount of assets of Enron Capital Resources remaining
available for distribution in liquidation to the holders of Preferred Securities
of such series, and (iv) any additional amounts payable by Enron Capital
Resources as described in the accompanying Prospectus Supplement. In addition,
the Prospectus Supplement relating to a series of Preferred Securities will
describe the rank of the Guarantee and any additional covenants or other terms
of the Guarantee of Enron with respect to such series, including any additional
amounts payable under the Guarantee with respect thereto.
BACKUP UNDERTAKINGS
Enron will guarantee the payment of any liabilities incurred by Enron
Capital Resources (other than obligations to holders of Preferred Securities)
pursuant to an amendment to the Partnership Agreement or a separate agreement
between Enron and Enron Capital Resources. Such agreement will be for the
benefit of, and enforceable by, third parties to whom Enron Capital Resources
owes such obligations.
In connection with any series of Preferred Securities, Enron may enter into
additional arrangements with Enron Capital Resources, including intercompany
loan agreements and amendments to the Partnership Agreement, that operate
directly or indirectly for the benefit of holders of the Preferred Securities.
The Guarantee described above under "Guarantee", the agreement described in the
previous paragraph and any such other arrangements are herein collectively
referred to as "Backup Undertakings" of Enron and will be described in the
Prospectus Supplement relating to any series of Preferred Securities to which
they apply.
THE PARTNERSHIP AGREEMENT
The following paragraphs are a summary of certain provisions of the
Partnership Agreement. A copy of the Partnership Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. Any
amendments to the Partnership Agreement, including those that relate to a series
of Preferred Securities, will be described in the Prospectus Supplement relating
to such series of
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<PAGE> 27
Preferred Securities. Enron Capital Resources will provide to prospective
investors a copy of the form of such agreement and any such amendment upon
request at no charge. The following discussion is qualified in its entirety by
reference to the Partnership Agreement as it may be amended.
PURPOSE. The purpose of Enron Capital Resources under the Partnership
Agreement is limited to issuing one or more series of Preferred Securities and
loaning the net proceeds thereof to Enron. The General Partner is authorized to
perform all acts deemed necessary to carry out such purposes and to conduct the
business of Enron Capital Resources.
COMPENSATION TO GENERAL PARTNER. The Partnership Agreement provides that
the General Partner is not entitled to receive any compensation for its services
as general partner of Enron Capital Resources.
AMENDMENT OF PARTNERSHIP AGREEMENT. The Partnership Agreement may be
amended by the General Partner, except as otherwise described in a Prospectus
Supplement relating to Preferred Securities.
MEETINGS; VOTING. Holders of Preferred Securities who are record holders of
Preferred Securities on the record date set pursuant to the Partnership
Agreement will be entitled to notice of, and to vote at, meetings of holders of
Preferred Securities and to act with respect to matters as to which approvals
may be solicited. The General Partner does not anticipate that any meeting of
holders of Preferred Securities will be called in the foreseeable future.
LIMITED LIABILITY. Assuming that a holder of Preferred Securities does not
participate in the control of the business of Enron Capital Resources, within
the meaning of the Delaware Act, and that he otherwise acts in conformity with
the provisions of the Partnership Agreement, his liability under the Delaware
Act will be limited generally to the amount of capital he is obligated to
contribute to Enron Capital Resources in respect of his Preferred Securities
plus his share of any undistributed profits and assets of Enron Capital
Resources. Enron Capital Resources will operate in such manner as the General
Partner deems reasonable and necessary or appropriate to preserve the limited
liability of holders of Preferred Securities. Under the Delaware Act, a limited
partnership may not make a distribution to a partner to the extent that at the
time of the distribution, after giving effect to the distribution, all
liabilities of the partnership, other than liabilities to partners on account of
their partnership interests and nonrecourse liabilities, exceed the fair value
of the assets of the limited partnership. The Delaware Act provides that a
limited partner who receives such a distribution and knew at the time of the
distribution that the distribution was in violation of the Delaware Act shall be
liable to the limited partnership for the amount of the distribution for three
years from the date of the distribution. Under the Delaware Act, an assignee who
becomes a substituted limited partner of a limited partnership is liable for the
obligations of his assignor to make contributions to the partnership, except the
assignee is not obligated for liabilities unknown to him at the time he became a
limited partner and which could not be ascertained from the partnership
agreement.
