<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1996
REGISTRATION NOS. 333-
333-
333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C> <C>
ENRON CORP. ENRON PREFERRED FUNDING II, L.P. ENRON CAPITAL TRUST II
(Exact name of registrant (Exact name of registrant as (Exact name of registrant as
as specified in its charter) specified in its certificate of specified in its certificate of
limited partnership) trust)
DELAWARE DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization) incorporation or organization)
47-0255140 TO BE APPLIED FOR TO BE APPLIED FOR
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>
REX R. ROGERS
ASSISTANT GENERAL COUNSEL
ENRON CORP.
1400 SMITH STREET, HOUSTON, TEXAS 77002
(713) 853-3069
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices and agent for service)
---------------------
<TABLE>
<S> <C> <C>
Copies to:
ROBERT S. BAIRD GARY W. ORLOFF RICHARD T. PRINS
VINSON & ELKINS L.L.P. BRACEWELL & PATTERSON, L.L.P. JOHN W. OSBORN
1001 FANNIN, SUITE 2300 711 LOUISIANA, SUITE 2900 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
HOUSTON, TEXAS 77002 HOUSTON, TX 77002 919 THIRD AVENUE
(713) 758-2222 (713) 223-2900 NEW YORK, NEW YORK 10022
(212) 735-3000
</TABLE>
---------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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. [ ]
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
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
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Enron Capital Trust II Trust Originated Preferred
Securities.......................................... 6,000,000 $25 $150,000,000 $45,455
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Enron Preferred Funding II, L.P. Partnership Preferred
Securities(2)....................................... 6,000,000 $25 $150,000,000 --
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Guarantee of Enron Corp. with respect to Trust
Preferred Securities(3)............................. -- -- -- --
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Guarantee of Enron Corp. with respect to Partnership
Preferred Securities(3)............................. -- -- -- --
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Guarantee of Enron Corp. with respect to debentures of
certain of its subsidiaries(3)...................... -- -- -- --
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Subordinated debenture of Enron Corp.(3).............. $150,000,000 -- $150,000,000 --
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Total......................................... $150,000,000 $45,455
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457.
(2) The Partnership Preferred Securities will be purchased by Enron Capital
Trust II with the proceeds of the sale of the Trust Preferred Securities,
together with the proceeds received from Enron Corp. in respect of the
common securities to be issued by Enron Capital Trust II. No separate
consideration will be received for the Partnership Preferred Securities.
(3) No separate consideration will be received for guarantees of Enron Corp.
with respect to the Trust Preferred Securities, the Partnership Preferred
Securities, the debentures of certain of its subsidiaries or the
subordinated debenture of Enron Corp. The debentures of Enron Corp. and its
subsidiaries will be purchased by Enron Preferred Funding II, L.P. with the
proceeds of the sale of the Partnership Preferred Securities, together with
a capital contribution from Enron Corp.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<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
PRELIMINARY PROSPECTUS DATED DECEMBER 23, 1996
PROSPECTUS
- -----------------
6,000,000 TRUST PREFERRED SECURITIES
ENRON CAPITAL TRUST II
% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
[ENRON CORP LOGO]
---------------------
The % Trust Originated Preferred Securities(SM) (the "TOPrS(SM)" or
"Trust Preferred Securities") offered hereby represent preferred undivided
beneficial ownership interests in the assets of Enron Capital Trust II, a
statutory business trust formed under the laws of the State of Delaware (the
"Trust"). Enron Corp., a Delaware corporation (the "Company" or "Enron"), will
own all the common securities (the "Trust Common Securities" and, together with
the Trust Preferred Securities, the "Trust Securities") representing undivided
beneficial ownership interests in the assets of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds as
described below and engaging in activities incident thereto. The proceeds from
the sale of the Trust Securities will be used by the Trust to purchase
Partnership Preferred Securities ("Partnership Preferred Securities"),
representing the limited partnership interests in Enron Preferred Funding II,
L.P., a Delaware limited partnership (the "Partnership"). All of the partnership
interests in the Partnership other than the
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED
SECURITIES, INCLUDING CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If the Trust
Preferred Securities are approved for listing on the New York Stock Exchange,
trading is expected to commence within a 30-day period after the initial
delivery of the Trust Preferred Securities. See "Underwriting."
---------------------
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.
<TABLE>
==============================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
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<S> <C> <C> <C>
Per Trust Preferred Security...... $ (3) $
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Total............................. $ (3) $
==============================================================================================
</TABLE>
(1) Plus accrued distributions, if any, from , 1997.
(2) Enron, the Trust and the Partnership have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in investment instruments of Enron
and certain of its subsidiaries, Enron has agreed to pay to the Underwriters
as compensation (the "Underwriters' Compensation") $ per Trust Preferred
Security (or $ in the aggregate); provided that such compensation for
sales of 10,000 or more Trust Preferred Securities to a single purchaser
will be $ per Trust Preferred Security. Therefore, to the extent of such
sales, the actual amount of Underwriters' Compensation will be less than the
aggregate amount specified in the preceding sentence. See "Underwriting."
(4) Expenses of the offering that are payable by Enron are estimated to be
$400,000.
---------------------
The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
, 1997.
---------------------
MERRILL LYNCH & CO.
---------------------
The date of this Prospectus is , 1997.
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE> 3
(continued from cover page)
limited partnership interests represented by the Partnership Preferred
Securities are owned by Enron, which is the sole general partner of the
Partnership (in such capacity, the "General Partner"). Substantially all of the
proceeds from the sale of the Partnership Preferred Securities and the capital
contribution from the General Partner will be used by the Partnership to
purchase debt instruments of Enron and certain of its subsidiaries (the
"Debentures"). In addition, approximately one percent of the proceeds from the
sale of the Partnership Preferred Securities and of the capital contribution
from the General Partner will be used to purchase certain U.S. government
obligations and commercial paper of entities not affiliated with Enron (the
"Eligible Debt Securities"). See "Description of the Partnership Preferred
Securities -- Partnership Investments."
Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions accruing from the date of original issuance and
payable quarterly in arrears on each March 31, June 30, September 30, and
December 31, commencing , 1997, at an annual rate of % of
the liquidation amount of $25 per Trust Preferred Security (equivalent to $
per Trust Preferred Security) if, as and when the Trust has funds available for
payment. See "Description of the Trust Preferred Securities -- Distributions."
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly at a rate per annum equal to %. The distribution rate
and the distribution payment dates and other payment dates for the Trust
Preferred Securities will correspond to the distribution rate and distribution
payment dates and other payment dates for the Partnership Preferred Securities,
which constitute the sole assets of the Trust. As described above, the assets of
the Partnership will initially consist only of the Debentures and, to a limited
extent, Eligible Debt Securities. The payment of distributions by the Trust and
payments on liquidation of the Trust or the redemption of Trust Preferred
Securities, as described below, are guaranteed by Enron (the "Trust Guarantee")
to the extent the Trust has funds available therefor as described under
"Description of the Trust Guarantee." The payment of distributions by the
Partnership (if, as and when declared) and payments on liquidation of the
Partnership or the redemption of Partnership Preferred Securities, as described
below, are also guaranteed by Enron (the "Partnership Guarantee") to the extent
the Partnership has funds available therefor as described under "Description of
the Partnership Guarantee." In addition, payments in respect of the Debentures
(other than the Company Debenture) are fully and unconditionally guaranteed, on
a subordinated basis, by Enron (the "Investment Guarantees") for the benefit of
the holder of the Partnership Preferred Securities.
The Trust Guarantee, the Partnership Guarantee and the Investment
Guarantees (collectively, the "Guarantees"), when taken together with the
Company Debenture and Enron's obligations to pay all fees and expenses of the
Trust and the Partnership, constitute a guarantee to the extent set forth herein
by Enron of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described in the next succeeding paragraph and
under "Risk Factors -- Insufficient Income or Assets Available to Partnership."
Enron's obligations under the Guarantees are subordinate and junior in right of
payment to all other liabilities of Enron and rank pari passu with the most
senior preferred stock issued from time to time by Enron and with any guarantee
now or hereafter entered into by Enron in respect of any preferred security of
any affiliate of Enron, and its obligations under the Company Debenture are
subordinate and junior in right of payment to all senior indebtedness of Enron.
At September 30, 1996, Enron had outstanding consolidated senior indebtedness
aggregating approximately $3.6 billion, which would have ranked senior to
Enron's obligations under the Guarantees and the Company Debenture. See "Risk
Factors -- Ranking of Subordinate Obligations Under the Guarantees and the
Company Debenture."
Distributions on the Partnership Preferred Securities will be declared and
paid only as determined in the sole discretion of Enron in its capacity as the
General Partner of the Partnership. In addition, the General Partner is not
obligated to declare distributions on the Partnership Preferred Securities at
any time, including upon or following a Partnership Enforcement Event. To the
extent that the issuers (including, where applicable, Enron, as guarantor) of
the securities in which the Partnership invests fail to make any payments in
respect of such securities (or, if applicable, guarantees), the Partnership will
not have sufficient funds to pay
2
<PAGE> 4
(continued from cover page)
and will not declare or pay distributions on the Partnership Preferred
Securities. In addition, as described under "Risk Factors -- Insufficient Income
or Assets Available to Partnership," the Partnership may not have sufficient
funds to pay current or liquidating distributions on the Partnership Preferred
Securities if (i) at any time that the Partnership is receiving current payments
in respect of the securities held by the Partnership (including the Debentures),
the General Partner, in its sole discretion, does not declare distributions on
the Partnership Preferred Securities and the Partnership receives insufficient
amounts to pay the additional compounded distributions that will accrue in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments and Eligible Debt
Securities that do not generate income in an amount that is sufficient to pay
full distributions in respect of the Partnership Preferred Securities or (iii)
the Partnership invests in equity or debt securities of Investment Affiliates
that are not guaranteed by Enron and that cannot be liquidated by the
Partnership for an amount sufficient to pay such distributions in full. If the
Partnership does not declare and pay distributions on the Partnership Preferred
Securities out of funds legally available for distribution, the Trust will not
have sufficient funds to make distributions on the Trust Preferred Securities,
in which event the Trust Guarantee will not apply to such distributions until
the Trust has sufficient funds available therefor. See "Risk
Factors -- Distributions Payable Only if Declared by General Partner;
Restrictions on Certain Payments; Tax Consequences," "-- Insufficient Income or
Assets Available to Partnership," "Description of the Trust Preferred
Securities -- Distributions" and "Description of the Partnership Preferred
Securities -- Distributions."
If for any distribution period, (i) full distributions on a cumulative
basis on any Trust Preferred Securities have not been paid, (ii) an Investment
Event of Default by any Investment Affiliate in respect of any Affiliate
Investment Instrument has occurred and is continuing or (iii) Enron is in
default of its obligations under any Guarantee, then during such period (a)
Enron shall not declare or pay dividends on, make distributions with respect to,
or redeem, purchase or acquire, or make a liquidation payment with respect to
any of its capital stock (except for dividends or distributions in shares of its
common stock and exchanges of common stock of one class for common stock of
another class), (b) Enron shall not make any payment or cause any payment to be
made that would result in, and shall take such actions as shall be necessary to
prevent, the payment of any dividends on, any distribution with respect to, any
redemption, purchase or other acquisition of, or any liquidation payment with
respect to, any Comparable Equity Interest, and (c) Enron shall not make any
guarantee payments with respect to the foregoing.
The Partnership Preferred Securities are redeemable by the Partnership, in
whole or in part, from time to time, on or after , 2002 at an
amount per Partnership Preferred Security equal to $25 plus accrued and unpaid
distributions thereon. The Partnership Preferred Securities may also be
redeemed, in whole but not in part, at any time upon the occurrence of a
Partnership Special Event. If the Partnership redeems the Partnership Preferred
Securities, the Trust must redeem Trust Securities on a pro rata basis having an
aggregate liquidation amount equal to the aggregate principal amount of the
Partnership Preferred Securities so redeemed at a redemption price corresponding
to the redemption price of the Partnership Preferred Securities (which includes
all accrued and unpaid distributions thereon to the date fixed for redemption)
(the "Redemption Price"). See "Description of the Trust Preferred
Securities -- Redemption." Neither the Partnership Preferred Securities nor the
Trust Preferred Securities have any scheduled maturity or are redeemable at any
time at the option of the holders thereof.
The Trust will be dissolved upon the occurrence of a Trust Special Event.
Upon dissolution of the Trust, the Partnership Preferred Securities will be
distributed to the holders of the Trust Securities, on a pro rata basis, in lieu
of any cash distribution, unless the Partnership Preferred Securities are
redeemed in the limited circumstances described herein. If the Partnership
Preferred Securities are distributed to the holders of the Trust Securities,
Enron will use its best efforts to cause the Partnership Preferred Securities to
be listed on the New York Stock Exchange or such other national securities
exchange or similar organization as the Trust Preferred Securities are then
listed or quoted. See "Description of the Trust Preferred Securities -- Trust
Special Event Redemption or Distribution" and "Description of the Partnership
Preferred Securities."
3
<PAGE> 5
(continued from cover page)
In the event of any liquidation, dissolution, winding up or termination of
the Trust, the holders of the Trust Preferred Securities will be entitled to
receive for each Trust Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon, except to the extent, in connection
with such dissolution, Partnership Preferred Securities are distributed to the
holders of the Trust Preferred Securities. Upon (i) the occurrence of an
Investment Event of Default by an Investment Affiliate (including Enron) in
respect of any Affiliate Investment Instrument or (ii) default by Enron on any
of its obligations under any Guarantee, the holders of the Trust Preferred
Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust. Under no
circumstances will the investment instruments held by the Partnership be
distributed in kind to the holders of the Trust Preferred Securities or
Partnership Preferred Securities. See "Description of the Trust Preferred
Securities -- Liquidation Distribution Upon Dissolution."
4
<PAGE> 6
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
Enron is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (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 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, Suite 1300, 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., 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; 440 South LaSalle Street, Chicago,
Illinois 60605; and 301 Pine Street, San Francisco, California 94104. Certain of
such reports, proxy statements and other information filed by Enron are also
available on the Internet at the Commission's World Wide Web site at
http://www.sec.gov.
Enron, the Trust and the Partnership have filed with the Commission a
Registration Statement on Form S-3 (the "Registration Statement," which term
shall include all amendments, exhibits and schedules thereto), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, with respect to the Trust Preferred
Securities offered hereby (as well as the Partnership Preferred Securities, the
Trust Guarantee, the Partnership Guarantee, the Investment Guarantees and the
Company Debenture). This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and to which reference is hereby
made. Copies of the Registration Statement (including the exhibits thereto) may
be inspected and copied at the offices of the Commission as set forth above.
No separate financial statements of the Trust or the Partnership have been
included herein. Enron, the Trust and the Partnership do not believe that such
financial statements would be material to holders of the Trust Preferred
Securities offered hereby because the Trust and the Partnership are special
purpose entities, have no operating history and no independent operations and
are not engaged in, and do not propose to engage in, any activity other than the
issuance of the securities and the lending of the proceeds thereof to Enron and
its affiliates as described herein. See "Description of the Trust" and
"Description of the Partnership." Enron beneficially owns all of the
Partnership's partnership interests other than the Partnership Preferred
Securities and beneficially owns all of the undivided beneficial interests in
the assets of the Trust other than the beneficial interests represented by the
Trust Preferred Securities. See "Description of the Trust," "Description of the
Partnership," "Description of the Trust Preferred Securities" and "'Description
of the Partnership Preferred Securities." In future filings under the Exchange
Act, a footnote to Enron's annual financial statements will state that the Trust
and the Partnership are consolidated with Enron, that the sole assets of the
Trust are the Partnership Preferred Securities, that the sole assets of the
Partnership are the Affiliate Investment Instruments and the Eligible Debt
Securities and that the Guarantees, when taken together with the Company
Debenture and the Company's obligations to pay all fees and expenses of the
Trust and the Partnership, constitute a guarantee to the extent set forth herein
by the Company of the distribution, redemption and liquidation payments payable
to the holders of the Trust Preferred Securities.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
5
<PAGE> 7
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, 1995;
(b) Current Report on Form 8-K dated March 8, 1996;
(c) Quarterly Report on Form 10-Q for the quarter ended March 31,
1996;
(d) Quarterly Report on Form 10-Q for the quarter ended June 30, 1996;
and
(e) Quarterly Report on Form 10-Q for the quarter ended September 30,
1996.
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 securities offered hereby 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 the Corporate
Secretary, Enron Corp., at its principal executive offices, 1400 Smith Street,
Houston, Texas 77002 (telephone: (713) 853-6161).
6
<PAGE> 8
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus. It is not intended to be complete and is qualified in its entirety
by the more detailed information contained elsewhere in this Prospectus.
Capitalized terms which are not defined in this summary are used as defined
elsewhere in this Prospectus. See "Index of Selected Defined Terms" for a cross
reference to the location in this Prospectus where such terms are defined.
THE COMPANY
Enron 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 transportation
and wholesale marketing of natural gas to markets throughout the United States
and internationally through approximately 37,000 miles of natural gas pipelines;
the exploration for and development 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.
Enron announced on July 22, 1996 that it had signed an agreement to merge
with Portland General Corporation ("PGC") in a stock-for-stock transaction. PGC
is an electric utility holding company, serving retail electric customers in
northwest Oregon as well as wholesale electricity customers throughout the
western United States. Enron proposes to issue approximately 51 million common
shares, valued at approximately $2.1 billion as of July 22, 1996, to
shareholders of PGC in a one-for-one exchange of shares, as a result of which
Enron will be the surviving corporation. Following the merger, former PGC
shareholders will own approximately 17% of the outstanding common shares of the
combined entity. The merger agreement provides that, unless certain regulatory
reforms are enacted, Enron will reincorporate as an Oregon corporation prior to
completing the merger with PGC. Enron will consolidate PGC's debt (approximately
$1.1 billion at September 30, 1996) and account for the transaction on a
purchase accounting basis. The merger was approved by each company's
shareholders on November 12, 1996, but remains subject to the satisfaction of
certain conditions, including the satisfactory receipt of regulatory approvals
from the Oregon Public Utilities Commission and the Federal Energy Regulatory
Commission. Regulatory procedures are expected to be completed sometime in 1997.
Proxy materials containing more detailed information about PGC and the proposed
merger have been filed with the Commission and may be obtained as set forth
under "Available Information."
THE OFFERING
The Trust..................... Enron Capital Trust II, a Delaware statutory
business trust. The sole assets of the Trust
will be the Partnership Preferred Securities.
The Partnership............... Enron Preferred Funding II, L.P., a Delaware
limited partnership. The assets of the
Partnership will initially consist of the
Debentures and, to a limited extent, certain
Eligible Debt Securities.
Securities Offered............ 6,000,000 % Trust Originated Preferred
SecuritiesSM.
Distributions................. Distributions on the Trust Preferred Securities
will accrue from the date of original issuance
of the Trust Preferred Securities and will be
payable at the annual rate of % of the
liquidation amount of $25 per Trust Preferred
Security (equivalent to $ per Trust
Preferred Security) if, as, and when the Trust
has funds available for payment. Distributions
will be payable quarterly in arrears on each
March 31, June 30, September 30, and December
31,
7
<PAGE> 9
commencing , 1997. Distributions
not made on the scheduled payment date will
accumulate and compound quarterly at a rate per
annum equal to %.
The ability of the Trust to pay distributions
on the Trust Preferred Securities is entirely
dependent on its receipt of corresponding
distributions with respect to the Partnership
Preferred Securities. The ability of the
Partnership to pay distributions on the
Partnership Preferred Securities is, in turn,
dependent on its receipt of payments with
respect to the Debentures and the Eligible Debt
Securities held by the Partnership.
Distributions on the Partnership Preferred
Securities will be declared and paid only as
determined in the sole discretion of the
Company in its capacity as the General Partner
of the Partnership. However, in the event full
distributions on Trust Preferred Securities
have not been paid, the Company will be
prohibited from, among other things, making
distributions with respect to its capital stock
or Comparable Equity Interests as described
below. See "Risk Factors -- Distributions
Payable Only if Declared by General Partner;
Restrictions on Certain Payments; Tax
Consequences," "Description of the Trust
Preferred Securities -- Distributions" and
"Description of the Partnership Preferred
Securities -- Distributions" and
"-- Partnership Investments."
Rights Upon Non-Payment of
Distributions and Certain
Defaults; Covenants of the
Company..................... If, at any time, (i) arrearages on
distributions on the Trust Preferred Securities
shall exist for six consecutive quarterly
distribution periods, (ii) an Investment Event
of Default occurs and is continuing on any
Affiliate Investment Instrument or (iii) the
Company is in default on any of its obligations
under the Trust Guarantee, then (a) the
Property Trustee, as the holder of the
Partnership Preferred Securities, will have the
right to enforce the terms of the Partnership
Preferred Securities, including the right to
direct the Special Representative to enforce
(1) the Partnership's creditors' rights and
other rights with respect to the Affiliate
Investment Instruments and the Investment
Guarantees and (2) the rights of the holders of
the Partnership Preferred Securities to receive
distributions (but only if, as and when
declared) on the Partnership Preferred
Securities, and (b) the Trust Guarantee Trustee
or the Special Representative, as the holders
of the Trust Guarantee and the Partnership
Guarantee, respectively, shall have the right
to enforce such Guarantees, including the right
to enforce the covenant restricting certain
distributions by the Company described below.
Under no circumstances, however, shall the
Special Representative have authority to cause
the General Partner to declare distributions on
the Partnership Preferred Securities. If the
Partnership does not declare and pay
distributions on the Partnership Preferred
Securities out of funds legally available for
distribution, the Trust will not have
sufficient funds to make distributions on the
Trust Preferred Securities. See "Risk
Factors -- Insufficient Income or Assets
Available to Partnership," "Description of the
Trust Preferred
8
<PAGE> 10
Securities -- Trust Enforcement Events" and
"Description of the Partnership Preferred
Securities -- Partnership Enforcement Events."
The Company has agreed that if for any
distribution period, (a) full distributions on
a cumulative basis on any Trust Preferred
Securities have not been paid, (b) an
Investment Event of Default by any Investment
Affiliate in respect of any Affiliate
Investment Instrument has occurred and is
continuing or (c) the Company is in default of
its obligations under the Trust Guarantee, the
Partnership Guarantee or any Investment
Guarantee, then, during such period (i) the
Company shall not declare or pay dividends on,
make distributions with respect to, redeem,
purchase or acquire or make a liquidation
payment with respect to any of its capital
stock (except for dividends or distributions in
shares of its common stock and exchanges of
common stock of one class for common stock of
another class), (ii) the Company shall not make
any payment or cause any payment to be made
that would result in, and shall take such
action as shall be necessary to prevent, the
payment of dividends on, any distribution with
respect to, any redemption, purchase or other
acquisition of, or any liquidation payment with
respect to, any Comparable Equity Interest, and
(iii) the Company shall not make any guarantee
payments with respect to the foregoing.
Guarantees.................... The Company will irrevocably guarantee, on a
subordinated basis and to the extent set forth
herein, the payment in full of (i) any accrued
and unpaid distributions on the Trust Preferred
Securities to the extent of funds of the Trust
available therefor, (ii) the amount payable
upon redemption of the Trust Preferred
Securities to the extent of funds of the Trust
available therefor and (iii) generally, the
liquidation amount of the Trust Preferred
Securities to the extent of the assets of the
Trust available for distribution to holders of
Trust Preferred Securities. See "Description of
the Trust Guarantee."
The Company will also irrevocably guarantee, on
a subordinated basis and to the extent set
forth herein, the payment in full of (i) any
accrued and unpaid distributions on the
Partnership Preferred Securities if, as and
when declared out of funds legally available
therefor, (ii) the amount payable upon
redemption of the Partnership Preferred
Securities to the extent of funds of the
Partnership legally available therefor and
(iii) the liquidation amount of the Partnership
Preferred Securities to the extent of the
assets of the Partnership available for
distribution to holders of Partnership
Preferred Securities. See "Description of the
Partnership Guarantee."
The Company will fully and unconditionally
guarantee, on a subordinated basis, payments in
respect of the Debentures (other than the
Company Debenture) for the benefit of the
holders of the Partnership Preferred
Securities, to the extent described under
"Description of the Partnership Preferred
Securities -- Investment Guarantees."
9
<PAGE> 11
The Guarantees, when taken together with the
Company Debenture and the Company's obligations
to pay all fees and expenses of the Trust and
the Partnership, constitute a guarantee to the
extent set forth herein by the Company of the
distribution, redemption and liquidation
payments payable to the holders of the Trust
Preferred Securities. The Guarantees do not
apply, however, to current distributions by the
Partnership unless and until such distributions
are declared by the Partnership out of funds
legally available for payment or to liquidating
distributions unless there are assets available
for payment in the Partnership, each as more
fully described under "Risk
Factors -- Insufficient Income or Assets
Available to Partnership." The Company's
obligations under the Guarantees are
subordinate and junior in right of payment to
all other liabilities of the Company and rank
pari passu with the most senior preferred stock
issued from time to time by the Company and
with any guarantee now or hereafter entered
into by the Company in respect of any preferred
security of any affiliate of the Company.
Liquidation Amount............ In the event of any liquidation of the Trust,
holders will be entitled to receive $25 per
Trust Preferred Security plus an amount equal
to any accrued and unpaid distributions thereon
to the date of payment (such amount being the
"Trust Liquidation Distribution"), unless
Partnership Preferred Securities are
distributed to such holders in connection with
a Trust Special Event. If, upon a liquidation
of the Trust in which the Partnership Preferred
Securities are not distributed to holders of
the Trust Securities, the Trust Liquidation
Distribution can be paid only in part because
the Trust has insufficient assets available to
pay in full the aggregate Trust Liquidation
Distribution, then the amounts payable directly
by the Trust on the Trust Preferred Securities
shall be paid on a pro rata basis. The holders
of the Trust Common Securities will be entitled
to receive distributions upon any such
liquidation pro rata with the holders of the
Trust Preferred Securities, except that upon
(i) the occurrence of an Investment Event of
Default by an Investment Affiliate (including
the Company) in respect of any Affiliate
Investment Instrument or (ii) default by the
Company on any of its obligations under any
Guarantee, the holders of the Trust Preferred
Securities will have a preference over the
holders of the Trust Common Securities with
respect to payments upon liquidation of the
Trust. See "Description of the Trust Preferred
Securities -- Liquidation Distribution Upon
Dissolution."
Optional Redemption........... The Partnership Preferred Securities will be
redeemable for cash, at the option of the
Partnership, in whole or in part, from time to
time, after , 2002, at an amount
per Partnership Preferred Security equal to $25
plus accrued and unpaid distributions thereon.
Upon any redemption of the Partnership
Preferred Securities, the Trust Preferred
Securities will be redeemed at the Redemption
Price. See "Description of the Partnership
Preferred Securities -- Optional Redemption"
and "Description of the Trust Preferred
Securities -- Redemption." Neither the
Partnership Preferred Securities nor the Trust
Preferred Securities have any
10
<PAGE> 12
scheduled maturity or are redeemable at any
time at the option of the holders thereof.
Special Event Redemptions or
Distributions............... Upon the occurrence of a Trust Tax Event (which
event will generally be triggered upon the
occurrence of certain adverse tax consequences
or the denial of an interest deduction on the
Debentures held by the Partnership) or a Trust
Investment Company Event (which event will
generally be triggered if the Trust is
considered an "investment company" under the
Investment Company Act of 1940, as amended (the
"1940 Act")), except in certain limited
circumstances, the Regular Trustees will have
the right to liquidate the Trust and cause
Partnership Preferred Securities to be
distributed to the holders of the Trust
Preferred Securities. In certain circumstances
involving a Partnership Tax Event (which event
will generally be triggered upon the occurrence
of certain adverse tax consequences or the
denial of an interest deduction on the
Debentures held by the Partnership) or a
Partnership Investment Company Event (which
event will generally be triggered if the
Partnership is considered an "investment
company" under the 1940 Act), the Partnership
will have the right to redeem the Partnership
Preferred Securities, in whole (but not in
part), at $25 per Partnership Preferred
Security plus accrued and unpaid distributions
thereon, in which event the Trust Securities
will be redeemed at the Redemption Price. See
"Description of the Trust Preferred
Securities -- Trust Special Event Redemption or
Distribution" and "Description of the
Partnership Preferred Securities -- Partnership
Special Event Redemption."
Voting Rights................. Generally, holders of the Trust Preferred
Securities will not have any voting rights. The
holders of a majority in liquidation amount of
the Trust Preferred Securities, however, have
the right to direct the time, method and place
of conducting any proceeding for any remedy
available to the Property Trustee, or direct
the exercise of any trust or other power
conferred upon the Property Trustee under the
Declaration, including the right to direct the
Property Trustee, as holder of the Partnership
Preferred Securities, (i) to exercise its
rights in the manner described above under
"Rights Upon Non-Payment of Distributions and
Certain Defaults; Covenants of the Company" and
(ii) to consent to any amendment, modification
or termination of the Limited Partnership
Agreement or the Partnership Preferred
Securities where such consent shall be
required. See "Description of the Trust
Preferred Securities -- Voting Rights."
Form of Trust Preferred
Securities.................... The Trust Preferred Securities will be
represented by a global certificate or
certificates registered in the name of Cede &
Co., as nominee for DTC. Beneficial interests
in the Trust Preferred Securities will be
evidenced by, and transfers thereof will be
effected only through, records maintained by
the participants in DTC. Except as described
herein, Trust Preferred Securities in
certificated form will not be issued in
exchange for the global certificate or
certificates. See "Description of the Trust
Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company."
11
<PAGE> 13
Use of Proceeds............... All of the proceeds from the sale of the Trust
Securities will be invested by the Trust in the
Partnership Preferred Securities. The
Partnership will use the funds to make
investments in the Debentures and, to a limited
extent, certain Eligible Debt Securities. The
Company and the subsidiaries that are issuers
of the Debentures will use the proceeds from
the sale of such Debentures for the repayment
of short-term debt and other general corporate
purposes. See "Use of Proceeds."
12
<PAGE> 14
SUMMARY HISTORICAL FINANCIAL INFORMATION OF ENRON
The financial information set forth below has been derived from the audited
and unaudited consolidated financial statements of Enron. The information should
be read in connection with, and is qualified in its entirety by reference to,
Enron's financial statements and notes thereto incorporated by reference herein.
See "Incorporation of Certain Documents by Reference." The interim data reflects
all adjustments which, in the opinion of the management of Enron, are necessary
to present fairly such information for the interim periods. The results of
operations of the nine-month periods are not necessarily indicative of the
results expected for a full year or any other interim period.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31, 30,
------------------------------------------ ---------------
1991 1992 1993 1994 1995 1995 1996
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues...................................................... $5,698 $6,415 $7,985 $8,984 $9,189 $6,639 $9,240
Costs and expenses
Cost of gas and other products sold......................... 3,646 4,222 5,567 6,517 6,733 4,726 7,124
Operating expenses.......................................... 1,039 1,037 1,146 1,124 1,218 770 956
Oil and gas exploration costs............................... 59 59 76 84 79 61 62
Depreciation, depletion and amortization.................... 366 376 458 441 432 321 346
Taxes, other than income taxes.............................. 75 101 108 102 109 85 98
------ ------ ------ ------ ------ ------ ------
5,185 5,795 7,355 8,268 8,571 5,963 8,586
------ ------ ------ ------ ------ ------ ------
Operating income.............................................. 513 620 630 716 618 676 654
Other income and deductions
Equity in earnings of unconsolidated subsidiaries........... 55 56 73 112 86 49 106
Other, net.................................................. 147 91 95 116 461 116 182
------ ------ ------ ------ ------ ------ ------
Income before interest, minority interest and income taxes.... 715 767 798 944 1,165 841 942
Interest and related charges, net............................. 373 330 300 273 284 214 201
Dividends on preferred stock of subsidiary company............ -- -- 2 20 32 24 24
Minority interest............................................. 7 18 28 31 44 34 55
Income taxes.................................................. 103 90 135 167 285 179 210
------ ------ ------ ------ ------ ------ ------
Income before extraordinary items............................. 232 329 333 453 520 390 452
Extraordinary items........................................... -- (23) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Net income(1)................................................. 232 306 333 453 520 390 452
Preferred stock dividends..................................... 25 22 17 15 16 12 12
------ ------ ------ ------ ------ ------ ------
Earnings on common stock...................................... $ 207 $ 284 $ 316 $ 438 $ 504 $ 378 $ 440
====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------- SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................................................ $10,070 $10,312 $11,504 $11,966 $13,239 $14,821
Short-term debt............................................. -- -- -- -- -- --
Long-term debt (including amounts reclassified from
short-term debt).......................................... 3,109 2,459 2,661 2,805 3,065 3,563
Company-obligated preferred stock of subsidiaries........... -- -- 214 377 377 392
Minority interest........................................... 101 179 196 290 549 628
Shareholders' equity........................................ 1,901 2,518 2,623 2,880 3,165 3,593
</TABLE>
- ---------------
(1) Net income for the year ended December 31, 1993 includes a primarily
non-cash charge of $54 million to adjust for the increase in the corporate
federal income tax rate from 34 percent to 35 percent.
13
<PAGE> 15
RISK FACTORS
Prospective purchasers of the Trust Preferred Securities should consider
carefully the risk factors set forth below, as well as all other information
contained or incorporated by reference in this Prospectus, in evaluating an
investment in the Trust Preferred Securities. To the extent any of the
information contained or incorporated by reference in this Prospectus
constitutes a "forward-looking statement" as defined in Section 27A(i)(1) of the
Securities Act, the risk factors set forth below are meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
DISTRIBUTIONS PAYABLE ONLY IF DECLARED BY GENERAL PARTNER; RESTRICTIONS ON
CERTAIN PAYMENTS; TAX CONSEQUENCES
Distributions on the Partnership Preferred Securities will be payable only
if, as and when declared by the General Partner in its sole discretion. If
interest payments on the Debentures are deferred as permitted thereby, or if
such interest payments are not paid to the Partnership according to their terms
(and guarantee payments on the Investment Guarantees are not made by the
Company), the Partnership will generally lack funds to pay distributions on the
Partnership Preferred Securities. If the Partnership does not make current
distributions on the Partnership Preferred Securities, either because the
General Partner does not declare distributions to be made or because the
Partnership lacks sufficient funds, the Trust will not have funds available to
make current distributions on the Trust Preferred Securities. As described under
"Description of the Trust Guarantee -- Certain Covenants of the Company," the
Company will be restricted from, among other things, making distributions with
respect to its capital stock or Comparable Equity Interests if full
distributions on the Trust Preferred Securities have not been paid.
Should the Partnership fail to pay current distributions on the Partnership
Preferred Securities, each holder of Trust Preferred Securities will generally
be required to accrue income, for United States federal income tax purposes, in
respect of the cumulative deferred distributions (including interest thereon)
allocable to its proportionate share of the Partnership Preferred Securities. As
a result, each holder of Trust Preferred Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash and
will not receive the cash from the Trust related to such income if such holder
disposes of its Trust Preferred Securities prior to the record date for the
distribution of such cash. See "Certain Federal Income Tax Considerations."
INSUFFICIENT INCOME OR ASSETS AVAILABLE TO PARTNERSHIP
The Trust Preferred Securities are subject to the risk of a mismatch
between the rate paid on the Trust Preferred Securities and the rate paid on the
securities held by the Partnership, including the Debentures and any additional
securities acquired by the Partnership in the future. Such mismatch could occur
if (i) at any time that the Partnership is receiving current payments in respect
of the securities held by the Partnership (including the Debentures), the
General Partner, in its sole discretion, does not declare distributions on the
Partnership Preferred Securities and the Partnership receives insufficient
amounts to pay the additional compounded distributions that will accrue in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments or Eligible Debt Securities
that do not generate income in an amount that is sufficient to pay full
distributions in respect of the Partnership Preferred Securities at a rate of
% per annum or (iii) the Partnership invests in equity or debt securities
of Investment Affiliates that are not guaranteed by the Company and that cannot
be liquidated by the Partnership for an amount sufficient to pay such
distributions in full. If the reinvestments in the Investment Affiliates
contemplated by the General Partner do not meet the eligibility criteria for
Affiliate Investment Instruments described under "Description of the Partnership
Preferred Securities -- Partnership Investments," the Partnership shall invest
funds available for reinvestment in Eligible Debt Securities. To the extent that
the Partnership lacks sufficient funds to make current or liquidating
distributions on the Partnership Preferred Securities in full, the Trust will
not have sufficient funds available to pay full current or liquidating
distributions on the Trust Preferred Securities.
14
<PAGE> 16
DEPENDENCE ON AFFILIATE INVESTMENT INSTRUMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and of the General Partner's capital contribution will be
invested in the Debentures, which will consist of debt instruments of Enron and
certain subsidiaries of Enron.
PROPOSED TAX LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation that would, among other
things, treat as equity for United States federal income tax purposes
instruments with a maximum term of more than 20 years that are not shown as
indebtedness on the consolidated balance sheet of the issuer. If the proposed
legislation is enacted, such legislation is not expected to apply to the
Debentures. In any event, based on statements by Congressional leaders it is not
expected that the legislation would have a retroactive effective date. There can
be no assurances, however, that legislation enacted after the date hereof will
not adversely affect the tax treatment of the Debentures, or that such tax
treatment will not cause a Partnership Tax Event or a Trust Tax Event resulting
in the redemption of the Partnership Preferred Securities and, consequently, the
Trust Preferred Securities.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Trust Special Event or a Partnership Special Event
(each of which will generally be triggered either upon (i) the occurrence of
certain adverse tax consequences to the Trust or the Partnership, as the case
may be, or the denial of an interest deduction by the related Investment
Affiliate on the Debentures held by the Partnership or (ii) the Trust or the
Partnership, as the case may be, being considered an "investment company" under
the 1940 Act) (each, a "Special Event"), the Trust will be dissolved with the
result, except in the limited circumstances described below, that the
Partnership Preferred Securities will be distributed to the holders of the Trust
Preferred Securities in connection with the liquidation of the Trust. In certain
circumstances, the Partnership will have the right to redeem the Partnership
Preferred Securities, in whole but not in part, in lieu of a distribution of the
Partnership Preferred Securities by the Trust, in which event the Trust will
redeem the Trust Preferred Securities for cash. See "Description of the Trust
Preferred Securities -- Trust Special Event Redemption or Distribution" and
"Description of the Partnership Preferred Securities -- Partnership Special
Event Redemption."
Unless the liquidation of the Trust occurs as a result of the Trust's being
subject to United States federal income tax with respect to income on the
Partnership Preferred Securities, a distribution of the Partnership Preferred
Securities upon the dissolution of the Trust will not be a taxable event to
holders of the Trust Preferred Securities. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal income
tax with respect to income accrued or received on the Partnership Preferred
Securities, the distribution of Partnership Preferred Securities to holders by
the Trust would be a taxable event to each such holder, and a holder would
recognize gain or loss as if the holder had exchanged its Trust Preferred
Securities for the Partnership Preferred Securities it received upon the
liquidation of the Trust. Similarly, the holders of the Trust Preferred
Securities would recognize gain or loss if the Trust were to dissolve upon an
occurrence of a Partnership Special Event and the holders of Trust Preferred
Securities were to receive cash in exchange for their Trust Preferred
Securities. See "Certain United States Federal Income Tax
Considerations -- Redemption of Trust Preferred Securities for Cash."
There can be no assurance as to the market prices for the Partnership
Preferred Securities that may be distributed in exchange for Trust Preferred
Securities if a dissolution or liquidation of the Trust occurs. Accordingly, the
Trust Preferred Securities that an investor may purchase, whether pursuant to
the offer made hereby or in the secondary market, or the Partnership Preferred
Securities that a holder of Trust Preferred Securities may receive upon
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Trust Preferred Securities offered
hereby. Because holders of Trust Preferred Securities may receive Partnership
Preferred Securities upon the occurrence of a Special Event, prospective
purchasers of Trust Preferred Securities are also making an investment decision
with regard to the Partnership Preferred Securities and should carefully review
all the information regarding the Partnership Preferred
15
<PAGE> 17
Securities contained herein. See "Description of the Partnership Preferred
Securities -- Partnership Special Event Redemption" and "Description of the
Partnership Preferred Securities -- General."
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEES AND THE COMPANY
DEBENTURE
Enron's obligations under the Trust Guarantee, the Partnership Guarantee
and the Investment Guarantees are subordinate and junior in right of payment to
all liabilities of Enron and will rank pari passu with the most senior preferred
stock issued, if any, from time to time by Enron and with any guarantee now or
hereafter entered into by Enron in respect of any preferred security of any
affiliate of the Company, and its obligations under the Company Debenture are
subordinate and junior in right of payment to all senior indebtedness of the
Company. As of September 30, 1996, consolidated senior indebtedness of Enron
aggregated approximately $3.6 billion. Except under certain limited
circumstances described under "Description of the Partnership Preferred
Securities -- Partnership Investments" with respect to the Company Debenture,
there are no terms in the Trust Preferred Securities, the Partnership Preferred
Securities, the Guarantees or the Debentures that limit the Company's ability to
incur additional indebtedness, including indebtedness that ranks senior to the
Guarantees. See "Description of the Partnership Preferred
Securities -- Partnership Investments" and " -- Investment Guarantees,"
"Description of the Trust Guarantee" and "Description of the Partnership
Guarantee."
ENFORCEMENT OF CERTAIN RIGHTS BY OR ON BEHALF OF HOLDERS OF TRUST PREFERRED
SECURITIES
If a Trust Enforcement Event occurs and is continuing, then (a) the holders
of Trust Preferred Securities will rely on the enforcement by the Property
Trustee of its rights, as a holder of the Partnership Preferred Securities,
including the right to direct the Special Representative to enforce (i) the
Partnership's creditors' rights and other rights with respect to the Affiliate
Investment Instruments and the Investment Guarantees, (ii) the rights of the
holders of the Partnership Preferred Securities under the Partnership Guarantee,
and (iii) the rights of the holders of the Partnership Preferred Securities to
receive distributions (only if and to the extent declared out of funds legally
available therefor) on the Partnership Preferred Securities, and (b) the Trust
Guarantee Trustee shall have the right to enforce the terms of the Trust
Guarantee, including the right to enforce the covenant restricting payments by
the Company of dividends and other distributions with respect to any of its
capital stock or Comparable Equity Interests. Under no circumstances, however,
will the Special Representative have authority to cause the General Partner to
declare distributions on the Partnership Preferred Securities. As a result,
although the Special Representative may be able to enforce the Partnership's
creditors' rights to accelerate and receive payments in respect of the Affiliate
Investment Instruments and the Investment Guarantees, the Partnership would be
entitled to reinvest such payments in additional Affiliate Investment
Instruments, subject to satisfying the reinvestment criteria described under
"Description of the Partnership Preferred Securities -- Partnership
Investments," and in Eligible Debt Securities, rather than declaring and making
distributions on the Partnership Preferred Securities. See "Description of the
Trust Preferred Securities -- Trust Enforcement Events."
LIMITED VOTING RIGHTS
Holders of the Trust Preferred Securities will have limited voting rights
and will not be entitled to vote to appoint, remove or replace, or to increase
or decrease the number of, Trustees, which voting rights are vested exclusively
in the holder of the Trust Common Securities. See "Description of the Trust
Preferred Securities -- Voting Rights."
TRADING CHARACTERISTICS OF TRUST PREFERRED SECURITIES
The price at which the Trust Preferred Securities may trade may not fully
reflect the value of the accrued but unpaid distributions on the Trust Preferred
Securities (which will equal the accrued but unpaid distributions on the
Partnership Preferred Securities). In addition, as a result of the right of the
General Partner not to declare current distributions on the Partnership
Preferred Securities, the market price of the Trust Preferred Securities (which
represent undivided beneficial ownership interests in the Partnership Preferred
Securities) may be more volatile than other similar securities where there is no
such right to defer
16
<PAGE> 18
current distributions. For United States federal income tax purposes, a holder
who disposes of its Trust Preferred Securities will be required to include in
income as ordinary income accrued but unpaid distributions on the Partnership
Preferred Securities through the date of disposition (to the extent not
previously included in income) and to add such amount to its adjusted tax basis
in its pro rata share of the Partnership Preferred Securities deemed disposed
of. To the extent the selling price is less than the holder's adjusted tax basis
(which will include all accrued but unpaid distributions), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Considerations."
NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities constitute a new issue of securities with no
established trading market. Application will be made to list the Trust Preferred
Securities on the New York Stock Exchange. There can be no assurance, however,
that an active market for the Trust Preferred Securities will develop or be
sustained in the future on the New York Stock Exchange. Although the
Underwriters have indicated to the Company that they intend to make a market in
the Trust Preferred Securities, as permitted by applicable laws and regulations,
they are not obligated to do so and may discontinue any such market-making at
any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Trust Preferred Securities.
USE OF PROCEEDS
The proceeds to be received by the Trust from the sale of the Trust
Preferred Securities and the Trust Common Securities will be used by the Trust
to purchase Partnership Preferred Securities and will be applied by the
Partnership to invest in the Debentures and Eligible Debt Securities. See
"Description of the Partnership Preferred Securities -- Partnership
Investments." The Company will, and will cause the subsidiaries of the Company
that are issuers of the Debentures to, use the proceeds of $150 million from the
sale of such Debentures to the Partnership for the repayment of short-term debt
(having an average interest rate of approximately %) and for other general
corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------ SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 1.66 1.74 1.98 2.34 2.92 3.19
</TABLE>
The ratio of earnings to fixed charges is 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.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of Enron and its
consolidated subsidiaries as of September 30, 1996, and as adjusted to give
effect to the issuance of $200 million principal amount of Trust Preferred
Securities by Enron Capital Trust I in November 1996, $150 million principal
amount of Notes by Enron Oil & Gas Company in November 1996 and the Trust
Preferred Securities offered hereby and the use of the proceeds therefrom.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt
Notes payable..................................................... $ -- $ --
Current maturities of long-term debt.............................. -- --
---------- ----------
Total short-term debt..................................... -- --
---------- ----------
Long-term debt
Enron:
Amount reclassified from short-term debt....................... 691,944 191,944
Notes due 1996-2023 (6 3/4% to 10%)............................ 1,547,689 1,547,689
Exchangeable Notes due 1998 (6 1/4%)........................... 228,375 228,375
Subsidiary companies:
Notes due 1998-2005 (4.52% to 9.2%)............................ 556,480 556,480
Notes due 1998-1999 (floating rates)........................... 160,000 160,000
Notes due 2006 (6.7%).......................................... -- 150,000
Other.......................................................... 43,537 43,537
Enron:
Senior subordinated debenture due 2005-2012 (6.75% to 8.25%)... 350,000 350,000
Unamortized debt discount and premium............................. (14,817) (14,817)
---------- ----------
Total long-term debt...................................... 3,563,208 3,213,208
---------- ----------
Minority interests.................................................. 628,324 628,324
---------- ----------
Company-obligated preferred stock of subsidiaries................... 391,750 391,750
---------- ----------
Company-obligated Trust Preferred Securities........................ -- 350,000
---------- ----------
Shareholders' equity
Convertible preferred stock....................................... 137,178 137,178
Common stock...................................................... 25,596 25,596
Additional paid-in capital........................................ 1,891,384 1,891,384
Retained earnings................................................. 1,929,062 1,929,062
Cumulative foreign currency translation adjustment................ (150,489) (150,489)
Common stock held in treasury..................................... (75,394) (75,394)
Other, including Flexible Equity Trust............................ (164,588) (164,588)
---------- ----------
Total shareholders' equity................................ 3,592,749 3,592,749
---------- ----------
Total capitalization...................................... $8,176,031 $ 8,176,031
========== ==========
</TABLE>
18
<PAGE> 20
THE COMPANY
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 transportation and wholesale marketing of natural gas
to markets throughout the United States and internationally through
approximately 37,000 miles of natural gas pipelines; the exploration for and
development 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.
Enron has its principal executive offices at 1400 Smith Street, Houston,
Texas 77002, and its telephone number is (713) 853-6161.
Additional information concerning Enron and its subsidiaries is included in
the documents filed with the Commission and incorporated by reference herein.
See "Incorporation of Certain Documents by Reference."
TRANSPORTATION AND OPERATION
Enron's operations include the interstate and intrastate 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 and pipeline interconnects on the east end of the Transwestern
system. 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 approximate 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. Enron is considering the sale of its interest in Enron
Liquids Pipeline, L.P. and certain other natural gas liquids assets. However, if
no acceptable offers are submitted, Enron will continue to own and operate these
assets.
DOMESTIC GAS AND POWER SERVICES
Enron Capital & Trade Resources Corp. and its affiliated companies ("ECT")
purchase natural gas, natural gas liquids and power through a variety of
contractual arrangements, including both short-term 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.
19
<PAGE> 21
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 and other liquid
fuels. 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 terminalling 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, the Dominican Republic, the Philippines
and China; pipeline systems in Argentina and Colombia; retail gas and propane
sales in the Caribbean basin; processing of natural gas liquids at Teesside,
England; and marketing of natural gas liquids and other liquid fuels worldwide.
Enron is also involved in power, pipeline and liquified natural gas projects in
varying stages of development in China, Guam, India, Puerto Rico, Italy, Qatar,
Vietnam, Israel, Jordan, Turkey, Bolivia, 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 acquire, 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 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), a 6,548 kilometer (4,069 mile) natural gas pipeline system in
Argentina, a 575 kilometer (357 mile) natural gas pipeline in Colombia and a 185
megawatt power plant in the Dominican Republic. The public offering of common
shares of EPP was completed in November 1994. Enron owns approximately 54% 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
Substantially all of Enron's natural gas and crude oil exploration and
production operations are conducted by its subsidiary Enron Oil & Gas Company
("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, 1995, EOG had
estimated net proved natural gas reserves of 3,343 billion cubic feet (including
54.2 billion cubic feet attributable to a volumetric production payment) and
estimated net proved crude oil, condensate and natural gas liquids reserves of
50 million barrels, and at such date approximately 78% of EOG's reserves (on a
natural gas equivalent basis) was located in the United States, 10% in Canada,
8% in Trinidad and 4% in India. Enron owns approximately 52% of the common stock
of EOG.
PENDING ACQUISITION OF PORTLAND GENERAL CORPORATION
Enron announced on July 22, 1996 that it had signed an agreement to merge
with Portland General Corporation ("PGC") in a stock-for-stock transaction. PGC
is an electric utility holding company, serving retail electric customers in
northwest Oregon as well as wholesale electricity customers throughout the
western United States. Enron proposes to issue approximately 51 million common
shares, valued at approximately $2.1 billion as of July 22, 1996, to
shareholders of PGC in a one-for-one exchange of shares, as a result of which
Enron will be the surviving corporation. Following the merger, former PGC
shareholders will own approximately 17% of the outstanding common shares of the
combined entity. The merger agreement provides that, unless certain regulatory
reforms are enacted, Enron will reincorporate as an Oregon corporation prior to
completing the merger with PGC. Enron will consolidate PGC's debt (approximately
$1.1 billion at September 30, 1996) and account for the transaction on a
purchase accounting basis. The merger was approved by each company's
shareholders on November 12, 1996, but remains subject to the satisfaction of
certain conditions, including the satisfactory receipt of regulatory approvals
from the Oregon Public Utilities
20
<PAGE> 22
Commission and the Federal Energy Regulatory Commission. Regulatory procedures
are expected to be completed sometime in 1997. Proxy materials containing more
detailed information about PGC and the proposed merger have been filed with the
Commission and may be obtained as set forth under "Available Information."
DESCRIPTION OF THE TRUST
Enron Capital Trust II (the "Trust") is a statutory business trust formed
under the Delaware Business Trust Act, as amended (the "Trust Act"), pursuant to
a declaration of trust and the filing of a certificate of trust with the
Secretary of State of the State of Delaware. Such declaration will be amended
and restated in its entirety (as so amended and restated, the "Declaration")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Trust Preferred Securities, the purchasers
thereof will own all the Trust Preferred Securities. See "Description of the
Trust Preferred Securities." The Company will acquire Trust Common Securities in
an aggregate liquidation amount equal to at least 3% of the total capital of the
Trust. The Trust will use all the proceeds derived from the issuance of the
Trust Securities to purchase the Partnership Preferred Securities from the
Partnership, and accordingly the assets of the Trust will consist solely of the
Partnership Preferred Securities. The Trust exists for the exclusive purpose of
(i) issuing the Trust Securities representing undivided beneficial ownership
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Partnership Preferred Securities, and (iii) engaging in
only those other activities necessary or incident thereto.
Pursuant to the Declaration, there will initially be five trustees (the
"Trustees") for the Trust. Three of the Trustees (the "Regular Trustees") will
be individuals who are employees or officers of or who are affiliated with the
Company. The fourth trustee will be a financial institution that is unaffiliated
with the Company and is indenture trustee for purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). The fifth
trustee will be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). Initially, The Chase Manhattan Bank
will act as Property Trustee and Chase Manhattan Bank Delaware will serve as
Delaware Trustee until, in each case, removed or replaced by the holder of the
Trust Common Securities. For purposes of compliance with the Trust Indenture
Act, The Chase Manhattan Bank will also act as trustee under the Trust Guarantee
(the "Trust Guarantee Trustee") and under the Investment Guarantees and the
Company Debenture. The address of The Chase Manhattan Bank is 450 West 33rd
Street, 15th Floor, New York, New York 10001. The address of Chase Manhattan
Bank Delaware is 1201 Market Street, Wilmington, Delaware 19801.
The Property Trustee will hold title to the Partnership Preferred
Securities for the benefit of the holders of the Trust Securities, and the
Property Trustee will have the power to exercise all rights, powers and
privileges with respect to the Partnership Preferred Securities under the
Amended and Restated Agreement of Limited Partnership (the "Limited Partnership
Agreement") to be entered into by the Company, as General Partner, and the Trust
as the holder of the limited partner interests consisting of the Partnership
Preferred Securities. In addition, the Property Trustee will maintain exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made in respect of the Partnership Preferred
Securities for the benefit of the holders of the Trust Securities. The Trust
Guarantee Trustee will hold the Trust Guarantee for the benefit of the holders
of the Trust Preferred Securities. The Company, as the holder of all the Trust
Common Securities, will have the right to appoint, remove or replace any of the
Trustees and to increase the number of trustees; provided, however, that there
must be at least one Delaware Trustee, at least one Property Trustee (which may
also be the Delaware Trustee) and at least one Regular Trustee. The Company will
pay all fees and expenses related to the organization and operations of the
Trust (including any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other domestic taxing authority upon the Trust) and the offering of the
Trust Preferred Securities. The Company will also be responsible for all debts
and obligations of the Trust (other than with respect to distributions on the
Trust Securities).
For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain direct ownership of 100% of the Trust
Common Securities, (ii) to cause the Trust to remain a
21
<PAGE> 23
statutory business trust and not to voluntarily dissolve, wind-up, liquidate or
be terminated, except as permitted by the Declaration of the Trust, (iii) to use
its commercially reasonable efforts to ensure that the Trust will not be an
"investment company" for purposes of the 1940 Act and (iv) to take no action
which would be reasonably likely to cause the Trust to be classified as an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are as set forth in
the Declaration and the Trust Act. See "Description of the Trust Preferred
Securities." The Declaration and the Trust Guarantee also incorporate by
reference the terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o Enron
Corp., 1400 Smith Street, Houston, Texas 77002, and its phone number at such
address is (713) 853-6161.
DESCRIPTION OF THE PARTNERSHIP
Enron Preferred Funding II, L. P. (the "Partnership") is a limited
partnership formed under the Delaware Revised Uniform Limited Partnership Act,
as amended (the "Partnership Act"). Pursuant to the certificate of limited
partnership, as amended, and the Limited Partnership Agreement, the Company is
the sole general partner of the Partnership (in such capacity the "General
Partner"). The Limited Partnership Agreement will be substantially in the form
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. Upon the issuance of the Partnership Preferred Securities, which
securities represent limited partnership interests in the Partnership, the Trust
will be the sole limited partner of the Partnership. Contemporaneous with the
issuance of the Partnership Preferred Securities, the General Partner will
contribute capital to the Partnership in an amount sufficient to establish its
initial capital account at an amount equal to at least 15% of the total capital
of the Partnership.
The Partnership will be managed by the General Partner and exists for the
sole purpose of (i) issuing its partnership interests, (ii) investing the
proceeds thereof in securities of Enron and its subsidiaries (the "Affiliate
Investment Instruments") and Eligible Debt Securities and (iii) engaging in only
those other activities necessary or incidental thereto. To the extent that
aggregate payments to the Partnership on the Affiliate Investment Instruments
and on Eligible Debt Securities exceed distributions payable with respect to the
Partnership Preferred Securities, the Partnership may at times have excess funds
which shall be allocated to and may, in the General Partner's sole discretion,
be distributed to the General Partner.
For so long as the Partnership Preferred Securities remain outstanding, the
Company will covenant in the Limited Partnership Agreement (i) to remain the
sole general partner of the Partnership and to maintain direct ownership of 100%
of the General Partner's interest in the Partnership, which interest will at all
times represent at least 1% of the total capital of the Partnership, (ii) to
cause the Partnership to remain a limited partnership and not to voluntarily
dissolve, liquidate, wind-up or be terminated, except as permitted by the
Limited Partnership Agreement, (iii) to use its commercially reasonable efforts
to ensure that the Partnership will not be an "investment company" for purposes
of the 1940 Act and (iv) to take no action that would be reasonably likely to
cause the Partnership to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
The rights of the holders of the Partnership Preferred Securities,
including economic rights, rights to information and voting rights, are set
forth in the Limited Partnership Agreement and the Partnership Act. See
"Description of the Partnership Preferred Securities."
The Limited Partnership Agreement provides that the General Partner will
have liability for the fees and expenses of the Partnership (including any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other domestic
taxing authority upon the Partnership) and be responsible for all debts and
obligations of the Partnership (other than with respect to distributions on the
Partnership Preferred Securities). Under Delaware law, assuming a limited
partner in a Delaware limited partnership such as the Partnership (i.e., a
holder of the Partnership Preferred Securities) does not participate in the
control of the business of the limited partnership, such limited partner
22
<PAGE> 24
will not be personally liable for the debts, obligations and liabilities of such
limited partnership, whether arising in contract, tort or otherwise, solely by
reason of being a limited partner of such limited partnership (subject to any
obligation such limited partner may have to repay any funds that may have been
wrongfully distributed to it).
The location of the principal executive offices of the Partnership is c/o
Enron Corp., 1400 Smith Street, Houston, Texas 77002, and its phone number at
such address is (713) 853-6161.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, The Chase Manhattan Bank, will act as
trustee for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act.
The following summary of the material terms and provisions of the Trust
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration, a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part, the Trust Act and the Trust Indenture Act.
GENERAL
The Trust Preferred Securities will be issued in fully registered form
without coupons. Trust Preferred Securities will not be issued in bearer form.
See " -- Book-Entry Only Issuance -- The Depository Trust Company."
The Declaration authorizes the Regular Trustees of the Trust to cause the
Trust to issue the Trust Securities, which represent undivided beneficial
ownership interests in the assets of the Trust. Title to the Partnership
Preferred Securities will be held by the Property Trustee for the benefit of the
holders of the Trust Securities. The Declaration does not permit the Trust to
acquire any assets other than the Partnership Preferred Securities, issue any
securities other than the Trust Securities or incur any indebtedness. The
payment of distributions out of money held by the Trust, including payments out
of money held by the Trust upon redemption of the Trust Preferred Securities or
liquidation of the Trust, are guaranteed by the Company to the extent described
under "Description of the Trust Guarantee." The Trust Guarantee will be held by
The Chase Manhattan Bank, the Trust Guarantee Trustee, for the benefit of the
holders of the Trust Preferred Securities. The Trust Guarantee does not cover
payment of distributions when the Trust does not have sufficient available funds
to pay such distributions. In such event, holders of Trust Preferred Securities
will have the remedies described below under " -- Trust Enforcement Events."
DISTRIBUTIONS
The distribution rate on Trust Preferred Securities will be fixed at a rate
per annum of % of the stated liquidation amount of $25 per Trust Preferred
Security if, as and when the Trust has funds available for payment.
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly at a rate per annum equal to %. The term "distribution"
as used herein includes any such compounded amounts unless otherwise stated or
the context otherwise requires. The amount of distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Trust Preferred Securities will be cumulative, will
accrue from the date of initial issuance and will be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31, commencing
, 1997, if, as and when the Trust has funds available for
payment, by the Property Trustee, except as otherwise described below. If
distributions are not paid when scheduled, the accrued distributions shall be
paid to the holders of record of Trust Preferred Securities as they appear on
the books and records of the Trust on the record date with respect to the actual
payment date for the Trust Preferred
23
<PAGE> 25
Securities, which will correspond to the payment date fixed by the Partnership
with respect to the payment of cumulative distributions on the Partnership
Preferred Securities.
Distributions on the Trust Preferred Securities will be made to the extent
that the Trust has funds available for the payment of such distributions in the
Property Account. Amounts available to the Trust for distribution to the holders
of the Trust Preferred Securities will be limited to payments received by the
Trust from the Partnership with respect to the Partnership Preferred Securities
or from the Company on the Partnership Guarantee or the Trust Guarantee.
Distributions on the Partnership Preferred Securities will be paid only if, as
and when declared in the sole discretion of the Company, as the General Partner
of the Partnership. Pursuant to the Limited Partnership Agreement, the General
Partner is not obligated to declare distributions on the Partnership Preferred
Securities at any time, including upon or following a Partnership Enforcement
Event. See "Description of Partnership Preferred Securities -- Partnership
Enforcement Events."
The assets of the Partnership consist only of Affiliate Investment
Instruments (which initially will be the Debentures) and Eligible Debt
Securities. To the extent that the issuers (including, where applicable, the
Company, as guarantor) of the securities in which the Partnership invests fail
to make any payment in respect of such securities (or, if applicable, such
guarantees), the Partnership may not have sufficient funds to pay and may not
declare or pay distributions on the Partnership Preferred Securities. To the
extent that the Partnership does not declare and pay distributions on the
Partnership Preferred Securities out of funds legally available for
distribution, the Trust will not have sufficient funds to make corresponding
distributions on the Trust Preferred Securities, in which event the Trust
Guarantee will not apply to such distributions until the Trust has sufficient
funds available therefor. See "Description of the Partnership Preferred
Securities -- Distributions" and "Description of the Trust Guarantee." In
addition, as described under "Risk Factors -- Insufficient Income or Assets
Available to Partnership," the Partnership may not have sufficient funds to pay
current or liquidating distributions on the Partnership Preferred Securities if
(i) at any time that the Partnership is receiving current payments in respect of
the securities held by the Partnership (including the Debentures), the General
Partner, in its sole discretion, does not declare distributions on the
Partnership Preferred Securities and the Partnership receives insufficient
amounts to pay the additional compounded distributions that will accrue in
respect of the Partnership Preferred Securities, (ii) the Partnership reinvests
the proceeds received in respect of the Debentures upon their retirement or at
their maturities in Affiliate Investment Instruments that do not generate income
in an amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in equity or
debt securities of Investment Affiliates that are not guaranteed by the Company
and that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full.
Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be one Business Day prior to the relevant
payment dates. Such distributions will be paid through the Property Trustee who
will hold amounts received in respect of the Partnership Preferred Securities in
the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under " -- Book-Entry
Only Issuance -- The Depository Trust Company" below. In the event that the
Trust Preferred Securities do not remain in book-entry only form, the relevant
record dates shall be the 15th day of the month of the relevant payment dates.
In the event that any date on which distributions are payable on the Trust
Preferred Securities is not a Business Day, payment of the distribution payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day. A "Business Day" shall
mean any day other than a day on which banking institutions in The City of New
York are authorized or required by law to close.
TRUST ENFORCEMENT EVENTS
The occurrence, at any time, of (i) arrearages on distributions on the
Trust Preferred Securities that shall exist for six consecutive quarterly
distribution periods, (ii) a default by the Company in respect of any of its
24
<PAGE> 26
obligations under the Trust Guarantee or (iii) a Partnership Enforcement Event
under the Limited Partnership Agreement, will constitute an enforcement event
under the Declaration with respect to the Trust Securities (a "Trust Enforcement
Event"); provided, that pursuant to the Declaration, the holder of the Trust
Common Securities will be deemed to have waived any Trust Enforcement Event with
respect to the Trust Common Securities until all Trust Enforcement Events with
respect to the Trust Preferred Securities have been cured, waived or otherwise
eliminated. Until such Trust Enforcement Events with respect to the Trust
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the holders of
the Trust Preferred Securities, and only the holders of the Trust Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and, therefore, the Special Representative
with respect to certain matters under the Limited Partnership Agreement. See
"Description of the Partnership Preferred Securities -- Partnership Enforcement
Events" for a description of the events which will trigger the occurrence of a
Partnership Enforcement Event.
Upon the occurrence of a Trust Enforcement Event, (a) the Property Trustee,
as the holder of the Partnership Preferred Securities, shall have the right to
enforce the terms of the Partnership Preferred Securities, including the right
to direct the Special Representative to enforce (i) the Partnership's creditors'
rights and other rights with respect to the Affiliate Investment Instruments and
the Investment Guarantees, (ii) the rights of the holders of the Partnership
Preferred Securities under the Partnership Guarantee and (iii) the rights of the
holders of the Partnership Preferred Securities to receive distributions (only
if and to the extent declared out of funds legally available therefor) on the
Partnership Preferred Securities, and (b) the Trust Guarantee Trustee shall have
the right to enforce the terms of the Trust Guarantee, including the right to
enforce the covenant restricting certain distributions by the Company.
If the Property Trustee fails to enforce its rights under the Partnership
Preferred Securities after a holder of Trust Preferred Securities has made a
written request, such holder of Trust Preferred Securities may directly
institute a legal proceeding against the Partnership, the General Partner and
the Special Representative to enforce the Property Trustee's rights under the
Partnership Preferred Securities without first instituting any legal proceeding
against the Property Trustee, the Trust or any other person or entity. In
addition, for so long as the Trust holds any Partnership Preferred Securities,
if the Special Representative fails to enforce its rights on behalf of the
Partnership under the Affiliate Investment Instruments after a holder of Trust
Preferred Securities has made a written request, a holder of Trust Preferred
Securities may on behalf of the Partnership directly institute a legal
proceeding against the Investment Affiliates under the Affiliate Investment
Instruments, without first instituting any legal proceeding against the Property
Trustee, the Trust, the Special Representative, the Partnership or any other
person or entity. In any event, for so long as the Trust is the holder of any
Partnership Preferred Securities, if a Trust Enforcement Event has occurred and
is continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument or the failure of the Company to make any required payment when due
on any Investment Guarantee, then a holder of Trust Preferred Securities may on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument or
against the Company with respect to any such Investment Guarantee, in each case
for enforcement of payment.
Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "Description of the
Partnership Preferred Securities -- Partnership Investments," and in Eligible
Debt Securities, rather than declaring and making distributions on the
Partnership Preferred Securities.
The Company and the Trust are each required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
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REDEMPTION
The Partnership Preferred Securities may be redeemed by the Partnership at
the option of the General Partner, in whole or in part, at any time on or after
, 2002 or at any time in certain circumstances upon the
occurrence of a Partnership Special Event. Upon the repayment of the Partnership
Preferred Securities upon such redemption (either at the option of the General
Partner or pursuant to a Partnership Special Event), the proceeds from such
repayment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
repaid at an amount equal to the amount received in respect of the redeemed
Partnership Preferred Securities; provided, that holders of the Trust Securities
shall be given not less than 30 nor more than 60 days' notice of such
redemption. See "Description of the Partnership Preferred Securities -- General"
and "Description of the Partnership Preferred Securities -- Optional
Redemption."
TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Trust Tax Event or a Trust Investment Company Event
(each as hereinafter defined, and each, a "Trust Special Event") shall occur and
be continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days' notice with the
result that, after satisfaction of creditors of the Trust, if any, Partnership
Preferred Securities (which will have an aggregate stated amount equal to the
aggregate stated liquidation amount of, a distribution rate identical to the
distribution rate of, accrued and unpaid distributions equal to accrued and
unpaid distributions on, and a record date for payment the same as, the Trust
Preferred Securities and the Trust Common Securities outstanding at such time)
will be distributed on a pro rata basis to the holders of the Trust Preferred
Securities and the Trust Common Securities in liquidation of such holders'
interests in the Trust; provided, however, that if at the time there is
available to the Trust the opportunity to eliminate, within such 90-day period,
the Trust Special Event by taking some ministerial action, such as filing a form
or making an election, or pursuing some other similar reasonable measure which
in the sole judgment of the Company has or will cause no adverse effect on the
Trust, the Partnership, the Company or the holders of the Trust Securities and
will involve no material cost, the Trust will pursue such measure in lieu of
dissolution or (ii) cause the Trust Preferred Securities to remain outstanding,
provided that in the case of this clause (ii), the Company shall pay any and all
expenses incurred by or payable by the Trust attributable to the Trust Special
Event. Furthermore, if in the case of the occurrence of a Trust Tax Event, the
Regular Trustees have received an opinion (a "Trust Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters that
there is more than an insubstantial risk that interest payable by one or more of
the Investment Affiliates with respect to the Debentures issued by such
Investment Affiliate is not, or will not be, deductible by such Investment
Affiliate for United States federal income tax purposes even if the Partnership
Preferred Securities were distributed to the holders of the Trust Securities in
liquidation of such holders' interests in the Trust as described above, then the
General Partner shall have the right, within 90 days following the occurrence of
such Trust Tax Event, to elect to cause the Partnership to redeem the
Partnership Preferred Securities in whole (but not in part) for cash upon not
less than 30 nor more than 60 days' notice, and promptly following such
redemption the Trust Preferred Securities and Trust Common Securities will be
redeemed by the Trust at the Redemption Price.