TERMINATION AND DISSOLUTION. Enron Capital Resources will continue until
December 31, 2084, unless sooner terminated pursuant to the Partnership
Agreement. Enron Capital Resources will be dissolved in certain events,
including upon (i) the election of the General Partner to dissolve Enron Capital
Resources, if approved by the holders of at least a majority of the voting power
of the Preferred Securities, (ii) the bankruptcy or dissolution of the General
Partner or (iii) under certain circumstances, withdrawal or removal of the
General Partner.
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<PAGE> 28
PLAN OF DISTRIBUTION
Enron, Enron Capital Resources and/or the Selling Stockholders may sell the
Offered Securities (i) through underwriters or dealers; (ii) directly to
purchasers; (iii) through agents; or (iv) from time to time at prevailing market
prices on the New York Stock Exchange, in the case of sales of Common Stock. The
Prospectus Supplement with respect to the Offered Securities will set forth the
terms of the offering of the Offered Securities, including the name or names of
any underwriters or agents, the purchase price of the Offered Securities and the
proceeds to Enron, Enron Capital Resources and/or the Selling Stockholders from
such sale, any delayed delivery arrangements, any underwriting discounts and
commissions and other items constituting underwriters' compensation, any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, Enron, Enron
Capital Resources and/or the Selling Stockholders will sell such Offered
Securities to the dealers as principals. The dealers may then resell such
Offered Securities to the public at varying prices to be determined by such
dealers at the time of resale.
The Offered Securities may be sold directly by Enron, Enron Capital
Resources and/or the Selling Stockholders or through agents designated by Enron,
Enron Capital Resources and/or the Selling Stockholders from time to time. Any
agent involved in the offer or sale of the Offered Securities in respect to
which this Prospectus is delivered will be named, and any commissions payable by
Enron, Enron Capital Resources and/or the Selling Stockholders to such agent
will be set forth, in the Prospectus Supplement relating thereto. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment.
Common Stock offered by Selling Stockholders may be sold from time to time
on the New York Stock Exchange at prevailing market prices. The terms of any
such sales will be described in the Prospectus Supplement, if any, relating
thereto.
If so indicated in the Prospectus Supplement, Enron, Enron Capital
Resources and/or the Selling Stockholders will authorize agents, underwriters or
dealers to solicit offers from certain types of institutions to purchase Offered
Securities from Enron, Enron Capital Resources and/or the Selling Stockholders
at the public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject only to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set forth
the commission payable for solicitation of such contracts.
Agents, dealers and underwriters may be entitled under agreements with
Enron, Enron Capital Resources and/or the Selling Stockholders to
indemnification by Enron or Enron Capital Resources against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect thereof. Agents, dealers and underwriters may be
customers of, engage in transactions with or perform services for Enron in the
ordinary course of business.
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The Offered Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for the Offered
Securities.
VALIDITY OF SECURITIES
The validity of the Offered Securities will be passed upon for Enron and
Enron Capital Resources by James V. Derrick, Jr., Esq., Senior Vice President
and General Counsel of Enron. Mr. Derrick owns substantially less than 1% of the
outstanding shares of Common Stock of Enron.