"Trust Tax Event" means that the Company shall have requested and received
and shall have delivered to the Regular Trustees an opinion of nationally
recognized independent tax counsel experienced in such matters (a "Trust
Dissolution Tax Opinion") to the effect that there has been (a) an amendment to,
change in or announced proposed change in the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (b) a judicial decision interpreting, applying or
clarifying such laws or regulations, (c) an administrative pronouncement or
action that represents an official position (including a clarification of an
official position) of the governmental authority or regulatory body making such
administrative pronouncement or taking such action, or (d) a threatened
challenge asserted in connection with an audit of the Company or any of its
subsidiaries, the Partnership or the Trust, or a threatened challenge asserted
in writing against any other taxpayer that has raised capital through the
issuance
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of securities that are substantially similar to the Debentures, the Partnership
Preferred Securities or the Trust Preferred Securities, that occurs on or after
the date of this Prospectus (collectively a "Tax Action") and that results in
there being more than an insubstantial risk that (i) the Trust is or will be
subject to United States federal income tax with respect to income accrued or
received on the Partnership Preferred Securities, (ii) the Trust is or will be
subject to more than a de minimis amount of other taxes, duties or other
governmental charges or (iii) interest payable by an Investment Affiliate with
respect to the Debenture issued by such Investment Affiliate is not, or will not
be, deductible by such Investment Affiliate for United States federal income tax
purposes.
"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of the occurrence on or after the date
hereof of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
will be considered an "investment company" which is required to be registered
under the 1940 Act.
If the Partnership Preferred Securities are distributed to the holders of
the Trust Preferred Securities, the Company will use its best efforts to cause
the Partnership Preferred Securities to be listed on the New York Stock Exchange
or on such other national securities exchange or similar organization as the
Trust Preferred Securities are then listed or quoted.
On the date fixed for any distribution of Partnership Preferred Securities,
upon dissolution of the Trust, (i) the Trust Preferred Securities and the Trust
Common Securities will no longer be deemed to be outstanding and (ii)
certificates representing Trust Securities will be deemed to represent the
Partnership Preferred Securities so distributed until such certificates are
presented to the Company or its agent for exchange.
There can be no assurance as to the market price for the Partnership
Preferred Securities which may be distributed in exchange for Trust Preferred
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Partnership Preferred Securities which an investor may
subsequently receive on dissolution and liquidation of the Trust may trade at a
discount to the price of the Trust Preferred Securities exchanged.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust Preferred Securities for all quarterly distribution periods terminating on
or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Trust Preferred
Securities (which notice will be irrevocable), and if the Company has paid to
the Property Trustee a sufficient amount of cash in connection with the related
redemption of the Partnership Preferred Securities, then, by 12:00 noon, New
York time, on the redemption date, the Trust will irrevocably deposit with the
DTC funds sufficient to pay the amount payable on redemption of all book-entry
certificates and will give DTC irrevocable instructions and authority to pay
such amount to holders of the Trust Preferred Securities. See " -- Book-Entry
Only Issuance -- The Depository Trust Company." If notice of redemption shall
have been given and funds are deposited as required, then upon the date of such
deposit all rights of holders of such Trust Preferred Securities so called for
redemption will cease, except the right of the holders of such Trust Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price. In the event that any date fixed for redemption of Trust
Preferred Securities is not a Business Day, then payment of the amount payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Trust Preferred Securities is improperly withheld
or refused and not paid either by the Trust or by the Company pursuant to the
Trust Guarantee described under "Description of the Trust Guarantee,"
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distributions on such Trust Preferred Securities will continue to accrue at the
then applicable rate, from the original redemption date to the date of payment.
In the event that fewer than all of the outstanding Trust Preferred
Securities are to be redeemed, the Trust Preferred Securities will be redeemed
in accordance with the procedures of DTC. See " -- Book-Entry Only
Issuance -- The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries may at
any time and from time to time purchase outstanding Trust Preferred Securities
by tender, in the open market or by private agreement.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of amounts upon liquidation of the Trust Securities (as described
below) shall be made pro rata based on the liquidation amount of the Trust
Securities except that if (i) an Investment Event of Default by an Investment
Affiliate (including the Company) in respect of any Affiliate Investment
Instrument has occurred and is continuing or (ii) the Company is in default
under any of its obligations under any Guarantee, then the holders of the Trust
Preferred Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust.
In the case of any Trust Enforcement Event, the holder of Trust Common
Securities will be deemed to have waived any such Trust Enforcement Event until
all such Trust Enforcement Events with respect to the Trust Preferred Securities
have been cured, waived or otherwise eliminated. Until all Trust Enforcement
Events with respect to the Trust Preferred Securities have been so cured, waived
or otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of the Trust Preferred Securities and not on behalf of the holder of the
Trust Common Securities, and only the holders of the Trust Preferred Securities
will have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Trust Liquidation"), the then
holders of the Trust Preferred Securities will be entitled to receive out of the
assets of the Trust, after satisfaction of liabilities to creditors,
distributions in cash or other immediately available funds in an amount equal to
the aggregate of the stated liquidation amount of $25 per Trust Preferred
Security plus accrued and unpaid distributions thereon to the date of payment
(the "Trust Liquidation Distribution"), unless, in connection with such Trust
Liquidation, Partnership Preferred Securities (which will have an aggregate
stated principal amount equal to the aggregate stated liquidation amount of, a
distribution rate identical to the distribution rate of, and accrued and unpaid
distributions equal to accrued and unpaid distributions on, the Trust Preferred
Securities) have been distributed on a pro rata basis to the holders of the
Trust Preferred Securities.
If, upon any such Trust Liquidation, the Trust Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Trust Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Preferred Securities shall be paid on a pro
rata basis, and the holders of the Trust Common Securities will be entitled to
receive distributions upon any such liquidation as described above under
" -- Subordination of Trust Common Securities."
Pursuant to the Declaration, the Trust shall terminate (i) upon the
bankruptcy, insolvency or dissolution of the Company, (ii) upon the filing of a
certificate of dissolution or the equivalent with respect to the Company, the
filing of a certificate of cancellation with respect to the Trust after having
obtained the consent of at least a majority in liquidation amount of the Trust
Securities, voting together as a single class, to file such certificate of
cancellation, or the revocation of the charter of the Company and the expiration
of 90 days after the date of revocation without a reinstatement thereof, (iii)
upon the distribution of all of the Partnership Preferred Securities upon the
occurrence of a Trust Special Event, (iv) upon the entry of a decree of a
judicial dissolution of the Company or the Trust, or (v) upon the redemption of
all the Trust Securities. A merger of the Company with or into another entity
will not constitute one of the foregoing events.
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VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act
and under "Description of the Trust Guarantee -- Amendments and Assignment," and
as otherwise required by law and the Declaration, the holders of the Trust
Preferred Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, the holders of a majority
in liquidation amount of the Trust Preferred Securities have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Property Trustee, or direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee, as holder of the Partnership Preferred Securities, to (i)
exercise the remedies available to it under the Limited Partnership Agreement as
a holder of the Partnership Preferred Securities, including the right to direct
the Special Representative to exercise its rights in the manner described above
under " -- Trust Enforcement Events" and (ii) consent to any amendment,
modification or termination of the Limited Partnership Agreement or the
Partnership Preferred Securities where such consent shall be required; provided,
however, that where a consent or action under the Limited Partnership Agreement
would require the consent or act of the holders of more than a majority of the
aggregate liquidation amount of Partnership Preferred Securities affected
thereby, only the holders of the percentage of the aggregate stated liquidation
amount of the Trust Securities which is at least equal to the percentage
required under the Limited Partnership Agreement may direct the Property Trustee
to give such consent or take such action on behalf of the Trust. See
"Description of the Partnership Preferred Securities -- Voting Rights." The
Property Trustee shall notify all holders of the Trust Preferred Securities of
any notice of any Partnership Enforcement Event received from the General
Partner with respect to the Partnership Preferred Securities and the Affiliate
Investment Instruments. Such notice shall state that such Partnership
Enforcement Event also constitutes a Trust Enforcement Event. Except with
respect to directing the time, method, and place of conducting a proceeding for
a remedy as described above, the Property Trustee shall be under no obligation
to take any of the actions described in clauses (i) or (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that as a result of such action, for United States federal income tax
purposes, the Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation.
Subject to certain exceptions, the holders of a majority in liquidation
amount of the Trust Preferred Securities may waive any past Trust Enforcement
Event in respect of the Trust Preferred Securities. A waiver of a Partnership
Enforcement Event with respect to the Partnership Preferred Securities held by
the Property Trustee will constitute a waiver of the corresponding Trust
Enforcement Event. See "Description of the Partnership Preferred
Securities -- Voting Rights."
Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Trust
Preferred Securities will be required for the Trust to redeem and cancel Trust
Preferred Securities or distribute Partnership Preferred Securities in
accordance with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Securities that are owned at such time by the Company or any entity directly or
indirectly controlled by, or under direct or indirect common control with, the
Company, shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if such Trust Securities were not
outstanding; provided, however, that persons (other than affiliates of the
Company)
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to whom the Company or any of its subsidiaries have pledged Trust Preferred
Securities may vote or consent with respect to such pledged Trust Preferred
Securities under any of the circumstances described herein.
The procedures by which holders of Trust Preferred Securities represented
by the global certificates may exercise their voting rights are described below.
See " -- Book-Entry Only Issuance -- The Depository Trust Company."
Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Regular Trustees, who may be appointed, removed or replaced solely by
the Company, as the holder of all of the Trust Common Securities.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other entity without the
consent of the holders of the Trust Securities, except in certain limited
circumstances and upon compliance with certain specified conditions. The Trust
shall not, however, except with the consent of holders of 100% in liquidation
amount of the Trust Preferred Securities, consolidate, amalgamate, merge with or
into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of
the Regular Trustees (and in certain circumstances the Property Trustee and the
Delaware Trustee), provided, that if any proposed amendment provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the holders of
Trust Securities, whether by way of amendment to the Declaration or otherwise or
(ii) the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the holders of at least a majority in liquidation amount of the
Trust Securities affected thereby; provided, further that if any amendment or
proposal referred to in clause (i) above would adversely affect only the Trust
Preferred Securities or the Trust Common Securities, then only the affected
class of security holders will be entitled to vote on such amendment or proposal
and such amendment or proposal shall not be effective except with the approval
of a majority in liquidation amount of such class of security holders.
The Declaration may be amended without the consent of any holders of the
Trust Securities to (i) cure any ambiguity, (ii) correct or supplement any
provision in the Declaration that may be defective or inconsistent with any
other provision of the Declaration, (iii) add to the covenants, restrictions or
obligations of the Company, (iv) conform to any change in the 1940 Act, the
Trust Indenture Act or the rules or regulations of either such Act and (v)
modify, eliminate and add to any provision of the Declaration to such extent as
may be necessary or desirable; provided that no such amendment shall have a
material adverse effect on the rights, preferences or privileges of the holders
of the Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes, (ii) cause the
Partnership to be classified as an association or a publicly traded partnership
taxable as a corporation for such purposes, (iii) reduce or otherwise adversely
affect the powers of the Property Trustee or (iv) cause the Trust or the
Partnership to be deemed an "investment company" which is required to be
registered under the 1940 Act.
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BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository (the
"Depository") for the Trust Preferred Securities and, to the extent distributed
to the holders of Trust Preferred Securities, the Partnership Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Trust Preferred Securities
certificates ("Global Certificates"), representing the total aggregate number of
Trust Preferred Securities, will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through Participants, which will receive a credit for the Trust Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by entries made on the books
of Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Participants to whose
accounts such Trust Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Trust Preferred Securities represented thereby
for all purposes under the Declaration and the Trust Preferred Securities. No
beneficial owner of an interest in a Global Certificate will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Trust Preferred Securities only at the direction of one or
more Participants to whose account the DTC interests in the Global Certificates
are credited and only in respect of such portion of the aggregate liquidation
amount of Trust Preferred Securities as to which such Participant or
Participants has or have given such direction. However, in certain cases if
there is a Trust Enforcement Event under the Trust Preferred Securities, DTC
will exchange the Global Certificates for Certificated Securities, which it will
distribute to its Participants in accordance with its customary procedures.
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Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Trust Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Trust
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Trust Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Trust Preferred
Securities are allocated on the record date (identified in a listing attached to
the Omnibus Proxy).
Distributions on the Trust Preferred Securities held in book-entry form
will be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trust will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depository with
respect to the Trust Preferred Securities at any time by giving notice to the
Trust. Under such circumstances, in the event that a successor securities
depository is not obtained, Trust Preferred Security certificates are required
to be printed and delivered to the Property Trustee. Additionally, the Trust
(with the consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC or any successor depository. In that event, and
in the event of certain Trust Enforcement Events, certificates for the Trust
Preferred Securities will be printed and delivered to the Property Trustee. In
each of the above circumstances, the Company will appoint a paying agent with
respect to the Trust Preferred Securities.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Trust
Preferred Securities as represented by a Global Certificate.
PAYMENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the scheduled payment dates or, in the case of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register.
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REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
The Property Trustee will act as Registrar, Transfer Agent and, if
required, Paying Agent for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust or the Company may require) in respect of any tax
or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Trust Enforcement
Event.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes. In this connection,
the Regular Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust or the Declaration that the Regular
Trustees determine in their discretion to be necessary or desirable for such
purposes as long as such action does not adversely affect the interests of the
holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE TRUST GUARANTEE
Set forth below is a summary of information concerning the Trust Guarantee
which will be executed and delivered by the Company for the benefit of the
holders from time to time of Trust Preferred Securities. The summary does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Trust Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The Trust Guarantee incorporates by reference the terms of, and will be
qualified as an indenture under, the Trust Indenture Act. The Chase Manhattan
Bank, as the Trust Guarantee Trustee, will hold the Trust Guarantee for the
benefit of the holders of the Trust Preferred Securities and will act as
indenture trustee for the purposes of compliance with the Trust Indenture Act.
GENERAL
Pursuant to the Trust Guarantee, the Company will irrevocably agree, on a
subordinated basis and to the extent set forth therein, to pay in full to the
holders of the Trust Preferred Securities (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set off or
counterclaim which the Trust may have or assert, the following payments (the
"Trust Guarantee Payments"), without duplication: (i) any accrued and unpaid
distributions on the Trust Preferred Securities to the extent the Trust has
funds available therefor, (ii) the Redemption Price with respect to any Trust
Preferred Securities called for redemption by the Trust to the extent the Trust
has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Partnership Preferred Securities to the holders of
Trust Preferred Securities), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Trust Preferred
Securities and (b) the amount of assets of the Trust remaining available for
distribution to holders of Trust Preferred Securities upon the liquidation of
the Trust. The Company's obligation to make a Trust Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Trust Preferred Securities.
The Trust Guarantee will be a guarantee on a subordinated basis with
respect to the Trust Preferred Securities from the time of issuance of such
Trust Preferred Securities but will only apply to any payment of distributions
or Redemption Price, or to payments upon the dissolution, winding-up or
termination of the Trust, to the extent the Trust shall have funds available
therefor. If the Partnership fails to declare distributions on Partnership
Preferred Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Trust Preferred Securities
or otherwise, and in such event holders of the Trust Preferred Securities would
not be able to rely upon the Trust Guarantee for payment of such amounts.
Instead, holders of the Trust Preferred Securities will have the remedies
described herein under "Description of the Trust Preferred Securities -- Trust
Enforcement Events", including the right to direct the Trust Guarantee Trustee
to enforce the covenant restricting certain distributions by the Company. See
"-- Certain Covenants of the Company" below.
The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors -- Insufficient
Income or Assets Available to Partnership."
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant in the Trust Guarantee that if for any
distribution period, (a) full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid, (b) an Investment Event of Default by
any Investment Affiliate in respect of any Affiliate Investment Instrument has
occurred and is continuing or (c) the Company is in default of its obligations
under the Trust Guarantee, the Partnership Guarantee or any Investment
Guarantee, then, during such period (i) the Company shall not declare or pay
dividends on, make distributions with respect to, redeem, purchase or acquire or
make a
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liquidation payment with respect to any of its capital stock (except for
dividends or distributions in shares of its common stock and exchanges of common
stock of one class for common stock of another class), (ii) the Company shall
not make any payment or cause any payment to be made that would result in, and
shall take such actions as shall be necessary to prevent, the payment of any
dividends on, any distribution with respect to, any redemption, purchase or
other acquisition of, or any liquidation payment with respect to, any Comparable
Equity Interest, and (iii) the Company will not make any guarantee payments with
respect to the foregoing. "Comparable Equity Interest" means the 8% Cumulative
Guaranteed Monthly Income Preferred Shares of Enron Capital LLC, the 9%
Cumulative Guaranteed Preferred Securities, Series A of Enron Capital Resources,
L.P., the 8.30% Trust Preferred Securities of Enron Capital Trust I and any
preferred security hereafter issued by any finance subsidiary of the Company,
the principal purpose of which is to lend the proceeds of the sale thereof to
the Company or to eligible affiliates of the Company.
EVENTS OF DEFAULT; ENFORCEMENT OF TRUST GUARANTEE
An event of default under the Trust Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trust Guarantee Trustee or to direct
the exercise of any trust or power conferred upon the Trust Guarantee Trustee
under the Trust Guarantee. If the Trust Guarantee Trustee fails to enforce its
rights under the Trust Guarantee after a holder of Trust Preferred Securities
has made a written request, such holder may institute a legal proceeding
directly against the Company to enforce the Trust Guarantee Trustee's rights
under the Trust Guarantee, without first instituting a legal proceeding against
the Trust, the Trust Guarantee Trustee or any other person or entity. In any
event, if the Company has failed to make a guarantee payment under the Trust
Guarantee, a holder of Trust Preferred Securities may directly institute a
proceeding in such holder's own name against the Company for enforcement of the
Trust Guarantee for such payment.
STATUS OF THE TRUST GUARANTEE; SUBORDINATION
The Trust Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior to all other liabilities of the Company and
will rank pari passu with the most senior preferred stock issued from time to
time by the Company and with any guarantee now or hereafter entered into by the
Company in respect of any preferred security of any affiliate of the Company.
The terms of the Trust Preferred Securities provide that each holder of Trust
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Trust Guarantee.
The Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Trust Preferred Securities (in which case no vote will
be required), the Trust Guarantee may be amended only with the prior approval of
the holders of at least a majority in liquidation amount of all the outstanding
Trust Preferred Securities. The manner of obtaining any such approval of holders
of the Trust Preferred Securities will be as set forth under "Description of the
Trust Preferred Securities -- Voting Rights." All guarantees and agreements
contained in the Trust Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Trust Preferred Securities then outstanding. Except in
connection with any permitted merger or consolidation of the Company with or
into another entity or any permitted sale, transfer or lease of the Company's
assets to another entity, the Company may not assign its rights or delegate its
obligations under the Trust Guarantee without the prior approval of the holders
of at least a majority of the aggregate stated liquidation amount of the Trust
Preferred Securities then outstanding.
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TERMINATION OF THE TRUST GUARANTEE
The Trust Guarantee will terminate as to each holder of Trust Preferred
Securities upon (i) full payment of the Redemption Price of all Trust Preferred
Securities, (ii) distribution of the Partnership Preferred Securities held by
the Trust to the holders of the Trust Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Trust. The Trust Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust Preferred
Securities must restore payment of any sum paid under such Trust Preferred
Securities or such Trust Guarantee.
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to the Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in the Trust Guarantee and, after default with respect to
the Trust Guarantee, shall exercise the same degree of care as a prudent person
would exercise in the conduct of his own affairs. Subject to such provision, the
Trust Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Guarantee at the request of any holder of Trust
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
laws of the State of New York.
DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES
GENERAL
All of the partnership interests in the Partnership other than the
Partnership Preferred Securities acquired by the Trust are owned directly by the
Company. The Company is the sole general partner of the Partnership. The Limited
Partnership Agreement authorizes and creates the Partnership Preferred
Securities, which represent limited partnership interests in the Partnership.
The limited partnership interests represented by the Partnership Preferred
Securities will have a preference with respect to distributions and amounts
payable on redemption or liquidation over the General Partner's interest in the
Partnership. Except as otherwise described herein or provided in the Limited
Partnership Agreement, the Limited Partnership Agreement does not permit the
issuance of any additional partnership interests or the incurrence of any
indebtedness by the Partnership.
The summary of certain material terms and provisions of the Partnership
Preferred Securities set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Limited
Partnership Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the Partnership Act.
DISTRIBUTIONS
Holders of Partnership Preferred Securities will be entitled to receive
cumulative cash distributions, if, as and when declared by the General Partner
in its sole discretion out of assets of the Partnership legally available for
payment. The distributions payable on each Partnership Preferred Security will
be fixed at a rate per annum of % of the stated liquidation preference of $25
per Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly at the rate per annum equal
to %. The amount of distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Distributions on the Partnership Preferred Securities will be payable
quarterly in arrears on March 31, June 30, September 30, and December 31 of each
year, commencing , 1997. If distributions are not declared and paid
when regularly scheduled, the accrued distributions that were not paid when
scheduled
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shall be paid to the holders of record of Partnership Preferred Securities as
they appear on the books and records of the Partnership on the record date with
respect to the actual payment date for the Partnership Preferred Securities.
The Partnership's funds available for distribution to the holders of the
Partnership Preferred Securities will be limited to payments received by the
Partnership on the Affiliate Investment Instruments, the Investment Guarantees
and the Eligible Debt Securities in which the Partnership has invested from time
to time. See "-- Partnership Investments." To the extent that the issuers
(including, where applicable, the Company, as guarantor) of the securities in
which the Partnership invests fail to make any payment in respect of such
securities (or, if applicable, such guarantees), the Partnership will not have
sufficient funds to pay and will not declare or pay distributions on the
Partnership Preferred Securities, in which event the Partnership Guarantee will
not apply to such distributions until the Partnership has sufficient funds
available therefor and declares such distributions. See "Description of the
Partnership Guarantee." In addition, distributions on the Partnership Preferred
Securities may be declared and paid only as determined in the sole discretion of
the Company, as the General Partner of the Partnership. If the Partnership fails
to declare and pay distributions on the Partnership Preferred Securities out of
funds legally available for distribution, the Trust will not have sufficient
funds to make distributions on the Trust Preferred Securities, in which event
the Trust Guarantee will not apply to such distributions until the Trust has
sufficient funds available therefor. In addition, as described under "Risk
Factors -- Insufficient Income or Assets Available to Partnership," the
Partnership may not have sufficient funds to pay current or liquidating
distributions on the Partnership Preferred Securities if (i) at any time that
the Partnership is receiving current payments in respect of the securities held
by the Partnership (including the Debentures), the General Partner, in its sole
discretion, does not declare distributions on the Partnership Preferred
Securities and the Partnership receives insufficient amounts to pay the
additional compounded distributions that will accrue in respect of the
Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds
received in respect of the Debentures upon their retirement or at their
maturities in Affiliate Investment Instruments that do not generate income in an
amount that is sufficient to pay full distributions in respect of the
Partnership Preferred Securities or (iii) the Partnership invests in equity or
debt securities of Investment Affiliates that are not guaranteed by the Company
and that cannot be liquidated by the Partnership for an amount sufficient to pay
such distributions in full.
Distributions on the Partnership Preferred Securities will be payable to
the holders thereof as they appear on the books and records of the Partnership
on the relevant record dates, which, as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a Trust
Special Event, as long as the Partnership Preferred Securities remain) in
book-entry only form, will be one Business Day prior to the relevant payment
dates. In the event the Trust Preferred Securities (or in the event that the
Trust is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities) shall not continue to remain in book-entry only form, the
relevant record dates shall be the 15th day of the month of the relevant payment
dates. In the event that any date on which distributions are payable on the
Partnership Preferred Securities is not a Business Day, then payment of the
distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day.
PARTNERSHIP ENFORCEMENT EVENTS
If one or more of the following events shall occur and be continuing (each
a "Partnership Enforcement Event"): (i) arrearages on distributions on the
Partnership Preferred Securities shall exist for six consecutive quarterly
distribution periods, (ii) the Company is in default on any of its obligations
under the Partnership Guarantee or any Investment Guarantee or (iii) an
Investment Event of Default occurs and is continuing on any Affiliate Investment
Instrument, then holders of the Partnership Preferred Securities, by the vote of
a majority in aggregate liquidation preference of such holders (or, for so long
as the Partnership Preferred Securities are held by the Property Trustee, the
Property Trustee, as the holder of the Partnership Preferred Securities), will
have the right (a) under the Limited Partnership Agreement to enforce the terms
of the Partnership Preferred Securities, including the right to appoint and
authorize a special representative of the
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Partnership and the limited partners (a "Special Representative") to enforce (1)
the Partnership's creditors' rights and other rights with respect to the
Affiliate Investment Instruments and the Investment Guarantees, (2) the rights
of the holders of the Partnership Preferred Securities under the Partnership
Guarantee and (3) the rights of the holders of the Partnership Preferred
Securities to receive distributions (only if and to the extent declared out of
funds legally available therefor) on the Partnership Preferred Securities, and
(b) under the Partnership Guarantee to enforce the terms of the Partnership
Guarantee, including the right to enforce the covenant restricting certain
distributions by the Company.
If the Special Representative fails to enforce its rights under the
Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of Partnership Preferred
Securities may directly institute a legal proceeding against the Company to
enforce the rights of the Special Representative and the Partnership under the
Affiliate Investment Instruments without first instituting any legal proceeding
against the Special Representative, the Partnership or any other person or
entity. In any event, if a Partnership Enforcement Event has occurred and is
continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument, then a holder of Partnership Preferred Securities may on behalf of
the Partnership directly institute a proceeding against such Investment
Affiliate with respect to such Affiliate Investment Instrument for enforcement
of payment. A holder of Partnership Preferred Securities may also bring a direct
action against the Company to enforce such holder's right under the Partnership
Guarantee. See "Description of the Partnership Guarantee -- Events of Default;
Enforcement of Partnership Guarantee."
Under no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare distributions on the
Partnership Preferred Securities. As a result, although the Special
Representative may be able to enforce the Partnership's creditors' rights to
accelerate and receive payments in respect of the Affiliate Investment
Instruments and the Investment Guarantees, the Partnership would be entitled to
reinvest such payments in additional Affiliate Investment Instruments, subject
to satisfying the reinvestment criteria described under "Description of the
Partnership Preferred Securities -- Partnership Investments," and in Eligible
Debt Securities, rather than declaring and making distributions on the
Partnership Preferred Securities. The Special Representative shall not, by
virtue of acting in such capacity, be admitted as a general partner in the
Partnership or otherwise be deemed to be a general partner in the Partnership
and shall have no liability for the debts, obligations or liabilities of the
Partnership.
PARTNERSHIP INVESTMENTS
Approximately 99% of the proceeds from the issuance of the Partnership
Preferred Securities and the General Partner's contemporaneous capital
contribution (the "Initial Partnership Proceeds") will be used by the
Partnership to purchase debt instruments of Enron and its subsidiaries and the
remaining 1% of the Initial Partnership Proceeds will be used to purchase
Eligible Debt Securities. The purchase of the Debentures by the Partnership will
occur contemporaneously with the issuance of the Partnership Preferred
Securities.
The initial Affiliate Investment Instruments purchased by the Partnership
will consist of three or more debt instruments (the "Debentures"). Approximately
% of the Initial Partnership Proceeds will be used to purchase a Debenture of
the Company (the "Company Debenture"), and approximately % of the Initial
Partnership Proceeds will be used to purchase Debentures of two or more wholly
owned subsidiaries of the Company (the "Affiliate Debentures"). Each Debenture
is expected to have a term of 20 years and to provide for interest payable at
market rates for such Debentures. The Debentures will be general unsecured debt
obligations of the relevant issuer, except that the Company Debenture will rank
subordinate and junior to all senior indebtedness of the Company.
The payment of interest on each of the Debentures may be deferred at any
time, and from time to time, by the relevant issuer for a period not exceeding
six consecutive quarters. If an issuer were to so defer the payment of interest,
interest would continue to accrue and compound at the stated interest rate on
such Debenture. The Debentures will contain covenants appropriate for unsecured
debt securities issued by similar borrowers pursuant to a public offering or
private placement under Rule 144A of a comparable debt security, including a
limitation on consolidation, merger or a sale or conveyance of all or
substantially all of the assets of
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the relevant issuer and a limitation on incurrence of secured debt. The
Debentures will contain redemption provisions that correspond to the redemption
provisions applicable to the Partnership Preferred Securities, including an
option to redeem the Debentures by the relevant issuer, in whole or in part,
from time to time, on or after , 2002 and following the
occurrence of a Partnership Special Event, in each case, in the same manner
described under "-- Optional Redemption" and "-- Partnership Special Event
Redemption." Each Affiliate Debenture will provide that in certain specified
circumstances, it may be assumed by another subsidiary of the Company that meets
certain criteria and will contain a mandatory redemption provision that is
triggered upon a change in control. The Debentures, and any other Affiliate
Investment Instruments that are debt instruments acquired by the Partnership in
the future, will also contain customary events of default (the "Investment
Events of Default"), including events of default for defaults in payments on
such securities when due (provided that no default shall occur upon a valid
deferral of an interest payment by an issuer), defaults in the performance of
the relevant issuer's obligations under its Debenture or Affiliate Investment
Instruments, as the case may be, and certain bankruptcy, insolvency or
reorganization events (subject to customary exceptions and grace periods).
The payment of interest and principal when due and other payment terms of
the Debentures (other than the Company Debenture), will be guaranteed to the
extent described herein (each, an "Investment Guarantee") by the Company for the
benefit of the holders of Partnership Preferred Securities. See "-- Investment
Guarantees."
Approximately 1% of the Initial Partnership Proceeds will be invested in
Eligible Debt Securities. "Eligible Debt Securities" means cash or book-entry
securities, negotiable instruments, or other securities of entities not
affiliated with the Company represented by instruments in registered form which
evidence any of the following: (a) any security issued or guaranteed as to
principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States, or
any certificate of deposit for any of the foregoing; (b) commercial paper issued
pursuant to Section 3(a)(3) of the Securities Act and having, at the time of the
investment or contractual commitment to invest therein, a rating from each of
S&P and Moody's in the highest investment rating category granted by such rating
agency and having a maturity not in excess of nine months; (c) demand deposits,
time deposits and certificates of deposit which are fully insured by the Federal
Deposit Insurance Corporation ("FDIC"); (d) repurchase obligations with respect
to any security that is a direct obligation of, or fully guaranteed by, the
Government of the United States of America or any agency or instrumentality
thereof, the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a depository
institution or trust company which is an Eligible Institution (as defined
herein) and the deposits of which are insured by the FDIC; and (e) any other
security which is identified as a permitted investment of a finance subsidiary
pursuant to Rule 3a-5 under the 1940 Act at the time it is acquired by the
Partnership.
"Eligible Institution" means (a) a depository institution organized under
the laws of the United States or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), (1)(i) which has either
(A) a long-term unsecured debt rating of AA or better by S&P and Aa or better by
Moody's or (B) a short-term unsecured debt rating or a certificate of deposit
rating of A-1+ by S&P and P-1 by Moody's and (ii) whose deposits are insured by
the FDIC or (2)(i) the parent of which has a long-term or short-term unsecured
debt rating which signifies investment grade and (ii) whose deposits are insured
by the FDIC.
The Partnership may, from time to time and subject to the restrictions
described below, reinvest payments received with respect to the Affiliate
Investment Instruments (including the Debentures) and the Eligible Debt
Securities in additional Affiliate Investment Instruments and Eligible Debt
Securities. As of the date of this Prospectus, the Company, as the General
Partner, does not intend to cause the Partnership to reinvest periodic payments
received by the Partnership in the manner described below, although there can be
no assurance that the General Partner's intention in respect of such
reinvestments will not change in the future.
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Certain financial terms of all Affiliate Investment Instruments (including
the Debentures) will be reviewed by a nationally recognized investment banking
firm that does not (and whose directors, officers, employees and affiliates do
not) have a direct or indirect material equity interest in the Company or any of
its subsidiaries or another entity selected by the Company and approved by the
holders of a majority in liquidation amount of the Partnership Preferred
Securities (the "Independent Financial Advisor"). Merrill Lynch & Co. will serve
as the initial Independent Financial Advisor.
The Partnership may reinvest in additional Affiliate Investment Instruments
only if certain procedures and criteria are satisfied with respect to such
Affiliate Investment Instrument, including the satisfaction of the following
conditions: (i) the Partnership did not hold debt or equity securities of the
issuer of the proposed Affiliate Investment Instrument within the three-year
period ending on the date of such proposed investment; (ii) there was never a
default on any debt obligation of, or arrearages of dividends on preferred stock
issued by, the issuer of the proposed Affiliate Investment Instrument that was
previously or is currently owned by the Partnership; and (iii) the applicable
financial terms with respect to the proposed Affiliate Investment Instrument
have been determined by the Independent Financial Advisor to be at least as
favorable as terms which could be obtained by the Partnership in a public
offering or private placement under Rule 144A of a comparable security issued by
the relevant Investment Affiliate and (iv) the requesting Investment Affiliate
shall not be deemed to be an investment company by reason of Section 3(a) or
3(b) of the 1940 Act. The term "Investment Affiliate" means the Company or any
corporation, partnership, limited liability company or other entity (other than
the Partnership or the Trust) that is controlled by the Company. If the
Partnership is unable to reinvest payments and proceeds from Affiliate
Investment Instruments in additional Affiliate Investment Instruments meeting
the above criteria, the Partnership may only invest such funds in Eligible Debt
Securities (subject to restrictions of applicable law, including the 1940 Act).
INVESTMENT GUARANTEES
General. The Company will agree, on a subordinated basis and to the extent
set forth therein, to execute and deliver an Investment Guarantee for the
benefit of the holders of Partnership Preferred Securities with respect to each
Debenture issued by an Investment Affiliate (other than the Company Debenture)
to the extent set forth below. The Investment Guarantees shall be enforceable
regardless of any defense, right of set-off or counterclaim that the Company may
have or assert. The Investment Guarantees will be full and unconditional
guarantees with respect to the applicable Debentures from the time of issuance.
To the extent that, as described above, the Partnership invests in additional
Affiliate Investment Instruments, the determination as to whether such Affiliate
Investment Instrument will contain an Investment Guarantee will be made at the
date of its issuance and will be based, among other things, upon its approval by
the Independent Financial Advisor in accordance with the reinvestment criteria
described above.
The Investment Guarantees will constitute guarantees of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the applicable
Investment Guarantee without instituting a legal proceeding against any other
person or entity). If no Special Representative has been appointed to enforce
any Investment Guarantee, the General Partner has the right to enforce such
Investment Guarantee on behalf of the holders of the Partnership Preferred
Securities. The holders of not less than a majority in aggregate liquidation
preference of the Partnership Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of any Investment Guarantee, including the giving of directions to the
General Partner or the Special Representative, as the case may be. If the
General Partner or the Special Representative fails to enforce any Investment
Guarantee as above provided, any holder of Trust Preferred Securities may
institute its own legal proceeding to enforce such Investment Guarantee. No
Investment Guarantee will be discharged except by payment in full of all amounts
guaranteed by such Investment Guarantee (without duplication of amounts
theretofore paid by the relevant Investment Affiliate).
Amendments and Assignment. Except with respect to any changes that do not
adversely affect the rights of holders of Partnership Preferred Securities (in
which case no consent will be required), the Investment Guarantees may be
amended only with the prior approval of the holders of not less than a majority
in liquidation preference of the outstanding Partnership Preferred Securities,
provided that for so long as the
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<PAGE> 42
Property Trustee of the Trust is the holder of the Partnership Preferred
Securities, such amendment will not be effective without the prior written
approval of a majority in liquidation preference of the outstanding Trust
Preferred Securities. All guarantees and agreements contained in the Investment
Guarantees shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
Partnership Preferred Securities.
Status of the Investment Guarantees. The Company's obligations under the
Investment Guarantees will constitute unsecured obligations of the Company and
will rank subordinate and junior to all other liabilities of the Company and
will rank pari passu with the most senior preferred stock issued from time to
time by the Company and with any guarantee now or hereafter entered into by the
Company in respect of any preferred security of any affiliate of the Company.
Governing Law. The Investment Guarantees will be governed by and construed
in accordance with the laws of the State of New York.
OPTIONAL REDEMPTION
The Partnership Preferred Securities are redeemable, at the option of the
General Partner, in whole or in part, from time to time, on or after
, 2002, upon not less than 30 nor more than 60 days' notice, at
an amount per Partnership Preferred Security equal to $25 plus accrued and
unpaid distributions thereon. If the Partnership redeems Partnership Preferred
Securities in accordance with the terms thereof, Trust Securities will be
mandatorily redeemed at the Redemption Price. If a partial redemption would
result in the delisting of the Trust Preferred Securities (or, if the
Partnership Preferred Securities have been distributed in connection with a
Trust Special Event, the delisting of the Partnership Preferred Securities), the
Partnership may only redeem the Partnership Preferred Securities in whole.
PARTNERSHIP SPECIAL EVENT REDEMPTION
If, at any time, a Partnership Tax Event or a Partnership Investment
Company Event (each as hereinafter defined, and each a "Partnership Special
Event") shall occur and be continuing, the General Partner shall, within 90 days
following the occurrence of such Partnership Special Event, elect to either (i)
redeem the Partnership Preferred Securities in whole (but not in part), upon not
less than 30 or more than 60 days' notice at the Redemption Price, provided
that, if at the time there is available to the Partnership the opportunity to
eliminate, within such 90-day period, the Partnership Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable such measure that in the sole judgment of
the Company has or will cause no adverse effect on the Partnership, the Trust or
the Company, the General Partner will pursue such measure in lieu of redemption;
or (ii) cause the Partnership Preferred Securities to remain outstanding,
provided that in the case of this clause (ii), the General Partner shall pay any
and all costs and expenses incurred by or payable by the Partnership
attributable to the Partnership Special Event.
"Partnership Tax Event" means that the General Partner shall have requested
and received an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that there has been a Tax Action that
results in there being more than an insubstantial risk that (i) the Partnership
is, or will be, subject to United States federal income tax with respect to
income accrued or received on the Affiliate Investment Instruments or the
Eligible Debt Securities, (ii) the Partnership is, or will be, subject to more
than a de minimis amount of other taxes, duties or other governmental charges or
(iii) interest payable by an Investment Affiliate with respect to the Debenture
issued by such Investment Affiliate to the Partnership is not, or will not be,
deductible by such Investment Affiliate for United States federal income tax
purposes.
"Partnership Investment Company Event" means that the General Partner shall
have requested and received an opinion of nationally recognized independent
legal counsel experienced in such matters to the effect that as a result of the
occurrence on or after the date hereof of a Change in 1940 Act Law, the
Partnership is or will be considered an "investment company" which is required
to be registered under the 1940 Act.
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REDEMPTION PROCEDURES
The Partnership may not redeem fewer than all the outstanding Partnership
Preferred Securities unless all accrued and unpaid distributions have been paid
on all Partnership Preferred Securities for all quarterly distribution periods
terminating on or prior to the date of redemption.
If the Partnership gives a notice of redemption in respect of Partnership
Preferred Securities (which notice will be irrevocable) then, by 12:00 noon, New
York City time, on the redemption date, the Partnership (i) if the Partnership
Preferred Securities are in book-entry form with DTC, will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price in
respect of the Partnership Preferred Securities held through DTC in global form
or (ii) if the Partnership Preferred Securities are held in certificated form,
will deposit with the paying agent for the Partnership Preferred Securities
funds sufficient to pay such amount in respect of any Partnership Preferred
Securities in certificated form and will give such paying agent irrevocable
instructions and authority to pay such amounts to the holders of Partnership
Preferred Securities upon surrender of their certificates. See "-- Book-Entry
Only Issuance -- The Depository Trust Company."
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the holders of such Partnership Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price. In the event
that any date fixed for redemption of Partnership Preferred Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Partnership Preferred Securities is improperly withheld or refused
and not paid either by the Partnership or by the Company pursuant to the
Partnership Guarantee described under "Description of the Partnership
Guarantee," distributions on such Partnership Preferred Securities will continue
to accrue, from the original redemption date to the date of payment.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or any of its subsidiaries
may at any time and from time to time purchase outstanding Partnership Preferred
Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Partnership, the holders of the Partnership Preferred
Securities at the time will be entitled to receive out of the assets of the
Partnership available for distribution to partners after satisfaction of
liabilities of creditors as required by the Partnership Act, before any
distribution of assets is made to the General Partner, an amount equal to, in
the case of holders of Partnership Preferred Securities, the aggregate of the
stated liquidation preference of $25 per Partnership Preferred Security plus
accrued and unpaid distributions thereon to the date of payment (such amount
being the "Partnership Liquidation Distribution").
The Limited Partnership Agreement provides that the Partnership shall be
dissolved and its affairs shall be wound up: (i) upon the bankruptcy, insolvency
or dissolution of the General Partner, (ii) upon the assignment by the General
Partner of its entire interest in the Partnership when the assignee is not
admitted to the Partnership as a general partner of the Partnership in
accordance with the Limited Partnership Agreement, or the filing of a
certificate of dissolution or its equivalent with respect to the General
Partner, or the revocation of the General Partner's charter and the expiration
of 90 days after the date of notice to the General Partner of revocation without
a reinstatement of its charter, or if any other event occurs that causes the
General Partner to cease to be a general partner of the Partnership under the
Partnership Act, unless the business of the Partnership is continued in
accordance with the Partnership Act, (iii) if the Partnership has redeemed or
otherwise purchased all the Partnership Preferred Securities, (iv) upon the
entry of a decree of judicial dissolution or (v) upon the written consent of all
partners of the Partnership.
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VOTING RIGHTS
Except as provided below and under "Description of the Partnership
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Limited Partnership Agreement, the holders of the Partnership Preferred
Securities will have no voting rights.
Not later than 30 days after any Partnership Enforcement Event occurs, the
General Partner will convene a meeting for the purpose of appointing a Special
Representative. If the General Partner fails to convene such meeting within such
30-day period, the holders of 10% in liquidation preference of the outstanding
Partnership Preferred Securities will be entitled to convene such meeting. The
provisions of the Limited Partnership Agreement relating to the convening and
conduct of the meetings of the partners will apply with respect to any such
meeting. In the event that, at any such meeting, holders of less than a majority
in aggregate liquidation preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and the limited partners if (i) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accrued and
unpaid distributions on the Partnership Preferred Securities, (ii) any
Investment Event of Default giving rise to the Partnership Enforcement Event
shall have been cured, and (iii) the Company is in compliance with all its
obligations under the Partnership Guarantee and the Company, in its capacity as
the General Partner, shall continue the business of the Partnership without
dissolution. Notwithstanding the appointment of any such Special Representative,
the Company shall continue as General Partner and shall retain all rights under
the Limited Partnership Agreement, including the right to declare, in its sole
discretion, the payment of distributions on the Partnership Preferred Securities
for which the failure of such declaration would not constitute a default under
the Limited Partnership Agreement.
If any proposed amendment to the Limited Partnership Agreement provides
for, or the General Partner otherwise proposes to effect, (i) any action that
would adversely affect the powers, preferences or special rights of the
Partnership Preferred Securities, whether by way of amendment to the Limited
Partnership Agreement or otherwise (including, without limitation, the
authorization or issuance of any limited partner interests in the Partnership
ranking, as to participation in the profits or distributions or in the assets of
the Partnership, senior to the Partnership Preferred Securities), or (ii) the
dissolution, winding-up or termination of the Partnership, other than (x) in
connection with the occurrence of a Partnership Special Event or (y) in certain
limited circumstances described under "-- Merger, Consolidation or Amalgamation
of the Partnership," then the holders of outstanding Partnership Preferred
Securities will be entitled to vote on such amendment or proposal of the General
Partner (but not on any other amendment or proposal) as a class, and such
amendment or proposal shall not be effective except with the approval of the
holders of a majority in liquidation preference of such outstanding Partnership
Preferred Securities having a right to vote on the matter; provided, however,
that if the Property Trustee on behalf of the Trust is the holder of the
Partnership Preferred Securities, any such amendment or proposal not excepted by
clauses (x) and (y) above shall not be effective without the prior or concurrent
approval of the holders of a majority in liquidation amount of the outstanding
Trust Preferred Securities having a right to vote on such matters.
The General Partner shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available, (ii) waive any Investment
Event of Default that is waivable under the Affiliate Investment Instruments,
(iii) exercise any right to rescind or annul a declaration that the principal of
any Affiliate Investment Instruments which are debt instruments shall be due and
payable, (iv) waive the breach of the covenant by the Company to restrict
certain payments by the Company and its majority owned subsidiaries, or (v)
consent to any amendment, modification or termination of any Affiliate
Investment Instrument, where such consent shall be required from the holder
thereof, without, in each case, obtaining the prior approval of the holders of
at least a majority in liquidation preference of the Partnership Preferred
Securities; provided, however, that if the Property Trustee on behalf of the
Trust is the holder of the Partnership Preferred Securities, such waiver,
consent or amendment or other action shall not be effective without the prior or
concurrent approval of at least a majority in liquidation amount of the
outstanding Trust Preferred Securities having a right to vote on such matters.
The General Partner shall not revoke any action previously authorized or
approved by a vote of the holders of the Partnership Preferred Securities. The
General Partner shall notify
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all holders of the Partnership Preferred Securities of any notice of an
Investment Event of Default received with respect to any Affiliate Investment
Instrument.
Any required approval of holders of Partnership Preferred Securities may be
given at a separate meeting of holders of Partnership Preferred Securities
convened for such purpose, at a meeting of all of the partners in the
Partnership or pursuant to written consent. The Partnership will cause a notice
of any meeting at which holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which action by written consent of such holders
is to be taken, to be mailed to each holder of record of Partnership Preferred
Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matters upon which written consent
is sought and (iii) instruction for the delivery of proxies or consents. No vote
or consent of the holders of Partnership Preferred Securities will be required
for the Partnership to redeem and cancel Partnership Preferred Securities in
accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Partnership Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Partnership Preferred Securities at such time that are owned by the
Company or by any entity more than 50% of which is owned by the Company, either
directly or indirectly, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding;
provided, however, that persons (other than affiliates of the Company) to whom
the Company or any of its subsidiaries have pledged Trust Preferred Securities
may vote or consent with respect to such pledged Trust Preferred Securities
under any of the circumstances described herein.
Holders of the Partnership Preferred Securities will have no rights to
remove or replace the General Partner.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE PARTNERSHIP
The Partnership may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, without the
consent of the holders of the Partnership Preferred Securities, except in
certain limited circumstances and upon compliance with certain specified
conditions. In any event, the Partnership will not take any such action unless,
prior to such merger, consolidation, amalgamation or replacement, the Company
has received an opinion of nationally recognized independent counsel to the
Partnership experienced in such matters to the effect that (A) such successor
entity will be treated as a partnership for United States federal income tax
purposes, (B) such merger, consolidation, amalgamation or replacement would not
cause the Trust to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes, (C) following such merger, consolidation, amalgamation or replacement,
the Company and such successor entity will be in compliance with the 1940 Act
without registering thereunder as an investment company, and (D) such merger,
consolidation, amalgamation or replacement will not adversely affect the limited
liability of the holders of the Partnership Preferred Securities.
BOOK-ENTRY AND SETTLEMENT
If the Partnership Preferred Securities are distributed to holders of Trust
Preferred Securities in connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, the Partnership Preferred Securities will
be issued in the form of one or more global certificates (each a "Global
Partnership Security") registered in the name of DTC as the depository or its
nominee. For a description of DTC and the specific terms of the Depository
arrangements, see "Description of the Trust Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company." As of the date of this
Prospectus, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Trust Preferred Securities apply in all material respects to any
Partnership Preferred Securities represented by one or more Global Partnership
Securities.
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REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The General Partner will act as registrar, transfer agent and paying agent
for the Partnership Preferred Securities for so long as the Partnership
Preferred Securities are held by the Trust or, if the Trust is liquidated in
connection with a Trust Special Event, for so long as the Partnership Preferred
Securities remain in book-entry only form. In the event the Partnership
Preferred Securities are distributed in connection with a Trust Special Event
and the book-entry system for the Partnership Preferred Securities is
discontinued, it is anticipated that The Chase Manhattan Bank or one of its
affiliates will act as registrar, transfer agent and paying agent for the
Partnership Preferred Securities.
Registration of transfers of Partnership Preferred Securities will be
effected without charge by or on behalf of the Partnership, but upon payment
(with the giving of such indemnity as the Partnership or the General Partner may
require) in respect of any tax or other governmental charges that may be imposed
in relation to it.
The Partnership will not be required to register or cause to be registered
the transfer of Partnership Preferred Securities after such Partnership
Preferred Securities have been called for redemption.
MISCELLANEOUS
The General Partner is authorized and directed to conduct its affairs and
to operate the Partnership in such a way that (i) the Partnership will not be
deemed to be an "investment company" required to be registered under the 1940
Act, (ii) the Affiliate Investment Instruments that are debt instruments will be
treated as indebtedness of the issuer of such debt instruments for United States
federal income tax purposes and (iii) the Partnership will not be treated as an
association or a publicly traded partnership taxable as a corporation. In this
connection, the General Partner is authorized to take any action, not
inconsistent with applicable law, the certificate of limited partnership of the
Partnership or the Limited Partnership Agreement, that the General Partner
determines in its discretion to be necessary or desirable for such purposes as
long as such action does not adversely affect the interests of the holders of
the Partnership Preferred Securities.
DESCRIPTION OF THE PARTNERSHIP GUARANTEE
Set forth below is a summary of information concerning the Partnership
Guarantee that will be executed and delivered by the Company for the benefit of
the holders from time to time of Partnership Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Partnership Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The General Partner will hold the Partnership Guarantee
for the benefit of the holders of the Partnership Preferred Securities.
GENERAL
Pursuant to the Partnership Guarantee, the Company will irrevocably agree,
on a subordinated basis to the extent set forth therein, to pay in full to the
holders of the Partnership Preferred Securities (without duplication of amounts
theretofore paid by the Partnership), as and when due, regardless of any
defense, right of set-off or counterclaim that the Partnership may have or
assert, the following payments (the "Partnership Guarantee Payments"): (i) any
accrued and unpaid distributions that have theretofore been declared on the
Partnership Preferred Securities out of funds legally available therefor, (ii)
the redemption price with respect to any Partnership Preferred Securities called
for redemption by the Partnership out of funds legally available therefor, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Partnership, the lesser of (a) the aggregate of the liquidation preference
and all accrued and unpaid distributions on the Partnership Preferred Securities
to the date of payment and (b) the amount of assets of the Partnership after
satisfaction of all liabilities remaining available for distribution to holders
of Partnership Preferred Securities in liquidation of the Partnership. The
Company's obligation to make a Partnership Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Partnership Preferred Securities or by causing the Partnership to pay such
amounts to such holders.
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The Partnership Guarantee will be a guarantee on a subordinated basis with
respect to the Partnership Preferred Securities from the time of issuance of
such Partnership Preferred Securities but will not apply to any payment of
distributions or Redemption Price, or to payments upon the dissolution,
winding-up or termination of the Trust, except to the extent the Partnership
shall have funds available therefor. If Investment Affiliates (including, where
applicable, the Company, as guarantor) of the Affiliate Investment Instruments
in which the Partnership invests fail to make any payment in respect of such
securities (or, if applicable, guarantees), the Partnership may not declare or
pay dividends on the Partnership Preferred Securities. In such event, holders of
the Partnership Preferred Securities would not be able to rely upon the
Partnership Guarantee for payment of such amounts. Instead, holders of the
Partnership Preferred Securities will have the remedies described herein under
"Description of the Partnership Preferred Securities -- Partnership Enforcement
Events," including the right to direct the General Partner or the Special
Representative, as the case may be, to enforce the covenant restricting certain
distributions by the Company. See "-- Certain Covenants of the Company" below.
The Guarantees, when taken together with the Company Debenture and the
Company's obligations to pay all fees and expenses of the Trust and the
Partnership, constitute a guarantee to the extent set forth herein by the
Company of the distribution, redemption and liquidation payments payable to the
holders of the Trust Preferred Securities. The Guarantees do not apply, however,
to current distributions by the Partnership unless and until such distributions
are declared by the Partnership out of funds legally available for payment or to
liquidating distributions unless there are assets available for payment in the
Partnership, each as more fully described under "Risk Factors -- Insufficient
Income or Assets Available to Partnership."
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant in the Partnership Guarantee that if for any
distribution period, (a) full distributions on a cumulative basis on any
Partnership Preferred Securities have not been paid or declared and set apart
for payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing or
(c) the Company is in default of its obligations under the Trust Guarantee, the
Partnership Guarantee or any Investment Guarantee, then, during such period (i)
the Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to any of its capital stock (except for dividends or distributions in
shares of its common stock and exchanges of common stock of one class for common
stock of another class), (ii) the Company shall not make any payment or cause
any payment to be made that would result in, and shall take such action as shall
be necessary to prevent, the payment of dividends on, any distribution with
respect to, any redemption, purchase or other acquisition of, or any liquidation
payment with respect to, any Comparable Equity Interest, and (iii) the Company
shall not make any guarantee payments with respect to the foregoing.
EVENTS OF DEFAULT; ENFORCEMENT OF PARTNERSHIP GUARANTEE
An event of default under the Partnership Guarantee will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Partnership
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Special Representative
in respect of the Partnership Guarantee or to direct the exercise of any trust
or power conferred upon the Special Representative under the Partnership
Guarantee. If the Special Representative fails to enforce its rights under the
Partnership Guarantee, after a holder of Partnership Preferred Securities has
made a written request, such holder of Partnership Preferred Securities may
institute a legal proceeding directly against the Company to enforce the Special
Representative's rights under the Partnership Guarantee without first
instituting a legal proceeding against the Partnership, the Special
Representative or any other person or entity. Notwithstanding the foregoing, if
the Company has failed to make a guarantee payment, a holder of Partnership
Preferred Securities may directly institute a proceeding against the Company for
enforcement of the Partnership Guarantee for such payment.
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STATUS OF THE PARTNERSHIP GUARANTEE; SUBORDINATION
The Partnership Guarantee will constitute an unsecured obligation of the
Company and will rank subordinate and junior to all other liabilities of the
Company and will rank pari passu with the most senior preferred stock issued
from time to time by the Company and with any guarantee now or hereafter entered
into by the Company in respect of any preferred security of any affiliate of the
Company. The Limited Partnership Agreement provides that each holder of
Partnership Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Partnership Guarantee.
The Partnership Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may directly institute a legal
proceeding against the Company to enforce its rights under the Partnership
Guarantee without instituting a legal proceeding against any other person or
entity).
The Partnership Guarantee will be deposited with the General Partner to be
held for the benefit of the holders of the Partnership Preferred Securities. In
the event of the appointment of a Special Representative to, among other things,
enforce the Partnership Guarantee, the Special Representative may take
possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the holders of the Partnership Preferred Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Partnership Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities. All guarantees and agreements
contained in the Partnership Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Partnership Preferred Securities then outstanding.
Except in connection with any permitted merger or consolidation of the Company
with or into another entity or any permitted sale, transfer or lease of the
Company's assets to another entity as described above under "Description of the
Partnership Preferred Securities -- Merger, Consolidation or Amalgamation of the
Partnership," the Company may not assign its rights or delegate its obligations
under the Partnership Guarantee without the prior approval of the holders of at
least a majority of the aggregate stated liquidation amount of the Partnership
Preferred Securities then outstanding.
TERMINATION OF THE PARTNERSHIP GUARANTEE
The Partnership Guarantee will terminate and be of no further force and
effect as to the Partnership Preferred Securities upon (i) full payment of the
redemption price of all Partnership Preferred Securities or (ii) full payment of
the amounts payable in accordance with the Limited Partnership Agreement upon
liquidation of the Partnership. The Partnership Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Partnership Preferred Securities must in accordance with the Partnership Act
restore payment of any sums paid under the Partnership Preferred Securities or
the Partnership Guarantee. The Partnership Act provides that a limited partner
of a limited partnership who wrongfully receives a distribution may be liable to
the limited partnership for the amount of such distribution.
GOVERNING LAW
The Partnership Guarantee will be governed by and construed in accordance
with the laws of the State of New York.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of the material United States federal income tax
considerations that may be relevant to the purchase, ownership and disposition
of Trust Preferred Securities and represents the opinion of Vinson & Elkins
L.L.P., counsel to the Company, the Trust and the Partnership ("Tax Counsel"),
insofar as it relates to matters of law and legal conclusions. Unless otherwise
stated, this summary deals only with Trust Preferred Securities held as capital
assets by United States Persons (defined below) who purchase the Trust Preferred
Securities upon original issuance. As used herein, a "United States Person"
means a person that is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or an estate or
trust which is not treated as a foreign estate or foreign trust for United
States federal tax purposes. The tax treatment of a holder may vary depending on
its particular situation. This summary does not address all the tax consequences
that may be relevant to holders who may be subject to special tax treatment,
such as banks, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
or foreign investors. This summary does not include any description of any
alternative minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to the Trust
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), the Treasury regulations promulgated thereunder
and administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
The Trust Preferred Securities are not being marketed to persons that are
not United States Persons ("non-United States Persons") and, consequently, the
following discussion does not discuss the tax consequences that might be
relevant to non-United States Persons. Moreover, in order to protect the Trust
and the Partnership from potential adverse consequences, non-United States
Persons will be subject to withholding on distributions on the Trust Preferred
Securities held by such non-United States Persons at a rate of 30%. In
determining a holder's status, the United States entity otherwise required to
withhold taxes may rely on an IRS form W-8, an IRS form W-9, or a holder's
certification of its non-foreign status signed under penalty of perjury.
Non-United States Persons should consult their own tax advisors as to the
specific United States federal income tax consequences of the purchase,
ownership, and disposition of Trust Preferred Securities.
Tax Counsel has advised that there is no authority directly on point
dealing with securities such as the Trust Preferred Securities or transactions
of the type described herein and that the opinions of Tax Counsel are not
binding on the Internal Revenue Service ("IRS") or the courts, either of which
could take a contrary position. No rulings have been or will be sought from the
IRS. Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Nevertheless, Tax Counsel has advised that it is of the view that, if
challenged, the opinions expressed herein would be sustained by a court with
jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE
TRUST PREFERRED SECURITIES OR REDEMPTION OF THE PARTNERSHIP PREFERRED SECURITIES
UPON THE OCCURRENCE OF CERTAIN TAX EVENTS, SEE "DESCRIPTION OF THE TRUST
PREFERRED SECURITIES -- TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION" AND
"DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES -- PARTNERSHIP SPECIAL
EVENT REDEMPTION" RESPECTIVELY.
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CLASSIFICATION OF THE TRUST
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the Trust will
not be classified for United States federal income tax purposes as an
association or a publicly traded partnership taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of Trust
Preferred Securities will be required to include in its gross income its
distributive share of income attributable to the Partnership, which generally
will be equal to such holder's allocable share of amounts accrued on the
Partnership Preferred Securities. No amount included in income with respect to
the Trust Preferred Securities will be eligible for the corporate
dividends-received deduction.
CLASSIFICATION OF THE PARTNERSHIP
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the
Partnership will be classified for United States federal income tax purposes as
a partnership and not as an association or a publicly traded partnership taxable
as a corporation.
The General Partner has represented that it intends to operate the
Partnership in a manner such that it will continue to constitute a partnership
for all taxable years in which any Partnership Preferred Securities remain
outstanding. In particular, pursuant to the Limited Partnership Agreement, the
General Partner is prohibited from taking any action that would cause the
Partnership to constitute a "publicly traded partnership" taxable as a
corporation under section 7704(a) of the Code. Accordingly, it is expected that
the Partnership will continue to qualify as a partnership, and therefore will
not constitute a publicly traded partnership taxable as a corporation, for all
taxable years in which the Partnership Preferred Securities remain outstanding.
If, however, the Partnership were to constitute a publicly traded partnership
taxable as a corporation with respect to a future taxable year, the
Partnership's net income would be subject to United States federal income tax at
the applicable corporate rates.
CLASSIFICATION OF THE DEBENTURES
Tax Counsel is of the opinion that, under current law, and based on certain
representations, facts and assumptions set forth in such opinion, the Debentures
will be classified as indebtedness of the issuer owned by the Partnership for
United States federal income tax purposes.
INCOME AND DEDUCTIONS
The Partnership will be an accrual basis taxpayer for United States federal
income tax purposes. Accordingly, income will accrue on the Trust Preferred
Securities and will be allocated to holders of Trust Preferred Securities on a
daily accrual basis, generally at a rate that is expected to be equal to (and
that will not be greater than) the distribution rate on the Trust Preferred
Securities, regardless of the holders' method of accounting. Actual cash
distributions on the Trust Preferred Securities, however, will not be separately
reported as taxable income to the holders at the time they are received.
Therefore, if quarterly distributions on the Trust Preferred Securities are paid
currently as expected, the amount of income recognized by a holder who holds
Trust Preferred Securities for a full year generally will equal the cash
distributions received by the holder with respect to its Trust Preferred
Securities for such year.
If, however, distributions on the Partnership Preferred Securities are not
made currently, the corresponding distributions on the Trust Preferred
Securities will not be made currently. Because the Partnership is an accrual
basis taxpayer it can be expected that during a period in which payment on the
Debentures or distributions on the Partnership Preferred Securities are deferred
(for whatever reason), holders will generally recognize income in advance of
their receipt of any cash distributions with respect to their Trust Preferred
Securities. The amount of income that will be allocated to holders of Trust
Preferred Securities during any such deferral period will equal their pro rata
share of the amount accruing on the Partnership Preferred Securities during such
deferral period.
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<PAGE> 51
RECEIPT OF PARTNERSHIP PREFERRED SECURITIES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities -- Trust Special Event Redemption or
Distribution," Partnership Preferred Securities may be distributed to holders of
Trust Preferred Securities in liquidation of the Trust. Unless the liquidation
of the Trust occurs as a result of the Trust's being subject to United States
federal income tax with respect to income accrued or received on the Partnership
Preferred Securities, such a distribution to holders would be treated as a
nontaxable event to each holder, each holder would receive an aggregate tax
basis in the Partnership Preferred Securities equal to such holder's aggregate
tax basis in its Trust Preferred Securities, and a holder's holding period for
the Partnership Preferred Securities so received in liquidation of the Trust
would include the period during which the Trust Preferred Securities were held
by such holder. If, however, the liquidation of the Trust were to occur because
the Trust is subject to United States federal income tax with respect to income
accrued or received on the Partnership Preferred Securities, the distribution of
Partnership Preferred Securities to holders by the Trust would be a taxable
event to each holder, and a holder would recognize gain or loss measured by the
difference between the holder's tax basis in the Trust Preferred Securities and
the fair market value of the Partnership Preferred Securities received in
exchange therefor upon the liquidation of the Trust.
REDEMPTION OF TRUST PREFERRED SECURITIES FOR CASH
Under certain circumstances, as described under the caption "Description of
the Trust Preferred Securities -- Redemption," "Description of the Trust
Preferred Securities -- Trust Special Event Redemption or Distribution" and
"Description of the Partnership Preferred Securities -- Partnership Special
Event Redemption," the General Partner may cause the Partnership to redeem the
Partnership Preferred Securities for cash, in which event the Trust would use
the proceeds of such redemption to redeem the Trust Preferred Securities. Upon
such a redemption, a holder would recognize gain to the extent the amount of
cash received exceeded the holder's tax basis in its Trust Preferred Securities,
and would recognize loss only if all of the holder's Trust Preferred Securities
were redeemed and if (and to the extent that) the cash received were less than
the holder's tax basis for its Trust Preferred Securities. See "-- Disposition
of Trust Preferred Securities."
DISPOSITION OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's tax basis in such Trust Preferred
Securities. Such gain or loss will be a capital gain or loss and will be a
long-term capital gain or loss if the Trust Preferred Securities have been held
for more than one year at the time of the sale. A holder will be required to
include the holder's allocable portion of the accrued interest on the Debentures
and the Eligible Debt Securities through the date of disposition in income as
ordinary income (to the extent not previously included in income) and to add
such amount to the adjusted tax basis of its Trust Preferred Securities. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
A holder's tax basis in its Trust Preferred Securities generally will be
equal to (i) the amount paid by such holder for its Trust Preferred Securities,
(ii) increased by the amount includible in income by such holder, and (iii)
reduced by the amount of cash or other property distributed to such holder with
respect to its Trust Preferred Securities.
OTHER PARTNERSHIP PROVISIONS
Section 708. Under Section 708 of the Code, the Partnership will be deemed
to terminate for United States federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a deemed termination were to occur, the Partnership
would be considered to have distributed its assets to the partners who would
then be treated as having recontributed those assets to a new partnership. If
any such constructive termination occurs, the General Partner may be
50
<PAGE> 52
unable to comply with certain technical requirements that might be applicable
for various reasons including the likely lack of relevant data. As a result, the
Partnership may be subject to certain tax penalties and may incur additional
expenses, which will be the obligation of the General Partner. Proposed Treasury
regulations, should they become effective, will mitigate some of the effects of
a constructive termination.
Section 701. The Department of Treasury has promulgated regulations under
Section 701 of the Code that permit it to disregard or recast a transaction if a
partnership is formed or availed of with a principal purpose to reduce
substantially the present value of the partners' aggregate tax liability in a
manner inconsistent with the intent of the partnership provisions of the Code.
Although there is no precedent that applies to the transactions contemplated
herein, Tax Counsel believes that the Partnership is not of the type intended to
fall within the scope of these regulations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Trust Preferred Securities will be reported to holders on an
IRS Form 1099, which should be mailed to holders of Trust Preferred Securities
by January 31 following each calendar year. Payments made on and proceeds from
the sale of Trust Preferred Securities may be subject to a "back-up" withholding
tax of 31% unless the holder complies with certain identification requirements.
Any withheld amount generally will be allowed as a credit against the holder's
United States federal income tax, provided the required information is timely
filed with the IRS.
PROPOSED LEGISLATION
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation that would, among other
things, treat as equity for United States federal income tax purposes
instruments with a maximum term of more than 20 years that are not shown as
indebtedness on the consolidated balance sheet of the issuer. If the proposed
legislation is enacted, such legislation is not expected to apply to the
Debentures. In any event, based on statements by Congressional leaders it is not
expected that the legislation would have a retroactive effective date. There can
be no assurances, however, that legislation enacted after the date hereof will
not adversely affect the tax treatment of the Debentures, or that such tax
treatment will not cause a Partnership Tax Event or a Trust Tax Event that may
result in the redemption of the Partnership Preferred Securities and,
consequently, the Trust Preferred Securities.
51
<PAGE> 53
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the Underwriters
named below, and each of the Underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated is acting as representative (the "Representative"),
has severally agreed to purchase the number of Trust Preferred Securities set
forth opposite its name below. In the Purchase Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all the Trust Preferred Securities offered hereby if any of the
Trust Preferred Securities are purchased. In the event of default by an
Underwriter, the Purchase Agreement provides that, in certain circumstances, the
purchase commitments of the non-defaulting Underwriters may be increased or the
Purchase Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
TRUST PREFERRED
UNDERWRITER SECURITIES
---------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................................
---------
Total..................................................... 6,000,000
=========
</TABLE>
The Underwriters propose to offer the Trust Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and, in part, to certain securities dealers at
such price less a concession of $ per Trust Preferred Security, provided that
such concession for sales of 10,000 or more Trust Preferred Securities to a
single purchaser will not be in excess of $ per Trust Preferred Security. The
Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per Trust Preferred Security to certain brokers and dealers. After
the Trust Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Representative.
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the investment instruments of the
Company and its subsidiaries, the Purchase Agreement provides that the Company
will pay as compensation ("Underwriters' Compensation") to the Underwriters
arranging the investment therein of such proceeds, an amount in immediately
available funds of $ per Trust Preferred Security (or $ in the
aggregate) for the accounts of the several Underwriters; provided that, such
compensation for sales of 10,000 or more Trust Preferred Securities to any
single purchaser will be $ per Trust Preferred Security. Therefore, to the
extent of such sales, the actual amount of Underwriters' Compensation will be
less than the aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the Prospectus, neither the
Trust nor the Company will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
sale of, or otherwise dispose of, any Trust Preferred Securities, any
Partnership Preferred Securities, any preferred stock of the Company or any
security convertible into or exchangeable into or exercisable for Trust
Preferred Securities or Partnership Preferred Securities or any preferred stock
of the Company.