EXPERTS
The consolidated financial statements and schedules included in Enron's
Annual Report on Form 10-K for the year ended December 31, 1994, incorporated by
reference in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto. The consolidated financial statements and schedules referred to above
and such reports have been incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The letter report of DeGolyer and MacNaughton, independent petroleum
consultants, included as an exhibit to Enron's Annual Report on Form 10-K for
the year ended December 31, 1994, and the estimates from the reports of that
firm appearing in such Annual Report, are incorporated by reference herein on
the authority of said firm as experts in petroleum engineering and in giving
such reports.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth those expenses to be incurred by Enron in
connection with the issuance and distribution of the securities being
registered. Except for the Securities and Exchange Commission registration fee,
all amounts shown are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 181,037
Accounting Fees and Expenses..................................... 20,000
Legal Fees and Expenses.......................................... 50,000
Fees and Expenses of Transfer Agent, Trustee and Depositary...... 15,000
Blue Sky Fees and Expenses, Including Counsel Fees............... 25,000
Listing Fees..................................................... 20,000
Printing and Engraving Expenses.................................. 150,000
Miscellaneous.................................................... 3,963
---------
Total.................................................. $ 465,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of Chapter 1 of Title 8 of the Delaware Code provides that
every corporation created under the provisions thereof shall have the power to
indemnify its directors, officers, employees and agents against certain
liabilities.
The Restated Certificate of Incorporation, as amended, of Enron contains
the following provisions relating to indemnification of directors and officers:
"1. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
2. (A) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director or officer, of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph
(B) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such person only if
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such proceeding (or part thereof) was authorized by the Board of Directors
of the Corporation. The right to indemnification conferred in this Section
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by
a director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of the
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of its Board of Directors,
provide indemnification to employees and agents of the Corporation with the
same scope and effect as the foregoing indemnification of directors and
officers.
(B) If a claim under paragraph 2(A) of this Article XVI is not paid in
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation
Law for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders)
that the claimant has not met such applicable standard of conduct, shall be
a defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
(C) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this Section shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate
of Incorporation, bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.
(D) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law."
Enron has purchased liability insurance policies covering its directors and
officers to provide protection where Enron cannot legally indemnify a director
or officer and where a claim arises under the Employee Retirement Income
Security Act of 1974 against a director or officer based on an alleged breach of
fiduciary duty or other wrongful act.
The Partnership Agreement of Enron Capital Resources, L.P. contains the
following provision relating to indemnification of directors and officers:
"6.04 INDEMNIFICATION. To the fullest extent permitted by law, the
Company shall indemnify the General Partner, its Affiliates and their
respective officers, directors, partners, employees and agents (each, an
"Indemnified Person"), on request by the Indemnified Person, and hold each
of them
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harmless from and against all losses, costs, liabilities, damages and
expenses (including, without limitation, costs of suit and attorney's fees)
any of them may incur as a partner in the Company, in performing the
obligations of the General Partner with respect to the Company or in
exercising the rights of the General Partner, INCLUDING ANY MATTER ARISING
OUT OF OR RESULTING FROM THE INDEMNIFIED PERSON'S OWN SIMPLE, FULL, PARTIAL
OR CONCURRENT NEGLIGENCE, except for any such loss, cost, liability, damage
or expense primarily attributable to the Indemnified Person's gross
negligence, bad faith, fraud or breach of this Agreement."
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
*1 -- Form of Underwriting Agreement -- Debt Securities (Exhibit 1 to
Registration Statement No. 33-43324, filed October 21, 1991).
*3(a) -- Restated Certificate of Incorporation of Enron, as amended (Exhibit 3.01
to Enron Form 10-K Annual Report for 1994, File No. 1-3423).
*3(b) -- Bylaws of Enron (Exhibit 3.02 to Enron Form 10-K Annual Report for 1990,
File No. 1-3423).
*4(a) -- Indenture dated as of November 1, 1985, between Enron and Harris Trust
and Savings Bank (Form T-3 Application for Qualification of Indentures
under the Trust Indenture Act of 1939, File No. 22-14390, filed October
24, 1985).
*4(b) -- Form of Amended and Restated Agreement of Limited Partnership of Enron
Capital Resources, L.P. (Exhibit 3.1 to Enron Form 8-K dated August 2,
1994).
*4(c) -- Form of Payment and Guarantee Agreement dated as of August 3, 1994,
executed by Enron Corp. for the benefit of the holders of Enron Capital
Resources, L.P. 9% Cumulative Preferred Securities, Series A (Exhibit
4.1 to Enron Form 8-K dated August 2, 1994).
*4(d) -- Form of Loan Agreement, dated as of August 3, 1994, between Enron Corp.
and Enron Capital Resources, L.P. (Exhibit 4.2 to Enron Form 8-K dated
August 2, 1994).
*4(e) -- Form of Deposit Agreement between Enron and the Depositary (Exhibit 4(f)
to Registration Statement No. 33-50641, filed October 15, 1993).
5 -- Opinion of James V. Derrick, Jr., Esq., Senior Vice President and
General Counsel of Enron, as to validity of Debt Securities, Second
Preferred Stock, Preference Stock, Common Stock, Debt Warrants, Stock
Warrants and Backup Undertakings of Enron and Preferred Securities of
Enron Capital Resources, L.P.
12 -- Computations of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends.
23(a) -- Consent of Arthur Andersen LLP.
**23(b) -- Consent of DeGolyer and MacNaughton.
23(c) -- The consent of James V. Derrick, Jr., Esq., is contained in his opinion
filed as Exhibit 5 hereto.
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939
of Harris Trust and Savings Bank.
</TABLE>
---------------
* Incorporated by reference as indicated.
** Previously filed.
II-3
<PAGE> 33
ITEM 17. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to each Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of each Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statements;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statements
or any material change to such information in the Registration
Statements;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statements;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of Enron's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 34
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ENRON CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS
FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR
AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON AND STATE OF TEXAS, ON THE 28TH DAY OF
AUGUST, 1995.
ENRON CORP.
(Registrant)
By: KURT S. HUNEKE
----------------------------------
Kurt S. Huneke
Vice President, Finance and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ENRON CAPITAL
RESOURCES, L.P. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON AND STATE OF
TEXAS, ON THE 28TH DAY OF AUGUST, 1995.
ENRON CAPITAL RESOURCES, L.P.
(Registrant)
By: ENRON CORP., as
General Partner
By: KURT S. HUNEKE
---------------------------------
Kurt S. Huneke
Vice President, Finance and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES WITH ENRON CORP. AND THE GENERAL PARTNER INDICATED AND ON THE
28TH DAY OF AUGUST, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------------------------------------------- ---------------------------------------------
<S> <C>
KENNETH L. LAY Chairman of the Board, Chief Executive
-------------------------------------------- Officer and Director (Principal Executive
(Kenneth L. Lay) Officer)
JACK I. TOMPKINS Senior Vice President and Chief Information,
-------------------------------------------- Administrative and Accounting Officer
(Jack I. Tompkins) (Principal Accounting Officer)
KURT S. HUNEKE Vice President, Finance and Treasurer
-------------------------------------------- (Principal Financial Officer)
(Kurt S. Huneke)
ROBERT A. BELFER* Director
--------------------------------------------
(Robert A. Belfer)
NORMAN P. BLAKE, JR.* Director
--------------------------------------------
(Norman P. Blake, Jr.)
</TABLE>
II-5
<PAGE> 35
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------------------------------------------- ---------------------------------------------
<S> <C>
JOHN H. DUNCAN* Director
---------------------------------------------
(John H. Duncan)
JOE H. FOY* Director
---------------------------------------------
(Joe H. Foy)
WENDY L. GRAMM* Director
---------------------------------------------
(Wendy L. Gramm)
ROBERT K. JAEDICKE* Director
---------------------------------------------
(Robert K. Jaedicke)
RICHARD D. KINDER* Director and President and Chief
--------------------------------------------- Operating Officer
(Richard D. Kinder)
CHARLES A. LEMAISTRE* Director
---------------------------------------------
(Charles A. LeMaistre)
JOHN A. URQUHART* Director
---------------------------------------------
(John A. Urquhart)
JOHN WAKEHAM* Director
---------------------------------------------
(John Wakeham)
CHARLS E. WALKER* Director
---------------------------------------------
(Charls E. Walker)
HERBERT S. WINOKUR, JR.* Director
---------------------------------------------
(Herbert S. Winokur, Jr.)
*By: PEGGY B. MENCHACA
---------------------------------------------
Peggy B. Menchaca
(Attorney-in-fact for persons indicated)
</TABLE>
II-6
<PAGE> 36
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
---------------------- ----------------------------------------------------------------------
<S> <C>
*1 -- Form of Underwriting Agreement -- Debt Securities (Exhibit 1 to
Registration Statement No. 33-43324, filed October 21, 1991).