Application will be made to list the Trust Preferred Securities on the New
York Stock Exchange. If the Trust Preferred Securities are approved for trading
on the New York Stock Exchange, trading is expected to commence within a 30-day
period after the initial delivery of the Trust Preferred Securities. The
Representative has advised the Trust that the Underwriters intend to make a
market in the Trust Preferred Securities prior to the commencement of trading on
the New York Stock Exchange. The Underwriters will have no obligation to make a
market in the Trust Preferred Securities, however, and may cease market making
activities, if commenced, at any time.
52
<PAGE> 54
Prior to this offering there has been no public market for the Trust
Preferred Securities. In order to meet one of the requirements for listing the
Trust Preferred Securities on the New York Stock Exchange, the Underwriters will
undertake to sell lots of 100 or more Trust Preferred Securities to a minimum of
400 beneficial holders.
The Company, the Trust and the Partnership have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
The Underwriters and/or their affiliates have provided investment banking
and financial advisory services to Enron, its subsidiaries or affiliates in the
past, for which they have received customary compensation and expense
reimbursement, and may do so again in the future.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Trust, the Partnership and Enron 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. The federal income tax
consequences of the Trust Preferred Securities have been passed upon by Vinson &
Elkins L.L.P. The validity of the securities offered hereby will be passed upon
on behalf of the Underwriters by Bracewell & Patterson, L.L.P. and Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Underwriters. Each of Bracewell
& Patterson, L.L.P. and Skadden, Arps, Slate, Meagher & Flom LLP currently
provides services to Enron and certain of its subsidiaries and affiliates as
outside counsel on matters unrelated to the issuance of the securities offered
hereby.
EXPERTS
The consolidated financial statements and schedule included in Enron's
Annual Report on Form 10-K for the year ended December 31, 1995, 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 schedule 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, 1995, 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.
53
<PAGE> 55
INDEX OF SELECTED DEFINED TERMS
<TABLE>
<S> <C>
1940 Act................................................................................ 11
Affiliate Debentures.................................................................... 38
Affiliate Investment Instruments........................................................ 22
Beneficial Owner........................................................................ 31
Business Day............................................................................ 24
Change in 1940 Act Law.................................................................. 27
Code.................................................................................... 48
Company................................................................................. 1
Commission.............................................................................. 5
Company Debenture....................................................................... 38
Comparable Equity Interest.............................................................. 35
Debentures.............................................................................. 2
Declaration............................................................................. 21
Delaware Trustee........................................................................ 21
Depository.............................................................................. 31
DTC..................................................................................... 1
DTC's nominee........................................................................... 31
Earnings................................................................................ 17
Eligible Debt Securities................................................................ 39
Eligible Institution.................................................................... 39
Enron................................................................................... 1
Exchange Act............................................................................ 5
FDIC.................................................................................... 39
Fixed Charges........................................................................... 17
General Partner......................................................................... 2
Global Certificates..................................................................... 31
Global Partnership Security............................................................. 44
Guarantees.............................................................................. 2
Independent Financial Advisor........................................................... 40
Indirect Participants................................................................... 31
Initial Partnership Proceeds............................................................ 38
Investment Affiliate.................................................................... 40
Investment Events of Default............................................................ 39
Investment Guarantees................................................................... 2
Limited Partnership Agreement........................................................... 21
New York Stock Exchange................................................................. 1
non-United States Persons............................................................... 48
Participants............................................................................ 31
Partnership............................................................................. 1
Partnership Act......................................................................... 22
Partnership Enforcement Event........................................................... 37
Partnership Guarantee................................................................... 2
Partnership Guarantee Payments.......................................................... 45
Partnership Investment Company Event.................................................... 41
Partnership Liquidation Distribution.................................................... 42
Partnership Preferred Securities........................................................ 1
Partnership Special Event............................................................... 41
Partnership Tax Event................................................................... 41
Property Account........................................................................ 21
Property Trustee........................................................................ 21
Purchase Agreement...................................................................... 52
</TABLE>
54
<PAGE> 56
<TABLE>
<S> <C>
Redemption Price........................................................................ 3
Registration Statement.................................................................. 5
Regular Trustees........................................................................ 21
Representative.......................................................................... 52
Securities Act.......................................................................... 5
Special Event........................................................................... 15
Special Representative.................................................................. 38
Tax Action.............................................................................. 27
Tax Counsel............................................................................. 48
TOPrS(SM)............................................................................... 1
Trust................................................................................... 1
Trust Act............................................................................... 21
Trust Common Securities................................................................. 1
Trust Dissolution Tax Opinion........................................................... 26
Trust Enforcement Event................................................................. 25
Trust Guarantee......................................................................... 2
Trust Guarantee Payments................................................................ 34
Trust Guarantee Trustee................................................................. 21
Trust Indenture Act..................................................................... 21
Trust Investment Company Event.......................................................... 27
Trust Liquidation....................................................................... 28
Trust Liquidation Distribution.......................................................... 10
Trust Preferred Securities.............................................................. 1
Trust Redemption Tax Opinion............................................................ 26
Trust Securities........................................................................ 1
Trust Special Event..................................................................... 26
Trust Tax Event......................................................................... 26
Trustees................................................................................ 21
United States Person.................................................................... 48
Underwriters' Compensation.............................................................. 52
</TABLE>
55
<PAGE> 57
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE TRUST, THE PARTNERSHIP OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
TRUST PREFERRED SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY, THE TRUST OR THE PARTNERSHIP SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 5
Incorporation of Certain Documents by
Reference........................... 6
Prospectus Summary.................... 7
Risk Factors.......................... 14
Use of Proceeds....................... 17
Ratio of Earnings to Fixed Charges.... 17
Capitalization........................ 18
The Company........................... 19
Description of the Trust.............. 21
Description of the Partnership........ 22
Description of the Trust Preferred
Securities.......................... 23
Description of the Trust Guarantee.... 34
Description of the Partnership
Preferred Securities................ 36
Description of the Partnership
Guarantee........................... 45
Certain Federal Income Tax
Considerations...................... 48
Underwriting.......................... 52
Legal Matters......................... 53
Experts............................... 53
Index of Selected Defined Terms....... 54
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
6,000,000
TRUST PREFERRED SECURITIES
ENRON CAPITAL TRUST II
% TRUST ORIGINATED
PREFERRED SECURITIES(SM)
("TOPRS(SM)")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
ENRON CORP LOGO
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
, 1997
(SM) "Trust Originated Preferred Securities" and
"TOPrS" are service marks of Merrill Lynch & Co., Inc.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 58
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...................... $ 45,455
Accounting Fees and Expenses............................................. 25,000
Legal Fees and Expenses.................................................. 125,000
Fees and Expenses of Transfer Agent, Trustee and Depository.............. 10,000
Blue Sky Fees and Expenses, Including Counsel Fees....................... 5,000
Listing Fees............................................................. 20,000
Printing Expenses........................................................ 150,000
Miscellaneous............................................................ 19,545
----------
Total.......................................................... $ 400,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Enron's Restated Certificate of Incorporation (the "Certificate of
Incorporation") contains provisions under which Enron will indemnify, to the
fullest extent permitted by law, persons who are made a party to an action or
proceeding by virtue of the fact that the individual is or was a director,
officer, or, in certain circumstances, an employee or agent of Enron or another
corporation at Enron's request. The Delaware General Corporation Law generally
permits such indemnification to the extent that the individual acted in good
faith and in a manner which he reasonably believed to be in the best interest of
or not opposed to the corporation or, with respect to criminal matters, if the
individual had no reasonable cause to believe his or her conduct was unlawful.
In addition, the Certificate of Incorporation contains a provision that
eliminates the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of fiduciary duties as a director,
except for liability of a director (i) for breach of the duty of loyalty, (ii)
for actions or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for payment of improper
dividends or redemptions, or (iv) for any transaction from which the director
derived an improper personal benefit.
The Amended and Restated Declaration of Trust provides, to the fullest
extent permitted by applicable law, for indemnity of the Regular Trustees, any
Affiliate of any Regular Trustee, any officer, director, shareholder, member,
partner, employee, representative or agent of any Regular Trustee, or any
officer, director, shareholder, member, partner, employee, representative or
agent of the Trust or its Affiliates (each a "Company Indemnified Person"), from
and against losses and expenses incurred by such Company Indemnified Person in
connection with any action, suit or proceedings if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Trust, except that if such action, suit or proceedings is by or in the right
of the Trust, the indemnity shall be limited to expenses of such Company
Indemnified person.
The Amended and Restated Limited Partnership Agreement provides that to the
fullest extent permitted by applicable law, the Partnership shall indemnify and
hold harmless each of the General Partner, and any Special Representative, any
Affiliate of the General Partner or any Special Representative, any officer,
director, shareholder, member, partner, employee, representative or agent of the
General Partner or any Special Representative, or any employee or agent of the
Partnership or its Affiliates (each a "Partnership Indemnified Person"), from
and against any loss, damage or claim incurred by such Partnership Indemnified
Person by reason of any act or omission performed or omitted by such Partnership
Indemnified Person in good faith on behalf of the Partnership and in a manner
such Partnership Indemnified Person reasonably believed to be within the scope
of authority conferred on such Partnership Indemnified Person by the Limited
Partnership
II-1
<PAGE> 59
Agreement, except that no Partnership Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Partnership
Indemnified Person by reason of gross negligence or willful misconduct with
respect to such acts or omissions.
The directors and officers of the Company and the Regular Trustees of the
Trust are covered by insurance policies indemnifying them against certain
liabilities that might be incurred by them in such capacities and against which
they cannot be indemnified by the Company or the Trust. Any agents, dealers or
underwriters who execute the agreement filed as Exhibit 1 of this Registration
Statement will agree to indemnify the Company's directors and their officers and
the Trustees who signed the Registration Statement against certain liabilities
that may arise under the Securities Act with respect to information furnished to
the Company or the Trust by or on behalf of any such indemnifying party.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1 -- Form of Purchase Agreement for the offering of the Preferred
Securities being registered under this Registration Statement.
2 -- Amended and Restated Agreement and Plan of Merger dated as of July
20, 1996 and amended and restated as of September 24, 1996 among
Enron Corp., Enron Oregon Corp. and Portland General Corporation
(Incorporated by reference to Exhibit 2.1 to Enron's Registration
Statement on Form S-4, File No. 333-13791).
3(a) -- Restated Certificate of Incorporation of Enron, as amended
(Incorporated by reference to Exhibit 3.01 to Enron's Form 10-K
Annual Report for 1994, File No. 1-3423).
3(b) -- Bylaws of Enron (Incorporated by reference to Exhibit 3.02 to Enron
Form 10-K Annual Report for 1995, File No. 1-3423).
4(a) -- Certificate of Trust of Enron Capital Trust II.
4(b) -- Form of Amended and Restated Declaration of Trust of Enron Capital
Trust II.
4(c) -- Certificate of Limited Partnership of Enron Preferred Funding II, L.
P.
4(d) -- Form of Amended and Restated Agreement of Limited Partnership of
Enron Preferred Funding II, L. P.
4(e) -- Form of Trust Preferred Securities Guarantee Agreement between Enron
Corp. and The Chase Manhattan Bank, as guarantee trustee.
4(f) -- Form of Partnership Guarantee Agreement between Enron Corp. and The
Chase Manhattan Bank, as guarantee trustee.
4(g) -- Form of Indenture between Enron Corp. and The Chase Manhattan Bank,
as trustee.
4(h) -- Form of Affiliate Debenture Guarantee Agreement by Enron Corp. and
The Chase Manhattan Bank, as guarantee trustee.
4(i) -- Form of Trust Preferred Security (included in Exhibit 4(b) above).
4(j) -- Form of Partnership Preferred Security (included in Exhibit 4(d)
above).
4(k) -- Form of Subordinated Debenture (included in Exhibit 4(g) above).
5* -- Opinion of James V. Derrick, Jr., Esq., Senior Vice President and
General Counsel of Enron, as to validity of the Trust Preferred
Securities.
8* -- Opinion of Vinson & Elkins L.L.P. as to certain federal income tax
matters.
12 -- Computations of Ratios of Earnings to Fixed Charges.
23(a) -- Consent of Arthur Andersen LLP.
23(b) -- Consent of DeGolyer and MacNaughton.
23(c)* -- Consent of James V. Derrick, Jr., Esq. (included in Exhibit 5).
</TABLE>
II-2
<PAGE> 60
<TABLE>
<S> <C>
23(d)* -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 8).
24 -- Powers of Attorney of certain directors of Enron.
25(a)* -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Chase Manhattan Bank under the Declaration of Trust.
25(b)* -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Chase Manhattan Bank under the Trust Preferred Securities
Guarantee Agreement, the Investment Guarantee Agreements and the
Indenture relating to the Company Debenture.
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
(i) that for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective;
(ii) that for the purpose of determining any liability under the
Securities Act of 1933, each 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
the time shall be deemed to be the initial bona fide offering thereof; and
(iii) that for purposes of determining any liability under the
Securities Act of 1933, each filing of the Company'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 this registration statement shall be
deemed to be a new registration statement relating to the securities
offered herein, 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 a
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-3
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Enron Capital
Trust II 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 23rd day of
December, 1996.
ENRON CAPITAL TRUST II
(Registrant)
By: /s/ KEITH A. CRANE
----------------------------------
Keith A. Crane
Regular Trustee
Pursuant to the requirements of the Securities Act of 1933, Enron Preferred
Funding II, 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 23rd day of December, 1996.
ENRON PREFERRED FUNDING II, L.P.
(Registrant)
By: ENRON CORP., as
General Partner
By: /s/ EDMUND P. SEGNER, III
----------------------------------
Edmund P. Segner, III
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, Enron Corp.
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 23rd day of
December, 1996.
ENRON CORP.
(Registrant)
By: /s/ EDMUND P. SEGNER, III
----------------------------------
Edmund P. Segner, III
Executive Vice President
II-4
<PAGE> 62
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., on its own behalf and as general partner of
Enron Preferred Funding II, L.P., on the 23rd day of December, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
KENNETH L. LAY Chairman of the Board, Chief Executive Officer
- --------------------------------------------- and Director (Principal Executive Officer)
(Kenneth L. Lay)
ROBERT H. BUTTS Vice President and Controller (Principal
- --------------------------------------------- Accounting Officer)
(Robert H. Butts)
WILLIAM D. GATHMANN Vice President, Finance and Treasurer
- --------------------------------------------- (Principal Financial Officer)
(William D. Gathmann)
ROBERT A. BELFER* Director
- ---------------------------------------------
(Robert A. Belfer)
NORMAN P. BLAKE, JR.* Director
- ---------------------------------------------
(Norman P. Blake, Jr.)
RONNIE C. CHAN* Director
- ---------------------------------------------
(Ronnie C. Chan)
JOHN H. DUNCAN* Director
- ---------------------------------------------
(John A. Duncan)
JOE H. FOY* Director
- ---------------------------------------------
(Joe H. Foy)
WENDY L. GRAMM* Director
- ---------------------------------------------
(Wendy L. Gramm)
ROBERT L. JAEDICKE* Director
- ---------------------------------------------
(Robert L. Jaedicke)
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.)
(Constituting a majority of
the Board of Directors)
*By: /s/ PEGGY B. MENCHACA
-----------------------------------------
(Peggy B. Menchaca)
(Attorney-in-fact for persons indicated)
</TABLE>
II-5
<PAGE> 63
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
ITEM NO.
- --------------------
<C> <S>
1 -- Form of Purchase Agreement for the offering of the Preferred
Securities being registered under this Registration Statement.
2 -- Amended and Restated Agreement and Plan of Merger dated as of July
20, 1996 and amended and restated as of September 24, 1996 among
Enron Corp., Enron Oregon Corp. and Portland General Corporation
(Incorporated by reference to Exhibit 2.1 to Enron's Registration
Statement on Form S-4, File No. 333-13791).
3(a) -- Restated Certificate of Incorporation of Enron, as amended
(Incorporated by reference to Exhibit 3.01 to Enron's Form 10-K
Annual Report for 1994, File No. 1-3423).
3(b) -- Bylaws of Enron (Incorporated by reference to Exhibit 3.02 to Enron
Form 10-K Annual Report for 1995, File No. 1-3423).
4(a) -- Certificate of Trust of Enron Capital Trust II.
4(b) -- Form of Amended and Restated Declaration of Trust of Enron Capital
Trust II.
4(c) -- Certificate of Limited Partnership of Enron Preferred Funding II, L.
P.
4(d) -- Form of Amended and Restated Agreement of Limited Partnership of
Enron Preferred Funding II, L. P.
4(e) -- Form of Trust Preferred Securities Guarantee Agreement between Enron
Corp. and The Chase Manhattan Bank, as guarantee trustee.
4(f) -- Form of Partnership Guarantee Agreement between Enron Corp. and The
Chase Manhattan Bank, as guarantee trustee.
4(g) -- Form of Indenture between Enron Corp. and The Chase Manhattan Bank,
as trustee.
4(h) -- Form of Affiliate Debenture Guarantee Agreement by Enron Corp. and
The Chase Manhattan Bank, as guarantee trustee.
4(i) -- Form of Trust Preferred Security (included in Exhibit 4(b) above).
4(j) -- Form of Partnership Preferred Security (included in Exhibit 4(d)
above).
4(k) -- Form of Subordinated Debenture (included in Exhibit 4(g) above).
5* -- Opinion of James V. Derrick, Jr., Esq., Senior Vice President and
General Counsel of Enron, as to validity of the Trust Preferred
Securities.
8* -- Opinion of Vinson & Elkins L.L.P. as to certain federal income tax
matters.
12 -- Computations of Ratios of Earnings to Fixed Charges.
23(a) -- Consent of Arthur Andersen LLP.
23(b) -- Consent of DeGolyer and MacNaughton.
23(c)* -- Consent of James V. Derrick, Jr., Esq. (included in Exhibit 5).
23(d)* -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 8).
24 -- Powers of Attorney of certain directors of Enron.
25(a)* -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Chase Manhattan Bank under the Declaration of Trust.
25(b)* -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Chase Manhattan Bank under the Trust Preferred Securities
Guarantee Agreement, the Investment Guarantee Agreements and the
Indenture relating to the Company Debenture.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 1
ENRON CORP.
(A DELAWARE CORPORATION)
ENRON PREFERRED FUNDING II, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
ENRON CAPITAL TRUST II
(A DELAWARE BUSINESS TRUST)
6,000,000 TRUST PREFERRED SECURITIES
____% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS")(SM)
PURCHASE AGREEMENT
DATED: JANUARY __, 1997
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
SECTION 1. Representations and Warranties
(a) Representations and Warranties by the Company
(i) Compliance with Registration Requirements..............................................4
(ii) Incorporated Documents.................................................................5
(iii) Independent Accountants................................................................5
(iv) Good Standing of the Company and Subsidiaries..........................................5
(v) Authorization of Agreement.............................................................5
(vi) Authorization of the Debentures and Indentures.........................................6
(vii) Authorization of Investment Guarantees.................................................6
(viii) Absence of Defaults and Conflicts; Absence of Further
Requirements...........................................................................6
(ix) Material Adverse Change................................................................7
(x) Investment Company Act.................................................................7
(xi) PUCHA..................................................................................7
(xii) Absence of Proceedings.................................................................7
(b) Representations and Warranties by the Trust, the Partnership and
the Company.....................................................................................7
(i) Good Standing of Trust.................................................................8
(ii) Authorization of Declaration...........................................................8
(iii) Authorization of Trust Common Securities...............................................8
(iv) Authorization of Trust Preferred Securities............................................8
(v) Authorization of Trust Guarantee.......................................................9
(vi) Regular Trustees.......................................................................9
(vii) Good Standing of the Partnership.......................................................9
(viii) Authorization of Partnership Agreement.................................................9
(ix) Authorization of Partnership Preferred Securities......................................9
(x) Authorization of Partnership Guarantee................................................10
(xi) General Partner Status................................................................10
(xii) Investment Company Act................................................................10
(xiii) Absence of Conflicts..................................................................10
(xiv) Absence of Further Requirements.......................................................10
(xv) Absence of Proceedings................................................................11
SECTION 2. Sale and Delivery to Underwriters; Closing.....................................................11
(a) Securities.....................................................................................11
(b) Payment........................................................................................11
(c) Denominations; Registration....................................................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3. Covenants of the Offerors......................................................................12
(a) Compliance with Securities Regulations and Commission Requests.................................12
(b) Filing of Amendments...........................................................................13
(c) Delivery of Registration Statements............................................................13
(d) Delivery of Prospectuses.......................................................................13
(e) Continued Compliance with Securities Laws......................................................13
(f) Blue Sky Qualifications........................................................................14
(g) Rule 158.......................................................................................14
(h) Use of Proceeds................................................................................14
(i) Listing........................................................................................14
(j) Restriction on Sale of Securities..............................................................14
(k) Reporting Requirements.........................................................................15
SECTION 4. Payment of Expenses............................................................................15
(a) Expenses.......................................................................................15
(b) Termination of Agreement.......................................................................15
SECTION 5. Conditions of Underwriters' Obligations........................................................16
(a) Effectiveness of Registration Statement........................................................16
(b) Opinion of Counsel for Company.................................................................16
(c) Opinion of Counsel for Underwriters............................................................16
(d) Opinion of Counsel for the Property Trustee....................................................16
(e) Officers' Certificate..........................................................................17
(f) Accountant's Comfort Letter....................................................................17
(g) Bring-down Comfort Letter......................................................................17
(h) Maintenance of Rating..........................................................................17
(i) Approval of Listing............................................................................17
(j) Additional Documents...........................................................................17
(k) Termination of Agreement.......................................................................18
SECTION 6. Indemnification................................................................................18
(a) Indemnification of Underwriters................................................................18
(b) Indemnification of Company, Directors and Officers.............................................19
(c) Actions Against Parties; Notification..........................................................19
(d) Settlement Without Consent if Failure to Reimburse.............................................20
SECTION 7. Contribution...................................................................................21
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.................................22
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 9. Termination of Agreement.......................................................................22
(a) Termination; General...........................................................................22
(b) Liabilities....................................................................................23
SECTION 10. Default by One or More of the Underwriters....................................................23
SECTION 11. Notices.......................................................................................24
SECTION 12. Parties.......................................................................................24
SECTION 13. Governing Law and Time........................................................................24
SECTION 14. Effect of Headings............................................................................24
Schedule B
Exhibit A
Exhibit B
Exhibit C
</TABLE>
<PAGE> 5
Enron Capital Trust II
(a Delaware business trust)
6,000,000 Trust Preferred Securities
___% Trust Originated Preferred Securities (SM) ("TOPrS")SM
(Liquidation Amount of $25 per Preferred Security)
guaranteed by Enron Corp.
PURCHASE AGREEMENT
January __, 1997
Merrill Lunch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Enron Capital Trust II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Trust Act") of the State
of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. ss.ss. 3801
et seq.), Enron Preferred Funding II, L.P. (the "Partnership"), a limited
partnership organized under the Revised Uniform Limited Partnership Act (the
"Delaware Limited Partnership Act") of the State of Delaware (Chapter 17, Title
6, of the Delaware Code, 6 Del. C. ss.ss. 17-101 et seq.), and Enron Corp., a
Delaware corporation (the "Company" and, together with the Trust and the
Partnership, the "Offerors"), confirm their agreement (the "Agreement") with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(together, "Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch is acting as representative (in such capacity,
hereinafter referred to as the
- ---------------------------------
(SM)"Trust Originated Preferred Securities" and "TOPrS" are service
marks of Merrill Lynch & Co., Inc.
<PAGE> 6
"Representative"), with respect to the sale by the Trust and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
____% Trust Originated Preferred Securities (liquidation amount of $25 per
preferred security) representing preferred undivided beneficial ownership
interests in the assets of the Trust ("TOPrS" or the "Trust Preferred
Securities") set forth in Schedule A. The Company will own all the common
securities (the "Trust Common Securities" and, together with the Trust
Partnership Securities, the "Trust Securities"), representing undivided
beneficial ownership interests in the assets of the Trust. The Trust Preferred
Securities and the Trust Common Securities will be issued pursuant to the
amended and restated declaration of trust (the "Declaration") of the Trust,
dated as of December __, 1996, among the Company, -----------, -----------
- ------------, as regular trustees (the "Regular Trustees"), The Chase Manhattan
Bank, as institutional trustee (the "Property Trustee"), and Chase National Bank
Delaware, a Delaware corporation, as Delaware trustee (the "Delaware Trustee"
and, together with the Regular Trustees and the Property Trustee, the "Issuer
Trustees"), and the holders from time to time of undivided beneficial interests
in the assets of the Trust. The Trust Preferred Securities will be guaranteed by
the Company, to the extent set forth in the Prospectus (as defined herein) with
respect to distributions and payments upon liquidation, redemption and otherwise
pursuant to the Trust Preferred Securities Guarantee Agreement (the "Trust
Guarantee"), to be dated as of January __, 1997, between the Company and The
Chase Manhattan Bank, as trustee (the "Guarantee Trustee").
The proceeds from the sale of the Trust Securities will be used by the
Trust to purchase partnership preferred securities ("Partnership Preferred
Securities"), representing all of the limited partnership interests of the
Partnership. All of the general partnership interests will be owned by the
Company, which shall be sole general partner (in such capacity, the "General
Partner"). The Partnership Preferred Securities will be issued pursuant to an
amended and restated agreement of limited partnership, to be dated as of
January __, 1997 (the "Partnership Agreement"), among the Company, as general
partner, and Organizational Partner, Inc., as initial limited partner, and such
other persons who become limited partners thereto, and will be guaranteed by
the Company, to the extent set forth in the Prospectus, with respect to
distributions and payments upon liquidation and redemption pursuant to the
Partnership Guarantee Agreement (the "Partnership Guarantee" and, together with
the Trust Guarantee, the "Guarantees"). The Trust Preferred Securities and the
related Trust Guarantee, together with the Partnership Preferred Securities and
the related Partnership Guarantee, are referred to herein as the "Offered
Securities."
The Partnership will use the proceeds from the sale of the Partnership
Preferred Securities and the capital contribution of the General Partner to
acquire, among other things, (i) a subordinated debenture of the Company, (ii)
senior debentures of certain subsidiaries the Company (together with the
Company, the "Investment Affiliates"). The debentures to be issued
(collectively, the "Subsidiary Debentures") by the subsidiaries (collectively,
the "Investment Subsidiaries") are to be fully and unconditionally guaranteed
by the Company (the "Investment Guarantees"). Each of the debentures (the
"Debentures") shall be issued pursuant to an indenture (each an "Indenture"),
to be
<PAGE> 7
dated as of January __, 1997, among the applicable Investment Affiliate, The
Chase National Bank, as trustee (the "Debt Trustee"), and in the case of the
Debentures issued by subsidiaries of the Company, the Company, as guarantor
(the "Debenture Guarantor").
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Nos. 333-_____,
333-_____-01, 333-_____-02) to register under the Securities Act of 1933, as
amended (the "1933 Act"), the offer and sale of (i) the Trust Preferred
Securities, (ii) the Trust Guarantee, (iii) the Partnership Preferred
Securities, (iv) the Partnership Guarantee, (v) the Debentures of the Company
and (vi) the Investment Guarantees.
The Offerors understand that the Underwriters propose to make a public
offering of the Offered Securities as soon as the Representative deems
advisable after this Agreement has been executed and delivered and the
Declaration, Trust Guarantee Agreement, Investment Guarantees and the Company
Debenture have been qualified under the Trust Indenture Act of 1939, as amended
(the "1939 Act").
Promptly after execution and delivery of this Agreement, the Offerors
will either (i) prepare and file a prospectus in accordance with the provisions
of Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). The information included in such prospectus or in such Term Sheet, as
the case may be, that was omitted from such registration statement at the time
it became effective, but that is deemed to be part of such registration
statement at the time it became effective pursuant to paragraph (b) of Rule
430A is referred to as "Rule 430A Information" or pursuant to paragraph (d) of
Rule 434 is referred to as "Rule 434 Information." Each prospectus used before
such registration statement became effective, and any prospectus that omitted,
as applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus, including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the
Underwriters for use in connection with the offering of the Offered Securities,
is herein called the "Prospectus." If Rule 434 is relied on, the term
"Prospectus" shall refer to the preliminary prospectus dated January __, 1997
together with the Term Sheet, and all references in this Agreement to the date
of the Prospectus shall mean the date
<PAGE> 8
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which
is incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, and as of the Closing
Time referred to in Section 2(b) hereof, as follows:
(i) Compliance with Registration Requirements. The
Registration Statement has been filed on an appropriate form under the 1933
Act. Each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the applicable requirements of the
1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act Regulations"),
and did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment or
supplement was issued and at the Closing Time, included or will include an
untrue statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements
<PAGE> 9
therein, in the light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Offerors will comply with the requirements
of Rule 434. The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished
to the Company in writing by any Underwriter through Merrill Lynch expressly
for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for use
in connection with this offering was substantively identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at the
time the Prospectus was issued and at the Closing Time, did not and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(iii) Independent Accountants. The accountants who certified
the financial statements included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(iv) Good Standing of the Company and Subsidiaries. Each of
the Company and each of its subsidiaries listed on Exhibit A hereto has been
duly incorporated, is validly existing and in good standing under the laws of
its respective jurisdiction of incorporation, is duly qualified to do business
and in good standing as a foreign corporation in each jurisdiction in which its
respective ownership of properties or the conduct of its respective businesses
requires such qualification (except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on
the Company and its subsidiaries taken as a whole), and has the power and
authority necessary to own or hold its respective properties and to conduct the
businesses in which it is engaged, as described in the Prospectus.
(v) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Offerors.
<PAGE> 10
(vi) Authorization of the Debentures and Indentures. At the
Closing Time, each Indenture will have been duly authorized, executed and
delivered by the applicable Investment Affiliate and, in the case of the
Subsidiary Debentures, the Debenture Guarantor and, when duly executed and
delivered by the Debt Trustee, will constitute a valid and binding agreement of
such Investment Affiliate and, in the case of the Subsidiary Debentures, the
Debenture Guarantor, enforceable against such Investment Affiliate and, in the
case of the Subsidiary Debentures, the Debenture Guarantor, in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) (the "Bankruptcy Exceptions"). The Indenture
of the Company has duly qualified under the 1939 Act. The Debentures have been
duly authorized and, at the Closing Time, will have been duly executed by the
applicable Investment Affiliate and, when authenticated, issued and delivered in
the manner provided for in the applicable Indenture and delivered against
payment of the purchase price therefor as provided in this Agreement, will
constitute valid and binding obligations of such Investment Affiliate,
enforceable against such Investment Affiliate in accordance with their terms,
except as the enforcement thereof may be limited by the Bankruptcy Exceptions.
(vii) Authorization of Investment Guarantees. The Investment
Guarantees have been duly authorized and, at the Closing Time, will have been
duly executed and delivered by the Debenture Guarantor, and, when authenticated
in the manner provided in the Investment Guarantee, will constitute a valid and
binding obligation of the Debenture Guarantor, enforceable against the Debenture
Guarantor in accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(viii) Absence of Defaults and Conflicts; Absence of Further
Requirements. The execution, delivery and performance of this Agreement, the
Declaration, the Partnership Agreement, the Trust Guarantee, the Partnership
Guarantee, the Debentures and the Indentures (collectively, the "Transaction
Documents") by the Company and the execution, delivery and performance of the
Debentures and the Indentures by the applicable Investment Affiliate and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or bylaws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties of assets, the effect of which
breach, violation or default would be material to the Company and its
subsidiaries taken as a whole; and except such as have been obtained or
required under the 1933 Act
<PAGE> 11
or the 1933 Act Regulations, 1934 Act or the 1934 Act Regulations or state
securities laws and the qualification of the Declaration, the Trust Preferred
Guarantee Agreement, the Investment Guarantees and the Indenture of the Company
under the 1939 Act, no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body is required
in connection with the offering, issuance, and sale of the Offered Securities,
the Debentures and Investment Guarantees or, the consummation of the
transactions contemplated by this Agreement or the execution, delivery and
performance by the Company and, where applicable, the Investment Subsidiaries
of the Transaction Documents.
(ix) Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
except as otherwise stated therein, there has been no material adverse change
in the condition, financial or otherwise, or in the earnings or business
affairs or business prospects of the Company and its subsidiaries taken as a
whole, whether or not arising in the ordinary course of business.
(x) Investment Company Act. Each of the Company and the
Investment Subsidiaries is not, and after giving effect to the offering and
sale of the Trust Preferred Securities and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xi) PUCHA. Each of the Company and its subsidiaries is
exempt from any obligation, duty or liability imposed on it as a "holding
company," "subsidiary company" of a "holding company" or an "affiliate" of a
"subsidiary company" or a "holding company," in each case as such term is
defined in the Public Utility Holding Company Act of 1935, as amended
("PUHCA").
(xii) Absence of Proceedings. Except as disclosed in the
Prospectus, there is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now pending or, to
the knowledge of the Company, threatened against or affecting the Company or
any of its subsidiaries that is required to be disclosed in the Prospectus or
that would result in any material adverse change in the condition (financial or
otherwise), earnings or business affairs of the Company and its subsidiaries,
taken as a whole, or that could materially and adversely affect the properties
or assets of the Company or any of its subsidiaries, or that could adversely
affect the consummation of the transactions contemplated in this Agreement.
(b) Representations and Warranties by the Trust, the Partnership and the
Company. The Offerors, jointly and severally, represent and warrant to each
Underwriter as of the date hereof, and as of the Closing Time referred to in
Section 2(b) herein, as follows:
<PAGE> 12
(i) Good Standing of Trust. The Trust has been duly created
and is validly existing in good standing as a business trust under the Delaware
Trust Act with the power and authority to own property and to conduct its
business as described in the Registration Statement and Prospectus and to enter
into and perform its obligations under this Agreement, the Trust Preferred
Securities, the Trust Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign business trust and is in good
standing in any other jurisdiction in which such qualification is necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a material adverse effect on the Trust; the Trust is not a party
to or otherwise bound by any agreement other than those described in the
Prospectus; and the Trust is and will be treated as a consolidated subsidiary
of the Company pursuant to generally accepted accounting principles.
(ii) Authorization of Declaration. The Declaration has been
duly authorized by the Company and, at the Closing Time, will have been
executed and delivered by the Company, as Sponsor, and assuming due
authorization, execution and delivery of the Declaration by the Trustees, the
Declaration will, at the Closing Time, be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions, and will conform in all material respects to all statements
relating thereto in the Prospectus; and at the Closing Time, the Declaration
will have been duly qualified under the 1939 Act.