*3(a) -- Restated Certificate of Incorporation of Enron, as amended (Exhibit
3.01 to Enron Form 10-K Annual Report for 1994, File No. 1-3423).
*3(b) -- Bylaws of Enron (Exhibit 3.02 to Enron Form 10-K Annual Report for
1990, File No. 1-3423).
*4(a) -- Indenture dated as of November 1, 1985, between Enron and Harris Trust
and Savings Bank (Form T-3 Application for Qualification of Indentures
under the Trust Indenture Act of 1939, File No. 22-14390, filed
October 24, 1985).
*4(b) -- Form of Amended and Restated Agreement of Limited Partnership of Enron
Capital Resources, L.P. (Exhibit 3.1 to Enron Form 8-K dated August 2,
1994).
*4(c) -- Form of Payment and Guarantee Agreement dated as of August 3, 1994,
executed by Enron Corp. for the benefit of the holders of Enron
Capital Resources, L.P. 9% Cumulative Preferred Securities, Series A
(Exhibit 4.1 to Enron Form 8-K dated August 2, 1994).
*4(d) -- Form of Loan Agreement, dated as of August 3, 1994, between Enron
Corp. and Enron Capital Resources, L.P. (Exhibit 4.2 to Enron Form 8-K
dated August 2, 1994).
*4(e) -- Form of Deposit Agreement between Enron and the Depositary (Exhibit
4(f) to Registration Statement No. 33-50641, filed October 15, 1993).
5 -- Opinion of James V. Derrick, Jr., Esq., Senior Vice President and
General Counsel of Enron, as to validity of Debt Securities, Second
Preferred Stock, Preference Stock, Common Stock, Debt Warrants, Stock
Warrants and Backup Undertakings of Enron and Preferred Securities of
Enron Capital Resources, L.P.
12 -- Computations of Ratios of Earnings to Fixed Charges and Preferred
Stock Dividends.
23(a) -- Consent of Arthur Andersen LLP.
**23(b) -- Consent of DeGolyer and MacNaughton.
23(c) -- The consent of James V. Derrick, Jr., Esq., is contained in his
opinion filed as Exhibit 5 hereto.
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Harris Trust and Savings Bank.
</TABLE>
---------------
* Incorporated by reference as indicated.
** Previously filed.
<PAGE> 1
EXHIBIT 5
[ENRON CORP LETTERHEAD]
August 30, 1995
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Enron Capital Resources, L.P.
c/o Enron Corp.
1400 Smith Street
Houston, Texas 77002
Gentlemen:
As Senior Vice President and General Counsel of Enron Corp., a Delaware
corporation ("Enron"), I am familiar with Amendment No. 1 to Registration
Statement No. 33-60417 of Enron and Enron Capital Resources, L.P. ("Enron
Capital") on Form S-3 and Post-Effective Amendment No. 1 to Registration
Statement No. 33-53877 (collectively, the "Registration Statement") relating to
the proposed offering from time to time of (i) up to an aggregate amount of
$600 million of Enron Debt Securities, Enron Debt Warrants, Enron Stock
Warrants, Enron Second Preferred Stock, Enron Preference Stock, Preferred
Securities of Enron Capital and Enron's related Backup Undertakings, and (ii)
up to 7.5 million shares of Enron Common Stock, par value $.10 per share (the
Debt Securities, Second Preferred Stock, Preference Stock, Debt Warrants, Stock
Warrants, Preferred Securities, Backup Undertakings and Common Stock
collectively referred to herein as the "Securities"). In connection therewith,
I have examined, among other things, a copy of the Restated Certificate of
Incorporation and Bylaws of Enron, the corporate proceedings taken to date with
respect to the authorization, issuance and sale of the Securities, a copy of
the Indenture dated as of November 1, 1985 (the "Indenture") between Enron and
Harris Trust and Savings Bank, Trustee, a copy of the Amended and Restated
Agreement of Limited Partnership of Enron Capital (the "Partnership
Agreement"), and the forms of certain other agreements to be entered into by
Enron, and I have performed such other investigations as I have considered
appropriate as the basis for the opinions expressed herein. Capitalized terms
used but not defined herein are used as defined in the Registration Statement.
Based on the foregoing, I am of the opinion that:
(1) Enron is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(2) Enron Capital has been duly formed and is validly existing as
a limited partnership under the Delaware Revised Uniform Limited Partnership
Act.
<PAGE> 2
Enron Corp.
Enron Capital Resources, L.P.
August 30, 1995
Page 2
(3) When (a) the terms of a series of Preferred Securities and
their issue and sale have been duly established, (b) the Registration Statement
has become effective and any applicable state securities or Blue Sky laws have
been complied with, (c) the shares of such series have been issued, and (d)
Enron Capital has received the purchase price of such shares in accordance with
the terms of their issue and sale, the Preferred Securities will be validly
issued, fully paid and non-assessable, except as such non-assessability may be
affected by the matters set forth in the Registration Statement under the
caption "Enron Capital Resources, L.P. - The Partnership Agreement - Limited
Liability."
(4) The Debt Securities of Enron have been validly authorized for
issuance, and (subject to the Registration Statement becoming effective and any
applicable state securities or Blue Sky laws being complied with), when the
terms thereof and their issue and sale have been duly established, upon
issuance and delivery thereof as set forth in the Registration Statement, and
upon receipt by Enron of the purchase price thereof, the Debt Securities will
be validly issued and will be binding obligations of Enron.
(5) The Debt Warrants have been validly authorized for issuance,
and (subject to the Registration Statement becoming effective and any
applicable state securities or Blue Sky laws being complied with), when the
terms thereof and their issue and sale have been duly established, upon
issuance and delivery thereof as set forth in the Registration Statement, and
upon receipt by Enron of the purchase price thereof, the Debt Warrants will be
validly issued and will be binding obligations of Enron.
(6) When (a) the terms of the series of Second Preferred Stock and
their issue and sale have been duly established, and (if applicable) a deposit
agreement has been duly authorized, executed and delivered by Enron and a
Depositary, in each case in conformity with Enron's Restated Certificate of
Incorporation and Delaware law, (b) a certificate of designations with respect
to such series of the Second Preferred Stock has been duly filed with the
Secretary of State of the State of Delaware, (c) the Registration Statement has
become effective and any applicable state securities or Blue Sky laws have been
complied with, (d) the shares of such series have been issued, and (if
applicable) Depositary Receipts have been delivered as set forth in the
Registration Statement, and (e) Enron has received the purchase price of such
shares in accordance with the terms of their issue and sale, the shares of such
series of Second Preferred Stock and (if applicable) the related Depositary
Shares will be validly issued, fully paid and nonassessable.
(7) When (a) the terms of the series of Preference Stock and their
issue and sale have been duly established, and (if applicable) a deposit
agreement has been duly authorized, executed and delivered by Enron and a
Depositary, in each case in conformity with Enron's Restated Certificate of
Incorporation and Delaware law, (b) a certificate of designations with respect
to such series of the
<PAGE> 3
Enron Corp.
Enron Capital Resources, L.P.
August 30, 1995
Page 3
Preference Stock has been duly filed with the Secretary of State of the State
of Delaware, (c) the Registration Statement has become effective and any
applicable state securities or Blue Sky laws have been complied with, (d) the
shares of such series have been issued, and (if applicable) Depositary Receipts
have been delivered as set forth in the Registration Statement, and (e) Enron
has received the purchase price of such shares in accordance with the terms of
their issue and sale, the shares of such series of Preference Stock and (if
applicable) the related Depositary Shares will be validly issued, fully paid
and nonassessable.