(iii) Authorization of Trust Common Securities. At the
Closing Time, the Trust Common Securities will have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus,
will be validly issued and (subject to the terms of the Declaration) fully paid
undivided beneficial interests in the assets of the Trust and will conform in
all material respects to all statements relating thereto contained in the
Prospectus; the issuance of the Trust Common Securities is not subject to
preemptive or other similar rights; and at the Closing Time all of the issued
and outstanding Trust Common Securities of the Trust will be directly owned by
the Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(iv) Authorization of Trust Preferred Securities. At the
Closing Time, the Trust Preferred Securities will have been duly authorized by
the Declaration and, when issued and delivered against payment of the
consideration set forth in this Agreement, will be validly issued and (subject
to the terms of the Declaration) fully paid and non-assessable undivided
beneficial interests in the Trust, will be entitled to the benefits of the
Declaration and will conform in all material respects to all statements
relating thereto contained in the Prospectus; the issuance of the Trust
Preferred Securities is not subject to preemptive or other similar rights; and
(subject to the terms of the Declaration) holders of Trust Preferred Securities
will be entitled to the same limitation of personal liability under Delaware
law as extended to stockholders of private corporations for profit.
<PAGE> 13
(v) Authorization of Trust Guarantee. The Trust Guarantee has
been duly authorized by the Company and, when validly executed and delivered by
the Company, and, assuming due authorization, execution and delivery of the
Trust Guarantee by the Guarantee Trustee, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions; the Trust Guarantee will conform in all material
respects to all statements relating thereto contained in the Prospectus; and
the Trust Guarantee, at the Closing Time, will have been duly qualified under
the 1939 Act.
(vi) Regular Trustees. Each of the Regular Trustees of the
Trust is an employee of the Company; at the Closing Time, the Declaration will
have been duly executed and delivered by the Regular Trustees and will be a
valid and binding obligation of each Regular Trustee, enforceable against such
Regular Trustee in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
(vii) Good Standing of the Partnership. The Partnership has
been duly formed and is validly existing in good standing as a limited
partnership under the Delaware Limited Partnership Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and, at the Closing Time, will have power
and authority to enter into and perform its obligations under this Agreement,
the Partnership Preferred Securities and the Partnership Agreement; the
Partnership is duly qualified to transact business as a foreign limited
partnership and is in good standing in any other jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the
Partnership; the Partnership is not a party to or otherwise bound by any
agreement other than those described in the Prospectus; and the Partnership is
and will be treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles.
(viii) Authorization of Partnership Agreement. The
Partnership Agreement has been duly authorized by the Company as general
partner and, at the Closing Time, will have been duly executed and delivered by
the Company, and will be a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions,
and will conform in all material respects to the description thereof in the
Prospectus.
(ix) Authorization of Partnership Preferred Securities. At
the Closing Time, the Partnership Preferred Securities will have been duly
authorized by the Partnership Agreement and, when issued and delivered pursuant
to the Partnership Agreement against payment of the consideration set forth
therein, will be duly issued and fully paid and not subject to assessment for
additional amounts (except as provided in Section 17-607 of the Delaware
Limited Partnership Act), will be entitled to the benefits of the Partnership
Agreement and will conform to the description thereof in the Prospectus; the
issuance of the Partnership Preferred Securities is not subject to
<PAGE> 14
preemptive or other similar rights; assuming that the holders of Partnership
Preferred Securities in their capacities as such do not participate in the
control of the business of the Company, the holders of the Partnership
Preferred Securities, in their capacities as such, will have no liability in
excess of their obligations to make payments provided for in the Limited
Partnership Agreement (subject to the obligation of a holder of Partnership
Preferred Securities to repay any funds distributed to it).
(x) Authorization of Partnership Guarantee. The Partnership
Guarantee has been duly authorized by the Company and, when validly executed
and delivered by the Company will constitute a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xi) General Partner Status. The Company is the sole general
partner of the Partnership.
(xii) Investment Company Act. Neither the Trust nor the
Partnership is and, after giving effect to the offering and sale of the Trust
Preferred Securities and the application of the proceeds thereof as described
in the Prospectus, neither will be an "investment company" under the 1940 Act.
(xiii) Absence of Conflicts. The Trust is not in violation of
the Declaration or its certificate of trust filed with the State of Delaware
December __, 1996 (the "Certificate of Trust"); the Partnership is not in
violation of the Partnership Agreement or the certificate of limited
partnership, filed December __, 1996 (the "Certificate of Partnership"); and
the execution, delivery and performance of applicable Transaction Documents by
the Partnership and the Trust and the consummation of the transactions
contemplated herein and therein and compliance by the Partnership and the Trust
with their respective obligations hereunder and thereunder have been duly
authorized by all necessary action on the part of the Partnership and the Trust
and do not and will not result in any violation of the Declaration or
Certificate of Trust or the Partnership Agreement or the Certificate of
Partnership and do not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Trust or the Partnership under any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, or any regulatory body or
administrative agency or other governmental body having jurisdiction over the
Trust or the Partnership or their respective properties.
(xiv) Absence of Further Requirements. No authorization,
approval, consent or order of any court or governmental authority or agency is
necessary in connection with the issuance, offer and sale of the Trust
Securities and the Partnership Preferred Securities, and the consummation of
the transactions contemplated by this Agreement by the Partnership or the
Trust, or the execution,
<PAGE> 15
delivery, and performance by the Partnership or the Trust of the applicable
Transaction Documents, except such as may be required under the 1933 Act or the
1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or state
securities laws and the qualification of the Declaration, the Trust Guarantee,
the Investment Guarantees and the Indenture relating to the Debenture of the
Company under the 1939 Act.
(xv) Absence of Proceedings. Except as disclosed in the
Prospectus, there is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now pending or, to
the knowledge of the Trust or the Partnership, threatened against or affecting
the Trust or the Partnership that is required to be disclosed in the Prospectus
or that would result in any material adverse change in the condition (financial
or otherwise), earnings or business affairs of the Trust or the Company and its
subsidiaries, taken as a whole, or that could materially and adversely affect
the properties or assets of the Trust or the Partnership, or that could
adversely affect the consummation of the transactions contemplated in this
Agreement.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at
the initial public offering price set forth in Schedule B, the number of Trust
Preferred Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Trust Preferred Securities which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Trust Preferred Securities shall be made at the offices
of Vinson & Elkins L.L.P., 1001 Fannin Street, Houston, Texas, or at such other
place as shall be agreed upon by the Representative and the Company, at 9:00
a.m. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 p.m.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representative and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
Payment shall be made to the Trust by wire transfer of
immediately available funds to a bank account designated by the Company,
against delivery to such persons designated by the Representative for the
respective accounts of the Underwriters of a certificate in global form for the
Trust Preferred Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the Trust
Preferred Securities which it has agreed to purchase. Merrill Lynch,
individually and not as representative of the Underwriters, may (but shall not
be obligated
<PAGE> 16
to) make payment of the purchase price for the Trust Preferred Securities to be
purchased by any Underwriter whose funds have not been received by the Closing
Time, but such payment shall not relieve such Underwriter from its obligations
hereunder.
The purchase price per Trust Preferred Security to be paid by
the several Underwriters for the Trust Preferred Securities shall be an amount
equal to the initial public offering price as set forth in Schedule B. The
initial public offering price per Trust Preferred Security shall be a fixed
price to be determined by agreement between the Representative and the
Offerors. The initial public offering price and the purchase price, when so
determined, shall be set forth in Schedule B.
As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the Trust
Preferred Securities will ultimately be used to purchase the Debentures of the
Company and the Investment Subsidiaries, the Company hereby agrees to pay at
the Closing Time to the Representative, for the accounts of the several
Underwriters, a commission per Trust Preferred Security set forth on Schedule
B.
At the Closing Time, the Company will pay, or cause to be
paid, the commission payable at such time to the Underwriters under Section 2
hereof by wire transfer of immediately available funds to a bank account
designated by Merrill, Lynch, Pierce, Fenner & Smith Incorporated for the
account of Underwriters.
(c) Denominations; Registration. Certificates for the Trust Preferred
Securities shall be in such denominations and registered in such names as the
Representative may request in writing at least one business day before the
Closing Time. The Trust Preferred Securities will be made available for
examination and packaging by the Representative in the City of New York not
later than 9:00 a.m. (Eastern time) on the business day prior to the Closing
Time.
SECTION 3. COVENANTS OF THE OFFERORS
The Offerors covenant with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Offerors, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Representative
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Offered Securities for offering or sale in
<PAGE> 17
any jurisdiction, or of the initiation or threatening of any proceeding for any
of such purposes. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. During the period when the Underwriters are
required to deliver a prospectus with respect to the Offered Securities, the
Offerors will give the Representative notice of its intention to file or
prepare any amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise, will furnish the Representative with copies of any such documents
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to which the Representative
or counsel for the Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Offerors have furnished or
will deliver to the Representative and counsel for the Underwriters, without
charge, conformed copies of the Registration Statement as originally filed and
of each amendment thereto (including exhibits filed therewith or incorporated
by reference therein and documents incorporated or deemed to be incorporated by
reference therein) and conformed copies of all consents and certificates of
experts, and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be substantively identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Offerors have delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Offerors hereby consent to the
use of such copies for purposes permitted by the 1933 Act. The Offerors will
furnish to each Underwriter, without charge, during the period when the
prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be substantively
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Offerors will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations with respect to the
offer of the Offered Securities so as to permit the completion of the
distribution of the Trust Preferred Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Trust Preferred
Securities, any event shall occur or
<PAGE> 18
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use all reasonable efforts,
in cooperation with the Underwriters, to qualify the Offered Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Representative may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to serve of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Offered Securities have been so qualified, the
Company will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement and
any Rule 462(b) Registration Statement.
(g) Rule 158. The Offerors will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use or cause to be used
the net proceeds received from the sale of the Offered Securities in the manner
specified in the Prospectus under "Use of Proceeds."
(i) Listing. The Company will use all reasonable efforts to
effect the listing of the Offerors Securities on the New York Stock Exchange.
(j) Restriction on Sale of Securities. Except as contemplated by this
Agreement, during a period of 30 days from the date of the Prospectus, neither
the Trust nor the Company will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, grant any
<PAGE> 19
option for sale of, or otherwise dispose of, any Trust Preferred Securities,
any Partnership Preferred Securities, any preferred stock of the Company or any
security convertible into or exchangeable into or exercisable for Trust
Preferred Securities or Partnership Preferred Securities or any preferred stock
of the Company.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. PAYMENT OF EXPENSES
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, the Declaration, the Partnership Agreement, and the Indentures
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities (other than fees and
expenses of counsel for the Underwriters related thereto), (iii) the
preparation, issuance and delivery of the certificates for the Trust Preferred
Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel, accountants, experts and other advisors, (v) the
qualification of the Offered Securities under securities laws in accordance
with the provisions of Section 3(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, any Term Sheets and of the Prospectus
and any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Blue Sky Survey and any
supplement thereto, (viii) the fees and expenses of the Property Trustee and
the Trust Preferred Guarantee Trustee, including the reasonable fees and
disbursements of counsel for the Trustees in connection with the Indentures,
the Investment Guarantees and the Debentures, (ix) any fees payable in
connection with the rating of the Trust Preferred Securities, and (x) the fees
and expenses incurred in connection with the listing of the Offered Securities
on the New York Stock Exchange.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
<PAGE> 20
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS
The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Offerors contained in
Section 1 hereof and in certificates of any officer of the Company, the Trust,
the Partnership or any subsidiary of the Company delivered pursuant to the
provisions hereof, to the performance by each of the Offerors of its covenants
and other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
the Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 424(b).
(b) Opinion of Counsel for Company. At the Closing Time, the
Representative shall have received the favorable opinions, dated as of the
Closing Time, of James V. Derrick, Jr., Senior Vice President and General
Counsel of the Company and Vinson & Elkins L.L.P., counsel to the Company, the
Trust and the Partnership, in form and substance satisfactory to counsel for
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit B hereto.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.
(c) Opinion of Counsel for Underwriters. At the Closing Time, the
Representative shall have received the favorable opinions, dated as of the
Closing Time, of Bracewell &Patterson, L.L.P. and of Skadden, Arps, Slate,
Meagher & Flom LLP, co-counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters in form and
substance satisfactory to the Underwriters.
(d) Opinion of Counsel for the Property Trustee. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Seward & Kissel, counsel for the Property Trustee, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letters for each of the other Underwriters to the
effect set forth in Exhibit C hereto and to such further effect as counsel to
the Underwriters may reasonably request.
<PAGE> 21
(e) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of the Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and warranties
in Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, (iii) the Company shall
have complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to the Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and, to such officer's knowledge, no proceedings for that purpose have
been instituted or are pending or are contemplated by the Commission.
(f) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from Arthur Andersen LLP a
letter, dated as of such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Underwriters, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(g) Bring-down Comfort Letter. At the Closing Time, the Representative
shall have received from Arthur Andersen LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the specified
date referred to shall be a date not more than five business days prior to the
Closing Time.
(h) Maintenance of Rating. Since the date of this Agreement, there shall
not have occurred a downgrading in the rating assigned to the Company's debt
securities by any "nationally recognized statistical rating agency," as that
term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933
Act, and no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the Company's debt securities.
(i) Approval of Listing. At the Closing Time, the Trust Preferred
Securities shall have been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.
(j) Additional Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents as they may
reasonably require for the purpose of enabling
<PAGE> 22
them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Offered Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Representative and counsel
for the Underwriters.
(k) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 6 and 7 shall survive any such termination and remain in
full force and effect.
SECTION 6. INDEMNIFICATION
(a) Indemnification of Underwriters. The Offerors agree, jointly and
severally, to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the Company;
and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by Merrill Lynch), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim
<PAGE> 23
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is
not paid under (i) or (ii) above; provided, however, that the indemnity set
forth in this Section 6(a) shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Offerors by any Underwriter through
Merrill Lynch expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto). The foregoing indemnity with respect to any untrue
statement or alleged untrue statement contained in or omission or alleged
omission from a preliminary prospectus shall not inure to the benefit of the
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any loss, liability, claim, damage or expense purchased any of the
Offered Securities which are the subject thereof if the Company shall sustain
the burden of proving that such person was not sent or given a copy of the
Prospectus (or the Prospectus as amended or supplemented) at or prior to the
written confirmation of the sale of such Offered Securities to such person and
the untrue statement contained in or omission from such preliminary prospectus
was corrected in the Prospectus (or the Prospectus as amended or supplemented)
and the Company had previously furnished copies thereof to such Underwriter.
(b) Indemnification of Company, Directors and Officers. Each Underwriter,
severally in proportion to its respective purchase obligation and not jointly,
agrees to indemnify and hold harmless the Offerors, directors of the Company,
the General Partner of the Partnership, the Issuer Trustees of the Trust, each
of the officers of the Offerors who signed the Registration Statement, and each
person, if any, who controls any of the Offerors within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section
6(a) above, counsel to the indemnified parties shall be selected by
<PAGE> 24
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company,
provided that if it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel
chosen by it and approved by the indemnified parties defendant in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying parties
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the indemnified
party. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to
any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement. Notwithstanding the immediately preceding
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, an indemnifying party shall not be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with
such request to the extent it considers such request to be reasonable and (ii)
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
<PAGE> 25
SECTION 7. CONTRIBUTION
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Offerors on the one hand and the Underwriters
on the other hand from the offering of the Trust Preferred Securities pursuant
to this Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Offerors on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the Trust
Preferred Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Trust Preferred Securities pursuant to this Agreement (before deducting
expenses but after deducting the total underwriting commission received by the
Underwriters) received by the Offerors and the total underwriting commission
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Trust
Preferred Securities as set forth on such cover.
The relative fault of the Offerors on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
<PAGE> 26
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Trust Preferred Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
any such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, the General Partner of the Partnership, the
Issuer Trustees of the Trust, each officer of the Offerors who signed the
Registration Statement, and each person, if any, who controls any of the
Offerors within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Trust Preferred Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Offerors or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Offerors, and
shall survive delivery of the Trust Preferred Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings or business affairs or business prospects of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis
or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representative,
impracticable to market the Trust Preferred Securities or to enforce contracts
for the
<PAGE> 27
sale of the Trust Preferred Securities, or (iii) if trading in any securities
of the Company has been suspended or materially limited by the Commission or
the New York Stock Exchange or if trading generally on the American Stock
Exchange or the New York Stock Exchange or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
State authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 6 and 7 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS
If one or more of the Underwriters shall fail at the Closing Time to
purchase the Trust Preferred Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Representative
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representative shall not have completed such arrangements within such
24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10%
of the aggregate number of the Trust Preferred Securities to be purchased
hereunder, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the
aggregate number of the Trust Preferred Securities to be purchased hereunder,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
<PAGE> 28
SECTION 11. NOTICES
All notices, requests, statements and other communications hereunder
shall be in writing and shall be delivered or sent by mail, messenger or any
standard form of telecommunication. Notices to the Underwriters shall be
directed to the Representative at Merrill Lynch, Pierce, Fenner & Smith
Incorporated, 1221 McKinney Street, Suite 2700, Houston, Texas 77010, Attention
Rob L. Jones, Managing Director, Facsimile No. (713) 759-2580; and notices to
the Company, the Trust or the Partnership shall be directed to the Company at
Enron Corp., 1400 Smith Street, Houston, Texas 77002-7369, Attention: Treasury
Department, Facsimile No. (713) 646-4831. Any such notice, request, statement
or communication shall be effective upon receipt thereof.
SECTION 12. PARTIES
This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Offerors and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Offerors and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Offerors and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Trust Preferred Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
<PAGE> 29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
ENRON CORP.
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ENRON PREFERRED FUNDING II, L.P.
By: ENRON CORP., General Partner
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
ENRON CAPITAL TRUST II
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 30
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER &
SMITH, INCORPORATED
By:
---------------------------------
Authorized Signatory
For themselves and as Representative of the other
Underwriters named in Schedule A hereto.
<PAGE> 31
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Name of Underwriter Trust Preferred Securities
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated..................................
---------
---------
Total.......................................................................... 6,000,000
=========
</TABLE>
<PAGE> 32
SCHEDULE B
1. The initial public offering price per security for the Trust
Preferred Securities, determined as provided in said Section 2, shall be
$_____.
2. The purchase price per security for the Trust Preferred Securities
to be paid by the several Underwriters shall be $_____, being an amount equal
to the initial public offering price set forth above.
3. The compensation per Trust Preferred Security to be paid by the
Company to the several Underwriters in respect of their commitments hereunder
shall be $____; provided, however, that the compensation per Trust Preferred
Security for sale of 10,000 or more Trust Preferred Securities to a single
purchaser shall be $__.
<PAGE> 33
Exhibit A
Citrus Corp.
Enron Gas Processing Company
Enron Capital & Trade Resources Corp.
Enron International Inc.
Enron Liquids Pipeline Company
Enron Oil & Gas Company
Enron Power Corp.
Florida Gas Transmission Company
Houston Pipe Line Company
Northern Natural Gas Company
Transwestern Pipeline Company
<PAGE> 34
Exhibit B
1. Each of the Company, each Subsidiary and each Investment Affiliate
has been duly incorporated and is validly existing and in good standing under
the laws of its jurisdiction of incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
its respective ownership of properties or the conduct of its respective
businesses requires such qualification (except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole), and has full
corporate power and authority to conduct its business as currently conducted.
2. The Purchase Agreement has been duly authorized, executed and
delivered by the Company, the Trust and the Partnership.
3. Each of the Indentures has been duly authorized, executed and
delivered by the Company or the applicable Investment Affiliate and, assuming
due authorization, execution and delivery thereof by the Indenture Trustee,
constitutes a valid and legally binding obligation of the Company or such
Investment Affiliate enforceable against the Company or such Investment
Affiliate in accordance with its terms, and the Indentures have been duly
qualified under the 1939 Act.
4. Each of the Debentures has been duly authorized, executed and
issued by the Company or the applicable Investment Affiliate and, assuming due
authentication thereof by the Indenture Trustee and upon payment and delivery
as described in the Purchase Agreement, will constitute a valid and legally
binding obligation of the Company or such Investment Affiliate enforceable
against the Company or such Investment Affiliate in accordance with its terms.
5. The Investment Guarantees have been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Investment Guarantee Trustee, constitute valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their respective terms, and the Investment Guarantees have been
duly qualified under the 1939 Act.
6. The Trust Guarantee has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trust Guarantee Trustee, constitutes a valid and
legally binding obligation of the Company enforceable against the Company in
accordance with its terms, and the Trust Guarantee has been duly qualified
under the 1939 Act.
<PAGE> 35
7. The Partnership Guarantee has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforceable against the Company in accordance with its terms.
8. The Declaration has been duly authorized, executed and delivered by
the Company and the Declaration has been duly qualified under the 1939 Act.
9. The Limited Partnership Agreement has been duly authorized,
executed and delivered by the Company.
10. Neither the Company, the Trust nor the Partnership is, nor after
giving effect to the offering and sale of the Trust Preferred Securities and
the application of the net proceeds therefrom as described in the Prospectus
will be, an "investment company" within the meaning of the 1940 Act.
11. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the issue and sale by the Registrants of the Offered Securities, the
issuance by the Investment Affiliates of the Debentures, the issuance by the
Company of the Investment Guarantees, the Partnership Guarantee and the Trust
Guarantee and the compliance by the Registrants with all of the provisions of
the Purchase Agreement, except for (a) the registration under the 1934 Act of
the Offered Securities and (b) such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Offered
Securities by the Underwriters.
12. The statements made in the Prospectus under the caption
"Description of the Trust," "Description of the Partnership," "Description of
the Trust Preferred Securities," "Description of the Trust Guarantee,"
"Description of the Partnership Preferred Securities" and "Description of the
Partnership Guarantee," insofar as they purport to constitute summaries of the
terms of the Offered Securities, the Declaration and the Limited Partnership
Agreement, constitute accurate summaries of the terms of the Offered
Securities, the Declaration and the Limited Partnership Agreement in all
material respects.
13. We hereby confirm (a) our opinions set forth in the Prospectus
under the caption "Certain Federal Income Tax Considerations" and (b) that,
subject to the qualifications set forth therein, the discussion set forth in
the Prospectus under such caption is an accurate summary of the United States
federal income tax matters described therein.
14. The Registration Statement has become effective under the 1933 Act
and the Prospectus was filed on ___________, 1997 pursuant to Rule 424(b) of
the 1933 Act Regulations and, to our knowledge after due inquiry, no stop order
suspending the effectiveness of the
<PAGE> 36
Registration Statement has been issued and no proceeding for that purpose has
been instituted or threatened by the Commission.
15. The Registration Statement and the Prospectus (except for the
reports of experts pertaining to natural resource reserves and the financial
statements and other financial data included in the Registration Statement and
the Prospectus, as to which we express no opinion, and exclusive of the
documents incorporated by reference therein) comply as to form in all material
respects with the requirements of the 1933 Act and the 1939 Act and the 1933
Act Regulations and the 1939 Act Regulations.
16. Each document filed with the Commission pursuant to the 1934 Act
(except for the reports of experts pertaining to natural resource reserves and
the financial statements and other financial data included in the Prospectus,
as to which we express no opinion), which is incorporated by reference into the
Prospectus, complied as to form, when so filed, in all material respects with
the requirements of the particular form of the Commission upon which it was
filed.
17. The execution and delivery of the Purchase Agreement and the
Indentures and the consummation of the transactions therein contemplated and
the compliance with the terms of the Purchase Agreement and the Indentures do
not and will not conflict with, violate or result in a breach of any of the
terms or provisions of, or constitute a default under, the Restated Certificate
of Incorporation, or By-laws, as amended, of the Company or any Subsidiary, or
any indenture, mortgage or, to our knowledge, other agreement to which the
Company or any Subsidiary is a party or by which any of the property or assets
of any of them is subject, or any existing applicable law, rule, regulation,
judgment, order or decree of any domestic government, governmental
instrumentality or court known to us and having jurisdiction over the Company
or any Subsidiary or any of their respective properties.
18. No action, suit or proceeding at law or in equity, or before or by
any federal, state or other commission, board or administrative agency, is
pending or to our knowledge threatened against the Company, the Trust, the
Partnership or any of the Subsidiaries which would be required to be described
in the Prospectus and is not described as required.
19. Each of the Company and its subsidiaries is exempt from any
obligation, duty or liability imposed on it as a "holding company," "subsidiary
company" of a "holding company" or an "affiliate" of a "subsidiary company" or
a "holding company," in each case as such term is defined in PUCHA.
<PAGE> 37
20. Under the Declaration and the Delaware Trust Act, the Trust has
full trust power and authority (i) to own property and to conduct its business
as described in the Prospectus, and (ii) to enter into and perform its
obligations under the Purchase Agreement and the Trust Securities.
21. The Trust Common Securities have been duly authorized by the
Declaration and are validly issued undivided beneficial interests in the assets
of the Trust.
22. Under the Declaration and the Delaware Trust Act, the
issuance of the Trust Securities is not subject to preemptive rights.
23. Under the Partnership Agreement and the Delaware Limited
Partnership Act, the Partnership has full partnership power and authority (i)
to own property and to conduct its business as described in the Prospectus, and
(ii) to enter into and perform its obligations under the Purchase Agreement and
the Partnership Preferred Securities.
24. Under the Partnership Agreement and the Delaware Limited
Partnership Act, the issuance of the Partnership Preferred Securities is not
subject to preemptive rights.
25. The Partnership Agreement is a valid and legally binding
obligation of the General Partner, enforceable against the General Partner in
accordance with its terms.
26. The issuance and sale by the Trust of the Trust Preferred
Securities, the issuance and sale by the Partnership of the Partnership
Preferred Securities, and the execution, delivery and performance by the Trust
and the Partnership of the Purchase Agreement and the consummation of the
transactions contemplated by the Purchase Agreement do not violate (i) the
Trust Certificate or the Declaration, (ii) the Partnership Certificate or the
Partnership Agreement, or (iii) any Delaware law, rule or regulation applicable
to the Trust or the Partnership.
27. No facts have come to our attention that would lead us to believe
that the Registration Statement (except for financial statements and schedules
and other financial data and information pertaining to natural resource
reserves included therein, as to which we have not been asked to comment), at
the time it became effective or at the date hereof, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and schedules and other
financial data and information pertaining to natural resource reserves included
therein, as to which we have not been asked to comment), as of the date of such
Prospectus and at the date hereof, included or includes an untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
<PAGE> 38
Exhibit C
1. Chase is a New York banking corporation validly existing under the
laws of the State of New York.
2. The Trust Preferred Guarantee Trustee has the requisite power and
authority to execute, deliver and perform its obligations under the Trust
Preferred Securities Guarantee, and has taken all necessary action to authorize
the execution, delivery and performance by it of the Trust Preferred Securities
Guarantee.
3. The Property Trustee has the requisite power and authority to
execute and deliver the Declaration, and has taken all necessary action to
authorize the execution and delivery of the Declaration.
4. The Trust Preferred Securities Guarantee has been duly executed and
delivered by the Trust Preferred Guarantee Trustee and constitutes a legal,
valid and binding obligation of the Trust Preferred Guarantee Trustee,
enforceable against the Trust Preferred Guarantee Trustee in accordance with
its terms, except that certain payment obligations may be enforceable solely
against the assets of the Issuer and except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, liquidation, or
other similar laws applicable to banking corporations affecting the enforcement
of creditors' rights generally, and by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
<PAGE> 1
EXHIBIT 4(a)
CERTIFICATE OF TRUST
The undersigned, the trustees of Enron Capital Trust II, desiring
to form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
1. The name of the business trust being formed hereby
(the "Trust") is "Enron Capital Trust II".
2. The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
3 . This Certificate of Trust shall be effective as of
the date of filing.
Dated: December 23, 1996
/s/ PHILLIP M. SISNEROS
-----------------------------------
Name: Phillip M. Sisneros
Title: Regular Trustee
CHASE MANHATTAN BANK
DELAWARE
/s/ JOHN J. CASHIN
-----------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
<PAGE> 1
EXHIBIT 4(b)
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
ENRON CAPITAL TRUST II
DATED AS OF ___________, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Trust Securities . . . . . . . . . 8
SECTION 2.3 Reports by the Property Trustee . . . . . . . . . . . . 8
SECTION 2.4 Periodic Reports to Property Trustee . . . . . . . . . 8
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . 9
SECTION 2.6 Trust Enforcement Events; Waiver . . . . . . . . . . . 9
SECTION 2.7 Trust Enforcement Event; Notice . . . . . . . . . . . . 10
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . 11
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . 11
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . 13
SECTION 3.8 Powers and Duties of the Property Trustee . . . . . . . 14
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.10 Certain Rights of Property Trustee . . . . . . . . . . 16
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . 18
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . 18
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust
Securities . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . 18
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor . . . . . . . . . . . . 20
SECTION 4.2 Indemnification and Expenses of the Trustee . . . . . . 20
ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities . . . . . 21
SECTION 5.2 Covenants of the Trust Common Securities Holder . . . . 21
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees . . . . . . . . . . . . . . . . . . 21
SECTION 6.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . 21
SECTION 6.3 Property Trustee; Eligibility . . . . . . . . . . . . . 22
SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee
Generally . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.5 Regular Trustees . . . . . . . . . . . . . . . . . . . 22
SECTION 6.6 Delaware Trustee . . . . . . . . . . . . . . . . . . . 23
SECTION 6.7 Appointment, Removal and Resignation of Trustees . . . 23
SECTION 6.8 Vacancies among Trustees . . . . . . . . . . . . . . . 24
SECTION 6.9 Effect of Vacancies . . . . . . . . . . . . . . . . . . 24
SECTION 6.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.11 Delegation of Power . . . . . . . . . . . . . . . . . . 25
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding Trust
Securities . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.2 Redemption of Trust Securities . . . . . . . . . . . . 27
SECTION 8.3 Redemption Procedures . . . . . . . . . . . . . . . . . 28
SECTION 8.4 Voting Rights of Trust Preferred Securities . . . . . . 29
SECTION 8.5 Voting Rights of Trust Common Securities . . . . . . . 31
SECTION 8.6 Paying Agent . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.7 Listing . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited
Partnership Agreement. . . . . . . . . . . . . . . . . . 32
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust . . . . . . . . . . . . . . . . . 33
SECTION 9.2 Liquidation Distribution Upon Termination and Dissolution
of the Trust . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities . . . . . . . . . . . . . 34
SECTION 10.2 Transfer of Certificates . . . . . . . . . . . . . . . 34
SECTION 10.3 Deemed Security Holders . . . . . . . . . . . . . . . . 35
SECTION 10.4 Book-Entry Interests . . . . . . . . . . . . . . . . . 35
SECTION 10.5 Notices to Clearing Agency . . . . . . . . . . . . . . 36
SECTION 10.6 Appointment of Successor Clearing Agency . . . . . . . 36
SECTION 10.7 Definitive Trust Preferred Security Certificates . . . 36
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . 36
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
<S> <C> <C>
SECTION 11.1 Liability . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 11.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 11.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . 37
SECTION 11.4 Indemnification . . . . . . . . . . . . . . . . . . . . 38
SECTION 11.5 Outside Businesses . . . . . . . . . . . . . . . . . . 40
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 12.2 Certain Accounting Matters . . . . . . . . . . . . . . 41
SECTION 12.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 12.4 Withholding . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 13.2 Meetings of the Holders of Trust Securities; Action by
Written Consent . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property Trustee . . 45
SECTION 14.2 Representations and Warranties of Delaware Trustee . . 45
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 15.2 Governing Law . . . . . . . . . . . . . . . . . . . . . 46
SECTION 15.3 Intention of the Parties . . . . . . . . . . . . . . . 47
SECTION 15.4 Headings . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.5 Successors and Assigns . . . . . . . . . . . . . . . . 47
SECTION 15.6 Partial Enforceability . . . . . . . . . . . . . . . . 47
SECTION 15.7 Counterparts . . . . . . . . . . . . . . . . . . . . . 47
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . A2-1
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
------------------- -----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3, 12.2(b)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6, 8.4, 8.5
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
</TABLE>
_______________
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
ENRON CAPITAL TRUST II
____________, 1997
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated
and effective as of ___________, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the Holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established ENRON
CAPITAL TRUST II (the "Trust"), a trust under the Delaware Business Trust Act
(the "Trust Act") pursuant to a Declaration of Trust dated as of _______, 1996,
(the "Original Declaration") and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on ________, 1996, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in the Partnership Preferred Securities;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
wish to amend and restate each and every term and provision of the Original
Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial ownership interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) a term used in this Agreement and not otherwise defined herein
shall have the meaning ascribed to such term in the Limited Partnership
Agreement.
<PAGE> 7
"Affiliate" means, with respect to any specified person, any other
person that directly or indirectly controls or is controlled by, or is under
common control with such specified person.
"Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of the Limited Partnership Agreement.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as set forth in Section 10.4 of this
Declaration.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Certificate" means a Trust Common Security Certificate or a Trust
Preferred Security Certificate.
"Change in 1940 Act Law" means any change on or after the date hereof
in law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority with the result that the Trust is or will be considered an
"investment company" which is required to be registered under the 1940 Act.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Trust Preferred Securities and in whose name or in the name
of a nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book-entry transfers and pledges of beneficial
interests in the Trust Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers and pledges of interest in securities
deposited with the Clearing Agency.
"Closing Date" means ___________, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security Holder of the Trust" means the Company in its
capacity as Holder of the Trust Common Security.
"Company" means Enron Corp., a Delaware corporation.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, director, shareholder, member, partner, employee,
representative or agent of the Trust or its Affiliates.
"Compounded Distributions" has the meaning set forth in Section 7.1(a)
of this Declaration.
2
<PAGE> 8
"Corporate Trust Office" means the principal corporate trust office of
the Property Trustee at which, at any particular time, its corporate trust
business shall be administered, which office at the date hereof is located at
450 West 33rd Street, 15th Floor, New York, NY 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Trust Securities.
"Definitive Trust Preferred Security Certificates" has the meaning set
forth in Section 10.4 of this Declaration.
"Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.
"Distribution" has the meaning set forth in Section 7.1(a) of this
Declaration.
"DTC" means the Depository Trust Company, the initial Clearing Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
11.4(b) of this Declaration.
"Fiscal Period" has the meaning set forth in Section 1.1 of the
Limited Partnership Agreement.
"Fiscal Year" has the meaning set forth in Section 12.1 of this
Declaration.
"General Partner" means the Company in its capacity as the general
partner of the Partnership, its permitted successors, or any successor general
partner in the Partnership admitted as such pursuant to the Limited Partnership
Agreement.
"Global Certificate" has the meaning set forth in Section 10.4 of this
Declaration.
"Holder" means a Person in whose name a Certificate representing a
Trust Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Initial Debentures" has the meaning set forth in Section 7.1(b) of
the Limited Partnership Agreement.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that is controlled by the Company and is not an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act.