(8) When (a) the terms of the Backup Undertakings of Enron
relating to the Preferred Securities of Enron Capital have been duly
established in accordance with applicable law, (b) the instruments relating to
the Backup Undertakings have been duly authorized, executed and delivered, (c)
the Registration Statement has become effective and any applicable state
securities or Blue Sky laws have been complied with, (d) the Preferred
Securities of Enron Capital to which any of the Backup Undertakings relate have
been duly issued and sold and the purchase price therefor has been received by
Enron Capital, and (e) Enron has received the consideration, if any, separately
payable for such Backup Undertakings, the Backup Undertakings will constitute
valid and legally binding obligations of Enron.
(9) The issuance of the Common Stock to be issued by the Company
has been duly authorized, and (subject to the Registration Statement becoming
effective and applicable Blue sky laws being complied with), when the terms of
their issue and sale have been duly established, upon the issuance and delivery
thereof as set forth in the Registration Statement, and upon the receipt by the
Company of the purchase price thereof, the Common Stock will be validly issued,
fully paid and nonassessable.
(10) The Stock Warrants have been validly authorized for issuance,
and (subject to the Registration Statement becoming effective and any
applicable state securities or Blue Sky laws being complied with), when the
terms thereof and their issue and sale have been duly established, upon
issuance and delivery thereof as set forth in the Registration Statement, and
upon receipt by Enron of the purchase price thereof, the Stock Warrants will be
validly issued and will be binding obligations of Enron.
(11) The shares of Common Stock to be sold by the Selling
Shareholders are, and upon sale will be, validly issued, fully paid, and
nonassessable.
I am a member of the bar of the State of Texas. The opinion set forth
above is limited in all respects to the laws of the State of Texas, the General
Corporation Law of the State of Delaware and federal law.
<PAGE> 4
Enron Corp.
Enron Capital Resources, L.P.
August 30, 1995
Page 4
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to me under the caption "Validity
of Securities" in the Prospectus constituting part of the Registration
Statement and to the filing of this opinion as an exhibit thereto. By giving
such consent I do not admit that I am an expert with respect to any part of the
Registration Statement, including this exhibit, within the meaning of the term
"expert" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission issued thereunder.
Very truly yours,
JAMES V. DERRICK, JR.
<PAGE> 1
Exhibit 12
ENRON CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES AND PREFERRED DIVIDENDS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
----------------------------------------------------------------------
6/30/95 1994 1993 1992 1991 1990
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings available for fixed charges
Net income $288,995 $ 453,410 $332,522 $328,800 $232,146 $202,180
Less:
Undistributed earnings and
losses of less than 50% owned
affiliates (5,902) (9,453) (20,232) (32,526) (8,890) (15,468)
Capitalized interest of
nonregulated companies (4,544) (9,007) (25,434) (66,401) (36,537) (8,145)
Add:
Fixed charges (1) 202,216 467,383 471,278 452,014 454,607 425,177
Minority interest 23,282 31,041 27,605 17,632 7,210 7,129
Income tax expense 146,387 190,081 148,104 88,630 105,859 62,739
--------------------------------------------------------------------
Total $650,434 $1,123,455 $933,843 $788,149 $754,395 $673,612
====================================================================
Preferred dividend requirements $ 23,324 $ 34,913 $ 19,056 $ 22,109 $ 24,740 $ 24,948
Ratio of income before provision
for income taxes to net income (2) 1.47 1.37 1.41 1.28 1.44 1.29
Preferred dividend factor on a
pretax basis 34,299 47,740 26,807 28,192 35,659 32,121
Fixed Charges
Interest expense (1) 177,189 424,893 436,211 430,406 425,945 400,548
Rental expense representative of
interest factor 25,027 42,490 35,067 21,608 28,662 24,629
--------------------------------------------------------------------
Total $236,515 $ 515,123 $498,085 $480,206 $490,266 $457,298
--------------------------------------------------------------------
Ratio of earnings to fixed charges
and preferred dividends 2.75 2.18 1.87 1.64 1.54 1.47
====================================================================
</TABLE>
(1) Amounts exclude costs incurred on sales of accounts receivables.
(2) Represents net income before provision for income taxes divided by net
income, which adjusts dividends on preferred stock to a pretax basis.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 17, 1995
included in Enron Corp.'s Annual Report on Form 10-K for the year ended
December 31, 1994 and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
August 25, 1995