"Investment Company" means an investment company as defined in the
1940 Act.
"Investment Guarantee" means any guarantee by the Company with respect
to (1) payment of interest, principal and other payment terms of Affiliate
Investment Instruments that are debt securities of an Investment Affiliate and
(2) the payment of dividends, distributions and other payment terms of
Affiliate Investment Instruments that are preferred or preference stock of an
Investment Affiliate when, as and if declared by such Investment Affiliate.
"Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.
3
<PAGE> 9
"Limited Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Enron Preferred Funding II, L.P. to be
dated as of ________, 1997.
"List of Holders" has the meaning set forth in Section 2.2(a) of this
Declaration.
"Majority in liquidation amount of the Trust Securities" means, except
as provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Trust Securities or all outstanding Trust Securities of the relevant class, as
the case may be.
"Ministerial Action" means, a ministerial action (such as filing a
form or making an election or pursuing some other similar reasonable measure)
which in the sole judgment of the Company has or will cause no adverse effect
on the Trust, the Partnership, the Company, or the holders of the Trust
Securities and will involve no material cost.
"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.
"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
"Officers' Certificate" means, with respect to any Person (who is not
an individual), a certificate signed by two authorized officers of such Person,
and, with respect to a natural person, a certificate signed by such person.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Partnership" means Enron Preferred Funding II, L.P., a Delaware
limited partnership formed pursuant to the Limited Partnership Agreement.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement to
be dated as of ________, 1997, by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred
Securities, as amended or supplemented from time to time.
"Partnership Preferred Securities" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
4
<PAGE> 10
"Partnership Special Event" has the meaning set forth in Section 1.1
of the Limited Partnership Agreement.
"Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.
"Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Security Beneficial Owner" means, with respect to a Book-
Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, or each case in
accordance with the rules of such Clearing Agency).
"Property Account" has the meaning set forth in Section 3.8(c) of this
Declaration.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3 of this Declaration.
"Pro Rata" means, in reference to any distributions on or redemptions
of Trust Securities or the distribution of Partnership Preferred Securities or
any other payment with respect to Trust Securities in connection with a Trust
Special Event or liquidation of the Trust, pro rata to each Holder of Trust
Securities according to the aggregate liquidation amount of the Trust
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Trust Securities outstanding.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Redemption Price" has the meaning set forth in Section 8.2(a) of this
Declaration.
"Regular Trustee" has the meaning set forth in Section 6.1 of this
Declaration.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including
any vice-president, any assistant vice-president, any secretary, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers, who has
direct responsibility for the administration of the Trust, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Rule 3a-5" means Rule 3a-5 under the 1940 Act.
"Securities Act" means the Securities Act of 1933, as amended from
time to time or any successor legislation.
5
<PAGE> 11
"Special Representative" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.
"Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.
"Successor Property Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.
"Successor Trust Securities" has the meaning set forth in Section 3.15
of this Declaration.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii) of
this Declaration.
"Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
a judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted in
connection with an audit of the Company or any of its subsidiaries, the
Partnership, or the Trust, or a threatened challenge asserted in writing
against any other taxpayer that has raised capital through the issuance of
securities that are substantially similar to the Initial Debentures, the
Partnership Preferred Securities, or the Trust Preferred Securities, which
amendment or change is adopted or which decision, pronouncement or proposed
change is announced or which action, clarification or challenge occurs on or
after the date of the prospectus related to the issuance of the Trust Preferred
Securities.
"10% in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Trust Securities or all outstanding Trust Securities of the relevant class, as
the case may be.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
"Trust Common Security" has the meaning set forth in Section 8.1 of
this Declaration.
"Trust Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Trust Common Securities Guarantee" means the Trust Common Securities
Guarantee Agreement to be dated as of ____________, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.
"Trust Dissolution Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Trust Tax Event.
6
<PAGE> 12
"Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Preferred Securities that shall exist
for six consecutive quarterly distribution periods, (ii) a default by the
Company in respect of any of its obligations under the Trust Preferred
Securities Guarantee or (iii) a Partnership Enforcement Event (as defined in
the Limited Partnership Agreement).
"Trust Guarantees" means the Trust Common Securities Guarantee and the
Trust Preferred Securities Guarantee, collectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of a Change in 1940 Act Law, the Trust
is or will be considered an "investment company" which is required to be
registered under the 1940 Act.
"Trust Liquidation" has the meaning set forth in Section 9.2(a) of
this Declaration.
"Trust Preferred Securities Guarantee" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.
"Trust Liquidation Distribution" has the meaning set forth in Section
9.2(a) of this Declaration.
"Trust Preferred Security" has the meaning set forth in Section 8.1(a)
of this Declaration.
"Trust Preferred Security Beneficial Owner" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Trust Preferred Security Certificate" means a certificate
representing a Trust Preferred Security substantially in the form of Exhibit
A-1.
"Trust Redemption Tax Opinion" means an opinion of nationally
recognized independent tax counsel (which may be counsel for the Company)
experienced in such matters that there has been a Trust Tax Event, and
following such Trust Tax Event there is more than an insubstantial risk that
interest payable by one or more of the Investment Affiliates with respect to
the Initial Debentures is not, or will not be, deductible by such Investment
Affiliate for United States federal income tax purposes even if the Partnership
Preferred Securities were distributed to the Holders of the Trust Securities in
liquidation of such Holders' interests in the Trust.
"Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.
"Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.
"Trust Tax Event" means that the Company shall have requested and
received and shall have delivered to the Regular Trustees, an opinion of
nationally recognized tax counsel experienced in such matters (who may be
counsel for the Company) to the effect that there has been a Tax Action that
results in there being more than an insubstantial risk that (i) the Trust is,
or will be subject to United States federal income tax with respect to income
accrued or received on the Partnership Preferred Securities, (ii) the Trust is,
or will be subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable by one or more of the
Investment Affiliates with respect to the Initial Debentures is not, or will
not be, deductible by such Investment Affiliate for United States federal
income tax purposes.
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"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Trust Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the Trust
Securities ("List of Holders") as of such record date, provided that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of
Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity) provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, the Property Trustee shall
provide to the Holders of the Trust Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
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compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in liquidation amount of Trust
Preferred Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Trust Enforcement Event in respect of the
Trust Preferred Securities and its consequences, provided that, if the
underlying event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Preferred Securities
Guarantee or the Limited Partnership Agreement, the Trust Enforcement
Event under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of
greater than a Majority in liquidation amount of the Trust Preferred
Securities to be waived under the Trust Preferred Securities Guarantee
or the Partnership Preferred Securities to be waived under the Limited
Partnership Agreement (a "Super Majority"), the Trust Enforcement
Event under this Declaration may only be waived by the vote of the
Holders of at least the relevant Super Majority in liquidation amount
of the Trust Preferred Securities.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Trust Securities, as permitted by the Trust Indenture Act. Upon such
waiver, any such default shall cease to exist, and any Trust Enforcement Event
with respect to the Trust Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Trust Enforcement
Event with respect to the Trust Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Trust Preferred
Securities of Trust Enforcement Events with respect to the Trust Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Trust Common Securities of any such Trust Enforcement Event with respect to the
Trust Common Securities for all purposes of this Declaration without any
further act, vote, or consent of the Holders of the Trust Common Securities.
(b) The Holders of a Majority in liquidation amount of the Trust
Common Securities may, by vote, on behalf of the Holders of all of the Trust
Common Securities, waive any past Trust Enforcement Event with respect to the
Trust Common Securities and its consequences, provided that, if the underlying
event of default or Partnership Enforcement Event:
(i) is not waivable under the Trust Common Securities
Guarantee or the Limited Partnership Agreement, except where the
Holders of the Trust Common Securities are deemed to have waived such
Trust Enforcement Event under this Declaration as provided below in
this Section 2.6(b), the Trust Enforcement Event under this
Declaration shall also not be waivable; or
(ii) requires the consent or vote of the Holders of a
Super Majority to be waived, except where the Holders of the Trust
Common Securities are deemed to have waived such Trust Enforcement
Event under the Declaration as provided below in this Section 2.6(b),
the Trust Enforcement Event under this Declaration may only be waived
by the vote of the Holders of at least the relevant Super Majority in
liquidation amount of the Trust Common Securities;
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provided further, each Holder of Trust Common Securities will be deemed to have
waived any such Trust Enforcement Event and all Trust Enforcement Events with
respect to the Trust Common Securities and its consequences until all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement Events
have been so cured, waived or otherwise eliminated, the Property Trustee will
be deemed to be acting solely on behalf of the Holders of the Trust Preferred
Securities and only the Holders of the Trust Preferred Securities will have the
right to direct the Property Trustee in accordance with the terms of the Trust
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu
of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this
Section 2.6(b), upon such waiver, any such default shall cease to exist and any
Trust Enforcement Event with respect to the Trust Common Securities arising
therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Trust Enforcement Event with respect to the Trust Common Securities or
impair any right consequent thereon.
(c) A waiver of Partnership Enforcement Events under the Limited
Partnership Agreement by the Property Trustee at the direction of the Holders
of the Trust Preferred Securities constitutes a waiver of the corresponding
Trust Enforcement Event under this Declaration. The foregoing provisions of
this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust
Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is
hereby expressly excluded from this Declaration and the Trust Securities, as
permitted by the Trust Indenture Act.
SECTION 2.7 Trust Enforcement Event; Notice.
The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to the
Holders of the Trust Securities, notices of all defaults with respect to the
Trust Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7 being hereby defined
to be defaults as defined in the Trust Guarantees or the Limited Partnership
Agreement, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Affiliate Investment Instruments or in the payment of
any sinking fund installment established for the Affiliate Investment
Instruments, the Property Trustee shall be protected in withholding such notice
if and so long as a Responsible Officer of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Trust Securities.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Enron Capital Trust II," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Trust Securities. The Trust's activities may be conducted under
the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Enron Corp.,
1400 Smith Street, Houston, Texas 77002. On ten Business Days written notice
to the Holders of Trust Securities, the Regular Trustees may designate another
principal office.
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SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and to use the proceeds from such sale to acquire the
Partnership Preferred Securities, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust to be classified as an
association or a publicly traded partnership taxable as a corporation for
United States federal income tax purposes.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Partnership
Preferred Securities and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) To issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Trust Preferred Securities and
no more than one series of Trust Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Trust Securities, and
the issuance of Trust Securities shall be limited to a one-time, simultaneous
issuance of both Trust Preferred Securities and Trust Common Securities on the
Closing Date;
(b) In connection with the issue and sale of the Trust Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Forms S-1 or S-3 prepared by the Sponsor, including any
amendments thereto, pertaining to the Trust Preferred Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the Trust Preferred
Securities in any State in which the Sponsor has determined to qualify
or register such Trust Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq Stock Market's National Market for
listing upon notice of issuance of any Trust Preferred Securities;
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(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by
the Sponsor, relating to the registration of the Trust Preferred
Securities under Section 12(b) of the Exchange Act; and
(v) execute and enter into an underwriting agreement
providing for the sale of the Trust Preferred Securities and perform
the duties and obligations of the Trust thereunder;
(c) To acquire the Partnership Preferred Securities with the
proceeds of the sale of the Trust Preferred Securities and the Trust Common
Securities; provided, however, that the Regular Trustees shall cause legal
title to the Partnership Preferred Securities to be held of record in the name
of the Property Trustee for the benefit of the Holders of the Trust Preferred
Securities and the Holders of Trust Common Securities;
(d) To give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Trust Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining from taking any Ministerial Action in relation to a Trust Special
Event;
(e) To establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Trust Preferred Securities and Holders of Trust
Common Securities as to such actions and applicable record dates;
(f) To give prompt written notice to the Holders of the Trust
Securities of any notice received from the Partnership of the General Partner's
election not to make a current, quarterly distribution on the Partnership
Preferred Securities under the Limited Partnership Agreement;
(g) To take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Trust Securities;
(h) To bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(f), the Property Trustee
has the exclusive power to bring such Legal Action;
(i) To employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(j) To cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(k) To give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;
(l) To incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(m) To act as, or appoint another Person to act as, registrar and
transfer agent for the Trust Securities;
(n) To execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) To take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Trust
Preferred Securities or to enable the Trust to effect the purposes for which
the Trust was created;
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(p) To take any action, or to take no action, not inconsistent
with this Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not
limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the 1940 Act; and
(ii) taking no action which would be reasonably likely to
cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal
income tax purposes;
provided that such action does not adversely affect the interests of Holders;
and
(q) To take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Partnership pursuant to Section 9.1 of the
Limited Partnership Agreement.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall cause the Trust not to:
(a) invest any proceeds received by the Trust from holding the
Partnership Preferred Securities, but shall distribute all such proceeds to
Holders of Trust Securities pursuant to the terms of this Declaration and of
the Trust Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans or incur any indebtedness or acquire any
securities other than the Partnership Preferred Securities;
(e) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Trust Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Trust
Securities;
(g) other than as set forth herein, (A) cause the Special
Representative to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative or exercising
any trust or power conferred upon the Special Representative with respect to
the Partnership Preferred Securities, the
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Affiliate Investment Instruments, and the Investment Guarantees, (B) cause the
Special Representative to waive any past default that is waivable under the
Limited Partnership Agreement, the Affiliate Investment Instruments or the
Investment Guarantees, (C) cause the Special Representative to exercise any
right to rescind or annul any declaration that the principal of, or other
amounts in respect of, any Affiliate Investment Instruments is due and payable
or (D) consent to any amendment, modification or termination of the Limited
Partnership Agreement or the Partnership Preferred Securities where such
consent shall be required; and
(h) other than in connection with the liquidation of the Trust
pursuant to a Trust Special Event or upon redemption of all the Trust
Securities, file a certificate of cancellation of the Trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Partnership Preferred Securities shall
be owned by and held of record in the name of the Property Trustee in trust for
the benefit of the Holders of the Trust Securities. The right, title and
interest of the Property Trustee to the Partnership Preferred Securities shall
vest automatically in each Person who may hereafter be appointed as Property
Trustee in accordance with Section 6.7. Such vesting and cessation of title
shall be effective whether or not conveyancing documents with regard to the
Partnership Preferred Securities have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Partnership Preferred Securities to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Account") in the name of and
under the exclusive control of the Property Trustee on behalf of the
Holders of the Trust Securities and, upon the receipt of payments of
funds made in respect of the Partnership Preferred Securities held by
the Property Trustee, deposit such funds into the Property Account and
make payments to the Holders of the Trust Preferred Securities and
Holders of the Trust Common Securities from the Property Account in
accordance with Section 7.1. Funds in the Property Account shall be
held uninvested until disbursed in accordance with this Declaration.
The Property Account shall be an account that is maintained with a
banking institution authorized to exercise corporate trust powers and
having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Trust
Preferred Securities and the Trust Common Securities to the extent the
Partnership Preferred Securities are redeemed; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Trust Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Partnership Preferred
Securities to Holders of Trust Securities upon the occurrence of a
Trust Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Trust Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with (i) a Trust Enforcement Event of which a
Responsible Officer of the Property Trustee has actual knowledge or (ii) the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act.
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(f) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a Holder of Partnership Preferred
Securities and, if a Trust Enforcement Event occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Trust Securities,
enforce its rights as Holder of the Partnership Preferred Securities subject to
the rights of the Holders pursuant to the terms of such Trust Securities.
(g) The Property Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(h) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Trust
Securities pursuant to the terms of the Trust Securities; or
(ii) a Successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 6.7.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing or waiver of all Trust Enforcement
Events that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Declaration and no implied covenants shall
be read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event
and after the curing or waiving of all such Trust Enforcement Events
that may have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; but in the case of any
such certificates
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or opinions that by any provision hereof are specifically
required to be furnished to the Property Trustee, the Property
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) subject to the requirement of the Property Trustee
receiving a tax opinion as set forth in Section 8.4(d) or 8.5(c), as
the case may be, the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Trust Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Partnership
Preferred Securities and the Property Account shall be to deal with
such property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or
sufficiency of the Partnership Preferred Securities or the payment of
any taxes or assessments levied thereon or in connection therewith;
(vii) money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Property Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and
(viii) the Property Trustee shall not be responsible
for monitoring the compliance by the Regular Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees acting on behalf of the Trust contemplated by this
Declaration shall be sufficiently evidenced by an Officers'
Certificate;
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(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may, at the expense of the
Sponsor, consult with counsel or other experts and the advice or
opinion of such counsel and experts with respect to legal matters or
advice within the scope of such experts' area of expertise shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion; such counsel may be counsel to
the Sponsor or any of its Affiliates, and may include any of its
employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless (a) such Holder
shall have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the fees,
charges, costs, expenses (including attorneys' fees and expenses and
the expenses of the Property Trustee's agents, nominees or custodians)
and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Property Trustee and (b) the Property Trustee has
obtained the legal opinions, if any, required by Section 8.4(d) or
8.5(c), as the case may be, of this Agreement; provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of a Trust Enforcement Event, of
its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the Trust
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders of the Trust Securities which instructions may only
be given by the Holders of the same proportion in liquidation amount
of the Trust Securities as would be entitled to direct the Property
Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy
or right or taking such
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other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions; provided, however, that the Property Trustee shall not
be required to take any action unless it shall have obtained such
legal opinions, if any, required by Sections 8.4(d) or 8.5(c), as the
case may be, of this Agreement; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration.
In the event that the Trustee is also acting as authenticating
agent, Paying Agent, transfer agent and security registrar, the rights
and protections afforded to the Trustee pursuant to this Article III
shall also be afforded to such authenticating agent, Paying Agent,
transfer agent and security registrar.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any provision of this Declaration other than Section
6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration. Except
as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act. In no event shall the Property Trustee or the Delaware
Trustee be liable for any act or omission of any of the Regular Trustees
hereunder.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust Securities.
The recitals contained in this Declaration and the Trust Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have perpetual existence.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
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(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Trust Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by a trust organized as such under the laws of any State of the United States;
provided that:
(i) if the Trust is not the survivor, such successor
entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of
the Trust under the Trust Securities; or
(B) substitutes for the Trust Preferred
Securities other securities having substantially the same
terms as the Trust Preferred Securities (the "Successor Trust
Securities") so long as the Successor Trust Securities rank
the same as the Trust Preferred Securities rank with respect
to Distributions, assets and payments upon liquidation,
redemption and otherwise;
(ii) the Company expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the Holder of the Partnership Preferred
Securities;
(iii) the Trust Preferred Securities or any Successor Trust
Securities are listed, or any Successor Trust Securities will be
listed upon notification of issuance, on any national securities
exchange or with another organization on which the Trust Preferred
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Trust Preferred Securities (including
any Successor Trust Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Trust Preferred Securities (including
any Successor Trust Securities) in any material respect;
(vi) such Successor Entity has a purpose identical to that
of the Trust;
(vii) the Company guarantees the obligations of such
Successor Entity under the Successor Trust Securities at least to the
extent provided by the Trust Guarantees; and
(viii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel (which may be counsel to the Sponsor)
to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement will not adversely affect the rights, preferences
and privileges of the Holders of the Trust Preferred
Securities (including any Successor Trust Securities) in any
material respect (other than with respect to any dilution of
the Holders' interest in the new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company under the 1940 Act;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will not be classified as an association or a publicly
traded partnership taxable as a corporation for United States
federal income tax purposes; and
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(D) following such merger, consolidation,
amalgamation or replacement, the Partnership will not be
classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax
purposes.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Trust
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or Successor Entity
to be classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) To prepare for filing by the Trust with the Commission a
registration statement on Form S-1 or S-3 in relation to the Trust Preferred
Securities, including any amendments thereto;
(b) To determine the states in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such states;
(c) To prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing upon notice of issuance of any Trust Preferred Securities;
(d) To prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Trust
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) To negotiate the terms of an underwriting agreement and any
pricing agreement providing for the sale of the Trust Preferred Securities.
SECTION 4.2 Indemnification and Expenses of the Trustee
The Partnership agrees, and to the extent the Partnership fails to do
so, the Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee and their respective officers, directors, employees and agents for, and
to hold each of them harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Property Trustee or the
Delaware Trustee, as the case may be, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending either of them against any claim or liability
in connection with the exercise or performance of any of their respective
powers or duties hereunder; the provisions of this Section 4.2 shall survive
the resignation or removal of the Delaware Trustee or the Property Trustee or
the termination of this Declaration.
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ARTICLE V
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Company's Purchase of Trust Common Securities.
On the Closing Date the Company will purchase all of the Trust Common
Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Trust Preferred Securities are
sold.
SECTION 5.2 Covenants of the Trust Common Securities Holder.
For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly 100 percent ownership of the
Trust Common Securities, (ii) to cause the Trust to remain a statutory business
trust and not to voluntarily dissolve, wind up, liquidate, or be terminated,
except as permitted by this Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an investment company
for purposes of the 1940 Act, and (iv) to take no action which would be
reasonably likely to cause the Trust to be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes.
ARTICLE VI
TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) At any time before the issuance of any Trust Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) After the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Trust Common Securities voting as a class at a
meeting of the Holders of the Trust Common Securities; provided, however, that
the number of Trustees shall in no event be less than three (3); provided
further that (1) if required by the Business Trust Act, one Trustee is the
Delaware Trustee; (2) there shall be at least one Trustee who is an employee or
officer of, or is affiliated with the Company (each, a "Regular Trustee"); and
(3) one Trustee shall be the Property Trustee for so long as this Declaration
is required to qualify as an indenture under the Trust Indenture Act, and such
Property Trustee may also serve as Delaware Trustee if it meets the applicable
requirements.
SECTION 6.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) A natural person who is a resident of the State of Delaware;
or
(b) If not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).
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SECTION 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 6.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign
in the manner and with the effect set forth in Section 6.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Trust Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Trust Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Chase Manhattan Bank
SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 6.5 Regular Trustees.
The initial Regular Trustees shall be:
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any
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documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6.
SECTION 6.6 Delaware Trustee.
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
SECTION 6.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.7(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Trust Securities, by
written instrument executed by the Sponsor; and
(ii) after the issuance of any Trust Securities, by vote
of the Holders of a Majority in liquidation amount of the Trust Common
Securities voting as a class at a meeting of the Holders of the Trust
Common Securities.
(b) (i) the Trustee that acts as Property Trustee shall not
be removed in accordance with Section 6.7(a) until a successor Trustee
possessing the qualifications to act as Property Trustee under Section
6.3 (a "Successor Property Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the Regular Trustees and
the Sponsor;
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with Section 6.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor;
(iii) no such removal of the Property Trustee or the
Delaware Trustee shall be effective until all of the fees, charges,
and expenses such entity have been paid.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the Holders of the Trust Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
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executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee; and
(iii) no such resignation of the Property Trustee or the
Delaware Trustee shall be effective until all of the fees, charges,
and expenses such entity have been paid.
(d) The Holders of the Trust Common Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
6.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
6.7 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or successor
Delaware Trustee, as the case may be.
SECTION 6.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees
is increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.7.
SECTION 6.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee
shall not operate to annul the Trust. Whenever a vacancy in the number of
Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 6.10 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a
brief statement of the time, place and anticipated purposes of the meeting.
The presence (whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting
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by the unanimous written consent of the Regular Trustees. Notwithstanding the
foregoing, any and all actions of the Regular Trustees may be taken by the
unanimous written consent of all Regular Trustees.
SECTION 6.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Property Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1 Distributions.
(a) Holders of Trust Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of ___% of the stated
liquidation amount of $25 per Trust Security, calculated on the basis of a 360-
day year consisting of twelve 30-day months. For any period shorter than a
full 90-day quarter, distributions will be computed on the basis of the actual
number of days elapsed in such 90-day quarter. Distributions shall be made on
the Trust Preferred Securities and the Trust Common Securities on a Pro Rata
basis. Distributions on the Trust Securities shall, from the date of original
issue, accrue and be cumulative and shall be payable quarterly only to the
extent that the Trust has funds available for the payment of such Distributions
in the Property Account. Distributions not paid on the scheduled payment date
will accumulate and compound quarterly at the rate of ____% per annum
("Compounded Distributions"). "Distributions" shall mean ordinary cumulative
distributions in respect of each Fiscal Period together with any Compounded
Distributions. If and to the extent that the Partnership makes a distribution
on the Partnership Preferred Securities held by the Property Trustee or the
Company makes a payment under the Partnership Guarantee (the amount of any such
partnership distribution, including any compounded partnership distributions,
or guarantee payment being a "Payment Amount"), the Trust shall and the
Property Trustee is directed, to the extent funds are available for that
purpose pursuant to Section 7.1(c), to make a Pro Rata Distribution of the
Payment Amount to Holders.
(b) Distributions on the Trust Securities will be cumulative, will
accrue from the date of initial issuance and will be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31, commencing
___________, 1997, when, as and if available for payment, by the Property
Trustee, except as otherwise described below. If Distributions are not paid
when scheduled, the accrued Distributions shall be paid to the Holders of
record of Trust Securities as they appear on the books and records of the Trust
on the record date as determined under Section 7.1(d) below.
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(c) Amounts available to the Trust for distribution to the Holders
of the Trust Securities will be limited to payments received by the Trust from
the Partnership on the Partnership Preferred Securities or from the Company on
the Partnership Guarantees paid by the Company to the Trust. If the Property
Trustee, as the holder of the Partnership Preferred Securities for the benefit
of the Holders of the Trust Securities, receives written notice of any
determination by the Partnership not to pay distributions on such Partnership
Preferred Securities, the Property Trustee shall give notice of such
determination to the Holders.
(d) Distributions on the Trust Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record dates, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through
the Property Trustee who will hold amounts received in respect of the
Partnership Preferred Securities in the Property Account for the benefit of the
Holders of the Trust Securities. In the event that the Trust Securities do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates. In the event that any date on
which distributions are payable on the Trust Securities is not a Business Day,
payment of the distribution payable on such date will be made on the next
succeeding day which is a Business Day (without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day (without any reduction in interest or other payments in
respect of such early payment).
ARTICLE VIII
ISSUANCE OF TRUST SECURITIES
SECTION 8.1 Designation and General Provisions Regarding Trust Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust (the "Trust Preferred Securities") and one
class of common securities representing undivided beneficial ownership
interests in the assets of the Trust (the "Trust Common Securities") as
follows:
(i) Trust Preferred Securities. ___________Trust
Preferred Securities of the Trust with an aggregate liquidation amount
with respect to the assets of the Trust of ____________________ and a
liquidation amount with respect to the assets of the Trust of $25 per
preferred security, are hereby designated for the purpose of
identification only as ____% Trust Originated Preferred SecuritiesSM
(the "Trust Preferred Securities"). The Trust Preferred Security
Certificates evidencing the Trust Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Trust Preferred Securities
are listed.
(ii) Trust Common Securities. ___________ Trust Common
Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of __________________ and a
liquidation amount with respect to the assets of the Trust of $25 per
common security, are hereby designated for the purposes of
identification only as ____% Trust Common Securities (the "Trust
Common Securities" and, together with the Trust Preferred Securities,
the "Trust Securities"). The Trust Common Security Certificates
evidencing the Trust Common Securities shall be substantially in the
form of Exhibit A-2 to the Declaration, with such changes and
additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
(b) Except as provided in Section 9.2(b) of this Declaration, the
Trust Preferred Securities rank pari passu and payment thereon shall be made
Pro Rata with the Trust Common Securities. The Trust shall issue no securities
or other interests in the assets of the Trust other than the Trust Preferred
Securities and the Trust Common Securities.
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(c) Any Regular Trustee shall sign the Trust Securities for the
Trust by manual or facsimile signature. In case any Regular Trustee of the
Trust who shall have signed any of the Trust Securities shall cease to be a
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Trust Security, shall be the Regular Trustees
of the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee. Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation of any stock exchange on which Trust Securities may
be listed, or to conform to usage.
A Trust Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Property Trustee. Such signature
shall be conclusive evidence that the Trust Security has been authenticated
under this Declaration.
Upon a written order of the Trust, signed by at least one Regular
Trustee, directing the Property Trustee to authenticate and deliver Trust
Securities, the Property Trustee shall authenticate and deliver the Trust
Securities for original issue. The aggregate number of Trust Securities
outstanding at any time shall not exceed the number set forth in the Terms of
the Trust Securities.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Trust Securities. An authenticating agent may
authenticate Trust Preferred Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property
Trustee includes authentication by such agent. An authenticating agent has the
same rights as the Property Trustee to deal with the Sponsor or an Affiliate of
the Sponsor.
(d) The consideration received by the Trust for the issuance of
the Trust Securities shall constitute a contribution to the capital of the
Trust and shall not constitute a loan to the Trust.
(e) Upon issuance of the Trust Securities as provided in this
Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable, subject to Section 11.1 with respect to
the Trust Common Securities.
(f) Every Person, by virtue of having become a Holder or a Trust
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 8.2 Redemption of Trust Securities.
(a) Upon a purchase of the Partnership Preferred Securities by the
Partnership upon redemption or otherwise, the proceeds from such purchase shall
be simultaneously applied Pro Rata to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
purchased or redeemed for an amount equal to $25 per Trust Security plus an
amount equal to accrued and unpaid Distributions, including any Compounded
Distributions thereon through the date of the redemption or such lesser amount
as shall be received by the Trust in respect of the Partnership Preferred
Securities so purchased or redeemed as calculated by the Regular Trustees (the
"Redemption Price"). Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) If fewer than all the outstanding Trust Securities are to be
so redeemed, the Trust Common Securities and the Trust Preferred Securities
will be redeemed Pro Rata and the Trust Preferred Securities to be redeemed
will be redeemed as described in Section 8.3 below.
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(c) If, at any time, a Trust Special Event shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days' notice with the
result that, after satisfaction of creditors, if any, of the Trust, Partnership
Preferred Securities with an aggregate principal amount equal to the aggregate
stated liquidation amount of, with a distribution rate identical to the
distribution rate of, and accrued and unpaid distributions equal to accrued and
unpaid distributions on, and having the same record date for payment as, the
Trust Preferred Securities and the Trust Common Securities outstanding at such
time would be distributed on a Pro Rata basis to the Holders of the Trust
Preferred Securities and the Trust Common Securities in liquidation of such
Holders' interests in the Trust; provided, however, that if at the time there
is available to the Trust the opportunity to eliminate, within such 90-day
period, the Trust Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure which in the sole judgment of the Sponsor has or will cause no adverse
effect on the Trust, the Partnership, the Sponsor or the Holders of the Trust
Securities and will involve no material cost, the Trust will pursue such
measure in lieu of dissolution or (ii) cause the Trust Preferred Securities to
remain outstanding, provided that in the case of this clause (ii), the Sponsor
shall pay any and all expenses incurred by or payable by the Trust attributable
to the Trust Special Event. Furthermore, if in the case of the occurrence of a
Trust Tax Event, the Regular Trustees have received a Trust Redemption Tax
Opinion, then the General Partner shall have the right, within 90 days
following the occurrence of such Trust Tax Event, to elect to cause the
Partnership to redeem the Partnership Preferred Securities in whole (but not in
part) for cash upon not less than 30 nor more than 60 days' notice and promptly
following such redemption, the Trust Securities will be redeemed by the Trust
at the Redemption Price.
(d) If the Partnership Preferred Securities are distributed to the
Holders of the Trust Preferred Securities, the Sponsor will use its best
efforts to cause the Partnership Preferred Securities to be listed on the New
York Stock Exchange or on such other national securities exchange or similar
organization as the Trust Preferred Securities are then listed or quoted.
(e) On the date fixed for any distribution of Partnership
Preferred Securities, upon dissolution of the Trust, (i) the Trust Preferred
Securities and the Trust Common Securities will no longer be deemed to be
outstanding and (ii) certificates representing Trust Securities will be deemed
to represent the Partnership Preferred Securities having an aggregate principal
amount equal to the stated liquidation amount of, and bearing accrued and
unpaid distributions equal to accrued and unpaid distributions on, such Trust
Securities until such certificates are presented to the Sponsor or its agent
for transfer or reissuance.
SECTION 8.3 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Partnership Preferred Securities in exchange for, the Trust Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to each
Holder of Trust Securities to be redeemed or exchanged not fewer than 30 nor
more than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for redemption of
the Partnership Preferred Securities. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this Section 8.3, a Redemption/ Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Trust Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Trust Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(b) In the event that fewer than all the outstanding Trust
Securities are to be redeemed, the Trust Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Trust Securities, provided that, in
respect of Trust Preferred Securities registered in the name of and held of
record by DTC or its nominee (or any successor Clearing Agency or its nominee)
or any nominee, the distribution of the proceeds of such redemption
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will be made to each Clearing Agency Participant (or Person on whose behalf
such nominee holds such securities) in accordance with the procedures applied
by such agency or nominee.
(c) If Trust Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Partnership Preferred Securities are redeemed as set out in this Section 8.3
(which notice will be irrevocable), then (A) while the Trust Preferred
Securities are in book-entry only form, by 12:00 noon, New York City time, on
the redemption date, the Property Trustee will deposit irrevocably with the DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient
to pay the applicable Redemption Price with respect to the Trust Preferred
Securities and will give the DTC irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities, and (B)
with respect to Trust Preferred Securities issued in definitive form and Trust
Common Securities, the Property Trustee will pay the relevant Redemption Price
to the Holders of such Trust Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been given and
funds deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Trust Securities so
called for redemption and all rights of Holders of such Trust Securities will
cease, except the right of the Holders of such Trust Securities to receive the
Redemption Price, but without interest on such Redemption Price. If any date
fixed for redemption of Trust Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day (without any reduction in interest or other payments in respect of such
early payment). If payment of the Redemption Price in respect of any Trust
Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant Trust
Guarantee, Distributions on such Trust Securities will continue to accrue at
the then applicable rate from the original redemption date to the actual date
of payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price. For
these purposes, the applicable Redemption Price shall not include Distributions
which are being paid to Holders who were Holders on a relevant record date.
Upon satisfaction of the foregoing conditions, then immediately prior to the
close of business on the date of such deposit or payment, all rights of Holders
of such Trust Preferred Securities so called for redemption will cease, except
the right of the Holders to receive the Redemption Price, but without interest
on such Redemption Price, and from and after the date fixed for redemption,
such Trust Preferred Securities will not accrue distributions or bear interest.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Trust Securities that
have been called for redemption.
(d) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding Trust
Preferred Securities by tender, in the open market or by private agreement.
SECTION 8.4 Voting Rights of Trust Preferred Securities.
(a) Except as provided under Sections 2.6, 6.1(b) and this
Article VIII and as otherwise required by the Business Trust Act, the Trust
Indenture Act and other applicable law, the Holders of the Trust Preferred
Securities will have no voting rights.
(b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 8.4(d) below, the
Holders of a Majority in liquidation amount of the Trust Preferred Securities
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as Holder of
the Partnership Preferred Securities, to (i) exercise the remedies available to
it under the Limited Partnership Agreement as a Holder of the Partnership
Preferred Securities, including the right to direct the Special Representative
of the Partnership as elected by the
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Holders of the Partnership Preferred Securities in accordance with the Limited
Partnership Agreement (A) to enforce the Partnership's creditors rights and
other rights with respect to the Affiliate Investment Instruments and any
Investment Guarantees, (B) to enforce the rights of the Holders of the
Partnership Preferred Securities under the Partnership Guarantee, and (C) to
enforce the rights of the Holders of the Partnership Preferred Securities to
receive distributions (if and to the extent such distributions have been
declared out of funds legally available therefor by the General Partner in its
sole discretion) on the Partnership Preferred Securities or (ii) consent to any
amendment, modification, or termination of the Limited Partnership Agreement or
the Partnership Preferred Securities where such consent shall be required;
provided, however, that where a consent or action under the Limited Partnership
Agreement would require the consent or act of the Holders of more than a
majority of the aggregate liquidation amount of Partnership Preferred
Securities affected thereby, only the Holders of the percentage of the
aggregate stated liquidation amount of the Trust Preferred Securities which is
at least equal to the percentage required under the Limited Partnership
Agreement may direct the Property Trustee to give such consent or take such
action.
(c) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Preferred
Securities has made a written request, such Holder of record of Trust Preferred
Securities may institute a legal proceeding directly against the General
Partner or the Special Representative, to enforce the Property Trustee's rights
under the Limited Partnership Agreement without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument, then a Holder of Trust Preferred Securities may directly institute
a proceeding against such Investment Affiliate for enforcement of payment with
respect to such Affiliate Investment Instrument.
(d) The Property Trustee shall notify all Holders of the Trust
Preferred Securities of any notice of any Partnership Enforcement Event
received from the General Partner with respect to the Partnership Preferred
Securities and the Affiliate Investment Instruments. Such notice shall state
that such Partnership Enforcement Event also constitutes a Trust Enforcement
Event. Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 8.4(b)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that as a result of such action, the Trust will not be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes and each Holder will
be treated as owning an undivided beneficial ownership interest in the
Partnership Preferred Securities.
(e) In the event the consent of the Property Trustee, as the
Holder of the Partnership Preferred Securities, is required under the Limited
Partnership Agreement with respect to any amendment, modification or
termination of the Limited Partnership Agreement, the Property Trustee shall
request the direction of the Holders of the Trust Securities with respect to
such amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Trust Securities voting together as a single class; provided,
however, that where a consent under the Limited Partnership Agreement would
require the consent of the Holders of more than a majority of the aggregate
principal amount of the Partnership Preferred Securities, the Property Trustee
may only give such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities. The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Trust Securities unless the Property Trustee
has obtained an opinion of tax counsel to the effect that as a result of such
action, the Trust will not be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
(f) A waiver of a Partnership Enforcement Event with respect to
the Partnership Preferred Securities will constitute a waiver of the
corresponding Trust Enforcement Event.
(g) Any required approval or direction of Holders of Trust
Preferred Securities may be given at a separate meeting of Holders of Trust
Preferred Securities convened for such purpose, at a meeting of all of the
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Holders of Trust Securities or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which Holders of Trust Preferred
Securities are entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of record
of Trust Preferred Securities. Each such notice will include a statement
setting forth the following information: (i) the date of such meeting or the
date by which such action is to be taken; (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought; and (iii)
instructions for the delivery of proxies or consents.
(h) No vote or consent of the Holders of Trust Preferred
Securities will be required for the Trust to redeem and cancel Trust Preferred
Securities or distribute Partnership Preferred Securities in accordance with
the Declaration.
(i) Notwithstanding that Holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Trust Securities that are owned at such time by the Company or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Trust Securities
were not outstanding, provided, however that persons otherwise eligible to vote
to whom the Company or any of its subsidiaries have pledged Trust Preferred
Securities may vote or consent with respect to such pledged Trust Preferred
Securities under any of the circumstances described herein.
(j) Holders of the Trust Preferred Securities will have no rights
to appoint or remove the Regular Trustees, who may be appointed, removed or
replaced solely by the Company, as the Holder of all of the Trust Common
Securities.
SECTION 8.5 Voting Rights of Trust Common Securities.
(a) Except as provided under this Section 8.5 or as otherwise
required by the Business Trust Act, the Trust Indenture Act or other applicable
law or provided by the Declaration, the Holders of the Trust Common Securities
will have no voting rights.
(b) The Holders of the Trust Common Securities are entitled,
subject to Article VI hereof, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Trust Enforcement Events with respect to the Trust Preferred Securities have
been cured, waived, or otherwise eliminated and subject to the requirement of
the Property Trustee obtaining a tax opinion in certain circumstances set forth
in this paragraph (c), the Holders of a Majority in liquidation amount of the
Trust Common Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Partnership Preferred Securities, to (i) exercise the remedies
available to it under the Limited Partnership Agreement as a Holder of the
Partnership Preferred Securities, including the right to direct the Special
Representative of the Partnership as elected by the Holders of the Partnership
Preferred Securities in accordance with the Limited Partnership Agreement (A)
to enforce the Partnership's creditors rights and other rights with respect to
the Affiliate Investment Instruments and any Investment Guarantees, (B) to
enforce the rights of the Holders of the Partnership Preferred Securities under
the Partnership Guarantee, and (C) to enforce the rights of the Holders of the
Partnership Preferred Securities to receive distributions (if and to the extent
such distributions have been declared out of funds legally available therefor
by the General Partner in its sole discretion) on the Partnership Preferred
Securities or (ii) consent to any amendment, modification, or termination of
the Limited Partnership Agreement or the Partnership Preferred Securities where
such consent shall be required; provided, however, that where a consent or
action under the Limited Partnership Agreement would require the consent or act
of the Holders of more than a majority of the aggregate liquidation amount of
Partnership Preferred Securities affected thereby, only the Holders of the
percentage of the aggregate stated liquidation amount of the Trust Common
Securities which is at least equal to the percentage required under the Limited
Partnership Agreement
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may direct the Property Trustee to give such consent or take such action.
Except with respect to directing the time, method, and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clause 8.5(c)(i) and (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that, as a result of such action, for United States federal income tax
purposes the Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation.
(d) If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Common
Securities has made a written request, such Holder of record of Trust Common
Securities may directly institute a legal proceeding directly against the
Company, as General Partner of the Partnership or the Special Representative,
to enforce the Property Trustee's rights under the Partnership Preferred
Securities without first instituting any legal proceeding against the Property
Trustee or any other person or entity. Notwithstanding the foregoing, if a
Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a Holder of Trust
Common Securities may directly institute a proceeding against such Investment
Affiliate for enforcement of payment with respect to such Affiliate Investment
Instrument.
(e) A waiver of a Partnership Enforcement Event with respect to
the Partnership Preferred Securities will constitute a waiver of the
corresponding Trust Enforcement Event.
(f) Any required approval or direction of Holders of Trust Common
Securities may be given at a separate meeting of Holders of Trust Common
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which Holders of Trust Common Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Trust Common
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
(g) No vote or consent of the Holders of the Trust Common
Securities shall be required for the Trust to redeem and cancel Trust Common
Securities or to distribute Partnership Preferred Securities in accordance with
the Declaration and the terms of the Trust Securities.
SECTION 8.6 Paying Agent.
In the event that the Trust Preferred Securities are not in book-entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where the Trust Preferred
Securities may be presented for payment ("Paying Agent). The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent. The Trust may change any Paying Agent without prior
notice to any Holder. The Trust shall notify the Property Trustee of the name
and address of any Paying Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Property
Trustee shall act as such. The Trust or any of its Affiliates may act as
Paying Agent. The Chase Manhattan Bank shall initially act as Paying Agent for
the Trust Preferred Securities and the Trust Common Securities.
SECTION 8.7 Listing
The Sponsor shall use its best efforts to cause the Trust Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 8.8 Acceptance of Guarantee and Agreements, Limited Partnership
Agreement.
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Each Holder of Trust Preferred Securities and Trust Common Securities,
by the acceptance thereof, agrees to the provisions of the applicable Trust
Guarantee, the Partnership Guarantee, and the Investment Guarantee,
respectively, including the subordination provisions therein.
ARTICLE IX
TERMINATION AND LIQUIDATION OF THE TRUST
SECTION 9.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy, insolvency or dissolution of the
Holder of Trust Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Sponsor, the filing of a
certificate of cancellation with respect to the Trust after having
obtained the consent of at least a Majority in liquidation amount of
the Trust Securities, voting together as a single class, to file such
certificate of cancellation, or the revocation of the Sponsor's
charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Sponsor or the Trust;
(iv) when all of the Trust Securities shall have been
called for redemption and the amounts necessary for redemption thereof
shall have been paid to the Holders in accordance with the terms of
the Trust Securities;
(v) upon the election of the Regular Trustees, following
the occurrence and continuation of a Trust Special Event, pursuant to
which the Trust shall have been dissolved in accordance with the terms
of the Trust Securities and all of the Partnership Preferred
Securities shall have been distributed to the Holders of Trust
Securities in exchange for all of the Trust Securities; or
(vi) before the issuance of any Trust Securities, with the
consent of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 9.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article XI shall survive the
termination of the Trust.
SECTION 9.2 Liquidation Distribution Upon Termination and Dissolution of
the Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Trust
Liquidation"), the Holders of the Trust Preferred Securities on the date of the
Trust Liquidation will be entitled to receive, out of the assets of the Trust
available for distribution to Holders of Trust Securities after satisfaction of
the Trusts' liabilities and creditors, distributions in cash or other
immediately available funds in an amount equal to the aggregate of the stated
liquidation amount of $25 per Trust Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities in an aggregate stated liquidation amount
equal to the aggregate stated liquidation amount of, with a distribution rate
identical to the distribution rate of, and accrued and unpaid distributions
equal to accrued and unpaid distributions on, such Trust Securities shall be
distributed on a Pro Rata basis to the Holders of the Trust Securities in
exchange for such Trust Securities.
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(b) If, upon any such Trust Liquidation, the Trust Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Trust Liquidation Distribution, then,
except as provided below, the amounts payable directly by the Trust on the
Trust Securities shall be paid on a Pro Rata basis. The Holders of the Trust
Common Securities will be entitled to receive distributions upon any such Trust
Liquidation Pro Rata with the Holders of the Trust Preferred Securities except
that if the Company is in default on any of its obligations under the Trust
Preferred Securities Guarantee, the Partnership Guarantee, or any Investment
Guarantee, or any Investment Event of Default has occurred and is continuing
with respect to an Affiliate Investment Instrument, the Trust Preferred
Securities shall have a preference over the Trust Common Securities with regard
to such distributions as provided below. Such preference is effectuated by the
Holder of the Trust Common Securities hereby agreeing to provide limited
recourse guarantees as follows: (i) to the Holders of the Trust Preferred
Securities, of the Company's obligations under the Trust Preferred Securities
Guarantee; (ii) to the Trust and the Holders of the Trust Preferred Securities,
of the Company's obligations under the Partnership Guarantee; and (iii) to the
Partnership and the Holders of the Trust Preferred Securities, of the Company's
obligations under any Investment Guarantee and/or the obligations of any
Investment Affiliate under an Affiliate Investment Instrument. In the case of
the limited recourse guarantee given by the Holder of the Trust Common
Securities to the Partnership and the Holder of the Trust Preferred Securities
in respect of the Company's obligations under any Investment Guarantee and/or
any Investment Affiliate's obligations under an Affiliate Investment
Instrument, (i) the Trust Common Securities Holder will be deemed to have
pledged the amount due in respect of its Trust Common Securities upon a
liquidation of the Trust to the Partnership and the Holders of Trust Preferred
Securities; (ii) the Trust Common Securities Holder will be deemed to have paid
such amount to the Partnership in respect of such defaulted Investment
Guarantee and/or Affiliate Investment Instrument, as the case may be; (iii) the
Partnership will be deemed to have paid such amount to the Trust; and (iv) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of Trust Preferred Securities (on a pro rata basis among such Trust Preferred
Securities Holders) in respect of the Trust Common Securities Holder's pledge
of such amounts to such Trust Preferred Securities Holders. In the case of a
limited recourse guarantee given by the Holder of the Trust Common Securities
to the Trust and the Holders of the Trust Preferred Securities in respect of
the Company's obligations under the Partnership Guarantee, (i) the Holder of
the Trust Common Securities will be deemed to have pledged the amount due in
respect of its Trust Common Securities upon a liquidation of the Trust to the
Trust and the Holders of the Trust Preferred Securities; (ii) the Holder of the
Trust Common Securities will be deemed to have paid such amount to the Trust in
respect of its obligations under the Partnership Guarantee; and (iii) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of the Trust Preferred Securities (on a pro rata basis among such Trust
Preferred Securities Holders) in respect of the Trust Common Securities
Holder's pledge of such amount to such Trust Preferred Securities Holders.
ARTICLE X
TRANSFER OF INTERESTS
SECTION 10.1 Transfer of Trust Securities.
(a) Trust Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and
in the terms of the Trust Securities. Any transfer or purported transfer of
any Trust Security not made in accordance with this Declaration shall be null
and void.
(b) Subject to this Article X, Trust Preferred Securities shall be
freely transferable.
SECTION 10.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of
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transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Regular Trustees duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular Trustees. A
transferee of a Certificate shall be entitled to the rights and be subject to
the obligations of a Holder hereunder upon the receipt by such transferee of a
Certificate. By acceptance of a Certificate, each transferee shall be deemed
to have agreed to be bound by this Declaration.
SECTION 10.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole Holder of such
Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 10.4 Book-Entry Interests.
Unless otherwise specified in the terms of the Trust Preferred
Securities, the Trust Preferred Securities Certificates, on original issuance,
will be issued in the form of one or more fully registered, global Trust
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such
Global Certificates shall initially be registered on the books and records of
the Trust in the name of Cede & Co., the nominee of DTC, and no Trust Preferred
Security Beneficial Owner will receive a definitive Trust Preferred Security
Certificate representing such Trust Preferred Security Beneficial Owner's
interests in such Global Certificates, except as provided in Section 10.7.
Unless and until definitive, fully registered Trust Preferred Security
Certificates (the "Definitive Trust Preferred Security Certificates") have been
issued to the Trust Preferred Security Beneficial Owners pursuant to Section
10.7:
(a) the provisions of this Section 10.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Trust Preferred Securities and the
sole Holder of the Global Certificates and shall have no obligation to the
Trust Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 10.4
conflict with any other provisions of this Declaration, the provisions of this
Section 10.4 shall control; and
(d) the rights of the Trust Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Trust Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and the Clearing Agency shall receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency Participants.
The Clearing Agency will make book-entry transfers among the Clearing Agency
Participants; provided, that solely for the purposes of determining whether the
Holders of the requisite amount of Trust Preferred Securities have voted on any
matter provided for in this Declaration, so long as Definitive Trust Preferred
Security Certificates have not been issued, the Trustees may conclusively rely
on, and shall be fully protected in relying on, any written instrument
(including a proxy) delivered to the Trustees by the Clearing Agency setting
forth the Trust Preferred Security Beneficial Owners' votes or assigning the
right to vote on any matter to any other Persons either in whole or in part.
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SECTION 10.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Trust Preferred
Security Holders is required under this Declaration, unless and until
Definitive Trust Preferred Security Certificates shall have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 10.7, the
Regular Trustees shall give all such notices and communications specified
herein to be given to the Trust Preferred Security Holders to the Clearing
Agency, and shall have no notice obligations to the Trust Preferred Security
Beneficial Owners.
SECTION 10.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Trust Preferred Securities.
SECTION 10.7 Definitive Trust Preferred Security Certificates.
If (a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 10.6; (b) the Regular Trustees elect after
consultation with the Sponsor to terminate the book-entry system through the
Clearing Agency with respect to the Trust Preferred Securities; or (c) there is
a Trust Enforcement Event (to the extent required by the Clearing Agency),
then:
(i) Definitive Trust Preferred Security Certificates
shall be prepared by the Regular Trustees on behalf of the Trust with
respect to such Trust Preferred Securities; and
(ii) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Trust Preferred Security Certificates
to be delivered to Trust Preferred Security Beneficial Owners in
accordance with the instructions of the Clearing Agency. Neither the
Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and each of them may conclusively rely on and shall
be protected in relying on, said instructions of the Clearing Agency.
The Definitive Trust Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks
of identification or designation and such legends or endorsements as
the Regular Trustees may deem appropriate, or as may be required to
comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which
Trust Preferred Securities may be listed, or to conform to usage.
SECTION 10.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b)
there shall be delivered to the Regular Trustees such security or indemnity as
may be required by them to keep each of them harmless, then, in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
any Regular Trustee on behalf of the Trust shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 10.8, the Regular Trustees
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest in the relevant Trust Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
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ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability.
(a) Except as expressly set forth in this Declaration, the Trust
Guarantees and the terms of the Trust Securities, the Sponsor and the Trustees
shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Trust Securities which shall be made solely from assets of the
Trust; and
(ii) required to pay to the Trust or to any Holder of
Trust Securities any deficit upon dissolution of the Trust or
otherwise.
(b) Notwithstanding any other provision herein, the Holder of the
Trust Common Securities, by entering into this Agreement, agrees that it shall
be liable directly to any creditor or claimant of or against the Trust for the
entire amount of all of the debts and obligations of the Trust (other than
obligations to the Holders of Trust Securities in their capacities as Holders)
to the extent not satisfied out of the Trust's assets as if the Holder of the
Trust Common Securities were the General Partner of a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act. This
Section 11.1(b) will automatically terminate upon (i) the adoption of final or
temporary United States federal tax regulations which, if the Trust were not
classified as a grantor trust for United States federal income tax purposes,
would result in the classification of the Trust as a partnership for United
States federal tax purposes without regard to its organic characteristics and
(ii) the taking of such action, if any, by the Trust or the Holders of Trust
Securities as may be necessary to achieve such classification.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Trust Preferred Securities shall be entitled to the same
limitation of personal liability extended to shareholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 11.2 Exculpation.
(a) No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Company Indemnified Person in good faith on behalf of the Trust
and in a manner such Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Company Indemnified Person
by this Declaration or by law, except that a Company Indemnified Person shall
be liable for any such loss, damage or claim incurred by reason of such Company
Indemnified Person's gross negligence or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Trust Securities might properly be paid.
SECTION 11.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and
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liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Trust Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 11.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law,
the Sponsor shall indemnify and hold harmless any Company Indemnified
Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that
he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or
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suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust and except
that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have
been adjudged to be liable to the Trust unless and only to the extent
that the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 11.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the fullest extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 11.4(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination
that indemnification of the Company Indemnified Person is proper in
the circumstances because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such determination
shall be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not parties to
such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Holder of the Trust Common Securities.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 11.4(a) shall be paid by
the Sponsor in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such
Company Indemnified Person to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Sponsor
as authorized in this Section 11.4(a). Notwithstanding the foregoing,
no advance shall be made by the Sponsor if a determination is
reasonably and promptly made (i) by the Regular Trustees by a majority
vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion or (iii) the Holder of the Trust Common
Securities, that, based upon the facts known to the Regular Trustees,
counsel or the Holder of the Trust Common Securities at the time such
determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Holder of the Trust Common Securities
reasonably determine that such person deliberately breached his duty
to the Trust or Holders of Trust Common Securities.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 11.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of shareholders or disinterested
directors of the Sponsor or Holders of the Trust Preferred Securities
or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. All rights to
indemnification under this Section 11.4(a) shall be deemed to be
provided by a contract between the Sponsor and each Company
Indemnified Person who serves in such capacity at any time while this
Section 11.4(a) is in effect. Any repeal or modification of this
Section 11.4(a) shall not affect any rights or obligations then
existing.
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(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or
not the Sponsor would have the power to indemnify him against such
liability under the provisions of this Section 11.4(a).
(viii) For purposes of this Section 11.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 11.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 11.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the
Fiduciary Indemnified Person arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 11.4(b) shall survive the
satisfaction and discharge of this Declaration.
SECTION 11.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Trust Securities
shall have no rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Trust, shall not be
deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, nor the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of Holders of, securities or
other obligations of the Sponsor or its Affiliates.
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ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code or the Treasury
Regulations.
SECTION 12.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Regular Trustees.
(b) Within 60 days after May 15 of each year, the Property Trustee
shall provide to the Holders of the Trust Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Trust Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return on form 1041 or other applicable form or statement under United
States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 12.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Partnership Preferred Securities held by the Property Trustee
shall be made directly to the Property Account and no other funds of the Trust
shall be deposited in the Property Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Account.
SECTION 12.4 Withholding.
The Regular Trustees shall cause the Trust to comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any
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claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding. Notwithstanding anything
herein to the contrary, the Regular Trustees shall cause the Trust, absent
receipt of an opinion of nationally recognized tax counsel to the contrary, to
withhold thirty percent (30%) (or such other rate as may be imposed as a result
of an amendment to the Code or such lower rate as may be imposed under an
applicable income tax treaty) on the gross amount of any Distributions on Trust
Preferred Securities held by a Holder that is not a "United States person"
within the meaning of Section 7701(a)(30) of the Code.
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Trust Securities, this Declaration may only be amended
by a written instrument approved and executed by the Regular Trustees (or, if
there are more than two Regular Trustees a majority of the Regular Trustees) ,
the Property Trustee and the Delaware Trustee;
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee and the Delaware Trustee shall have first received an
Officers' Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Trust Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee or the Delaware Trustee, the Property Trustee or the
Delaware Trustee, as the case may be, shall have first received an
opinion of counsel (who may be counsel to the Sponsor or the Trust)
that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Trust Securities); and
(iii) to the extent the result of such amendment would be
to:
(A) cause the Trust to be classified for
purposes of United States federal income taxation as an
association or a publicly traded partnership taxable as a
corporation;
(B) cause the Partnership to be classified for
purposes of United States federal income tax as an association
or a publicly traded partnership taxable as a corporation;
(C) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the Trust
Indenture Act; or
(D) cause the Trust to be deemed to be an
Investment Company required to be registered under the 1940
Act.
(c) In the event the consent of the Property Trustee, as the
Holder of the Partnership Preferred Securities is required under the Limited
Partnership Agreement with respect to any amendment, modification or
termination of the Limited Partnership Agreement or the Partnership Preferred
Securities the Property Trustee shall request the direction of the Holders of
the Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a
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consent under the Limited Partnership Agreement would require the consent of a
Super Majority of the Holders of Partnership Preferred Securities the Property
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Trust Securities which the relevant
Super Majority represents of the aggregate liquidation amount of the
Partnership Preferred Securities outstanding; provided, further, that the
Property Trustee shall not be obligated to take any action in accordance with
the directions of the Holders of the Trust Securities under this Section
13.1(c) unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that as a result of such action, the Trust will not be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes;
(d) At such time after the Trust has issued any Trust Securities
that remain outstanding, any amendment that would (i) adversely affect the
powers, preferences or special rights of the Trust Securities or (ii) provide
for the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of this Declaration, may be effected only with the approval of the
Holders of at least a Majority in liquidation amount of the Trust Securities
affected thereby; provided, that if any amendment or proposal referred to in
clause (i) hereof would adversely affect only the Trust Preferred Securities or
the Trust Common Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Trust Securities;
(e) Section 11.1(c) and this Section 13.1 shall not be amended
without the consent of all of the Holders of the Trust Securities;
(f) Article V shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Trust Common Securities;
(g) The rights of the Holders of the Trust Common Securities under
Article VI to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Trust Common Securities; and
(h) Notwithstanding Section 13.1(c), this Declaration may be
amended without the consent of the Holders of the Trust Securities:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) to add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in the 1940 Act or written
change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government
agency or regulatory authority;
(v) to conform to any change in the Trust Indenture Act
or written change in interpretation or application of the rules and
regulations promulgated thereunder by any legislative body, court,
government agency or regulatory authority; and
(vi) to modify, eliminate and add to any provision of this
Declaration to such extent as may be necessary;
provided that such amendments do not have a material adverse effect on
the rights, preferences or privileges of the Holders.
43
<PAGE> 49
SECTION 13.2 Meetings of the Holders of Trust Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Trust Securities may
be called at any time by the Regular Trustees (or as provided in the terms of
the Trust Securities) to consider and act on any matter on which Holders of
such class of Trust Securities are entitled to act under the terms of this
Declaration, the terms of the Trust Securities, the Limited Partnership
Agreement, the rules of any stock exchange on which the Trust Preferred
Securities are listed or admitted for trading, the Business Trust Act or other
applicable law. The Regular Trustees shall call a meeting of the Holders of
such class if directed to do so by the Holders of at least 10% in liquidation
amount of such class of Trust Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Trust Securities wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders of Trust Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Trust Securities exercising the right to
call a meeting and only those Trust Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Trust Securities, the following provisions shall apply to meetings of Holders
of Trust Securities:
(i) notice of any such meeting shall be given to all the
Holders of Trust Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting. Any
action that may be taken at a meeting of the Holders of Trust
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Trust
Securities owning not less than the minimum amount of Trust Securities
in liquidation amount that would be necessary to authorize or take
such action at a meeting at which all Holders of Trust Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the
Holders of Trust Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot
submitted to the Holder for the purpose of taking any action without a
meeting shall be returned to the Trust within the time specified by
the Regular Trustees;
(ii) each Holder of a Trust Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
Trust Securities is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of Trust Securities executing
it. Except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Trust Securities were shareholders
of a Delaware corporation;
(iii) each meeting of the Holders of the Trust Securities
shall be conducted by the Regular Trustees or by such other Person
that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Trust Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Trust Preferred Securities
are then listed for trading, otherwise provide, the Regular Trustees,
in their sole discretion, shall establish all other provisions
relating to meetings of Holders of Trust Securities, including notice
of the time, place or purpose of any meeting at which any matter is to
be voted on by any Holders of Trust Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
44
<PAGE> 50
ARTICLE XIV
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, the
Declaration;
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee;
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Incorporation or By-laws of the Property Trustee;
(e) The Property Trustee, pursuant to this Declaration, shall hold
legal title to, and a valid ownership interest on behalf of the Holders of the
Trust Securities, in the Partnership Preferred Securities and agrees that,
except as expressly provided or contemplated by this Agreement, it will not
create, incur or assume, or suffer to exist any mortgage, pledge,
hypothecation, encumbrance, lien or other charge or security interest upon the
Partnership Preferred Securities.
SECTION 14.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration.
(c) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
45
<PAGE> 51
(a) If given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Trust Securities):
Enron Capital Trust II
c/o Enron Corp.
1400 Smith Street
Houston, TX 77002
Attention: Treasury Department
(b) If given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of
to the other Trustees):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, DE 19801
Attention: Global Trust Services
(c) If given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of
to the Holders of the Trust Securities and the other Trustee):
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor New York, NY 10001
Attention: Global Trust Services
(d) If given to the Holder of the Trust Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Trust Common Securities may give notice of to the Trust):
Enron Corp.
1400 Smith Street
Houston, TX 77002
Attention: Treasury Department
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws, except that the rights, duties and
remedies of the Property Trustee hereunder shall be governed by the internal
laws of the State of New York without regard to principles of conflict of laws.
46
<PAGE> 52
SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention
of the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and a duly authorized officer of the Sponsor
to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.
47
<PAGE> 53
IN WITNESS WHEREOF, each of the undersigned has caused these presents
to be executed as of the day and year first above written.
Regular Trustees
-----------------------------
Name:
Title:
-----------------------------
Name:
Title:
-----------------------------
Name:
Title:
Chase Manhattan Bank Delaware,
as Delaware Trustee
By:
--------------------------
Name:
Title:
The Chase Manhattan Bank, as
Property Trustee
By:
--------------------------
Name:
Title:
Enron Corp., as Sponsor
By:
--------------------------
Name:
Title:
48
<PAGE> 54
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
This Trust Preferred Security is a Global Certificate within the meaning
of the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Trust Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Declaration and no transfer
of this Trust Preferred Security (other than a transfer of this Trust Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York), a New York corporation, to the Trust or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
A-1-1
<PAGE> 55
TP-1 [ ]
CUSIP NO. _________
Certificate Evidencing Trust Preferred Securities
of
ENRON CAPITAL TRUST II
___% Trust Preferred Securities
(liquidation amount $25 per Trust Preferred Security)
ENRON CAPITAL TRUST II, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of __________ preferred securities of the
Trust representing undivided beneficial ownership interests in the assets of
the Trust designated the ___% Trust Preferred Securities (liquidation amount
$25 per Trust Preferred Security) (the "Trust Preferred Securities"). The
Trust Preferred Securities are freely transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, powers, privileges, restrictions, preferences and other terms and
provisions of the Trust Preferred Securities represented hereby are set forth
in, issued under and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust dated as of ______, 1997, as the same
may be amended from time to time (the "Declaration"). Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Trust Preferred Securities
Guarantee to the extent provided therein. Each Holder of a Trust Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Initial Debentures, and any other Affiliate Investment Instruments that are
treated as debt instruments by the relevant Investment Affiliate and by the
Partnership, as indebtedness for United States federal income tax purposes.
The Sponsor will provide a copy of the Declaration, the Trust Preferred
Securities Guarantee and the Limited Partnership Agreement to a Holder without
charge upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day
of __________, _____.
ENRON CAPITAL TRUST II
--------------------------------
Name: ,
-------------------
as Regular Trustee
(See reverse for additional terms)
A-1-2
<PAGE> 56
[REVERSE OF SECURITY]
Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of ____% of the stated
liquidation amount of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the date of original issue, accrue and
be cumulative and shall be payable quarterly only to the extent that the Trust
has funds available for the payment of such distributions in the Property
Account. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of ____% per annum. The term "Distributions" as used herein shall mean
ordinary cumulative distributions in respect of each Fiscal Period together
with any such Compounded Distributions. Amounts available to the Trust for
distribution to the holders of the Trust Preferred Securities will be limited
to payments received by the Trust from the Partnership on the Partnership
Preferred Securities or from the Company on the Partnership Guarantee.
Distributions on the Partnership Preferred Securities will be paid only if, as
and when declared in the sole discretion of the Company, as the General Partner
of the Partnership. If and to the extent that the Partnership makes a
distribution on the Partnership Preferred Securities held by the Property
Trustee or the Company makes a payment under the Partnership Guarantee (the
amount of any such partnership distribution, including any compounded
partnership distributions or guarantee payment being a "Payment Amount"), the
Trust shall and the Property Trustee is directed, to the extent funds are
available for that purpose, to make a Pro Rata Distribution of the Payment
Amount to Holders.
The amount of Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly Distribution
period on the basis of the actual number of days elapsed in a 90-day quarter.
Except as otherwise described herein, distributions on the Trust
Preferred Securities will be cumulative, will accrue from the date of initial
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ___________, 1997 if,
as and when available for payment by the Property Trustee. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry-only form, Distributions will be payable to the
Holders of record of Trust Preferred Securities as they appear on the books and
records of the Trust on the relevant record dates, which will be one Business
Day prior to the relevant payment dates. If the Trust Preferred Securities
(or, if the Trust is liquidated, the Partnership Preferred Securities) do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates. In the event that any date on
which distributions are payable is not a Business Day, payment of such
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (without any
reduction of interest or other payments in respect of such early payment).
Payments of accrued Distributions will be payable to Holders of record of Trust
Preferred Securities as they appear on the books and records of the Trust on
the record date with respect to the payment date for the Trust Preferred
Securities which corresponds to the payment date fixed by the Partnership with
respect to the payment of cumulative distributions on the Partnership Preferred
Securities.
The Trust Preferred Securities shall be redeemable as provided in the
Declaration.
A-1-3
<PAGE> 57
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred
Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Trust Preferred Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
-----------------------
Signature:
------------------
(Sign exactly as your name appears on the other side of this
Trust Preferred Security Certificate)
A-1-4
<PAGE> 58
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CS-1 [ ]
Certificate Evidencing Trust Common Securities
of
ENRON CAPITAL TRUST II
____% Trust Common Securities
(liquidation amount $25 per Trust Common Security)
ENRON CAPITAL TRUST II, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Enron Corp., a
Delaware corporation (the "Holder") is the registered owner of ____________
common securities of the Trust representing undivided beneficial ownership
interests in the assets of the Trust designated the ____% Trust Common
Securities (liquidation amount $25 per Trust Common Security) (the "Trust
Common Securities"). The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Trust Common
Securities represented hereby are set forth in, issued under and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust dated as of ________, 1997, as the same may be amended from time to
time (the "Declaration"). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Trust Common Securities Guarantee to the extent provided
therein. Each Holder of a Trust Common Security, by acceptance of this
Certificate, agrees to treat the Initial Debentures, and any other Affiliate
Investment Instruments that are treated as debt instruments by the relevant
Investment Affiliate and by the Partnership, as indebtedness for United States
federal income tax purposes. The Sponsor will provide a copy of the
Declaration, the Trust Common Securities Guarantee and the Limited Partnership
Agreement to a Holder without charge upon written request to the Sponsor at its
principal place of business. THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON
THE BOOKS AND RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE
DECLARATION.
Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ________, _____.
ENRON CAPITAL TRUST II
-----------------------------------
,
------------------
as Regular Trustee
(See reverse for additional terms)
A-2-1
<PAGE> 59
[FORM OF REVERSE OF SECURITY]
Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of ___% of the stated
liquidation amount of $25 per Trust Common Security. Distributions on the
Trust Common Securities shall, from the date of original issue, accrue and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly (to the extent permitted by applicable law) at the rate of
____% per annum. The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any
such Compounded Distributions. Amounts available to the Trust for distribution
to the holders of the Trust Common Securities will be limited to payments
received by the Trust from the Partnership on the Partnership Preferred
Securities or from the Company on the Partnership Guarantee. Distributions on
the Partnership Preferred Securities will be paid only if, as and when declared
in the sole discretion of the Company, as the General Partner of the
Partnership. If and to the extent that the Partnership makes a distribution on
the Partnership Preferred Securities held by the Property Trustee or the
Company makes a payment under the Partnership Guarantee (the amount of any such
partnership distribution, including any compounded partnership distributions or
guarantee payment being a "Payment Amount"), the Trust shall and the Property
Trustee is directed, to the extent funds are available for that purpose, to
make a Pro Rata Distribution of the Payment Amount to Holders.
The amount of Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly Distribution
period on the basis of the actual number of days elapsed in a 90-day quarter.
Except as otherwise described herein, distributions on the Trust Common
Securities will be cumulative, will accrue from the date of initial issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on ____________, 1997 if, as and when
available for payment by the Property Trustee. Distributions will be payable
to the Holders of record of Trust Common Securities as they appear on the books
and records of the Trust on the relevant record dates, which will be one
Business Day prior to the relevant payment dates. In the event that any date
on which distributions are payable is not a Business Day, payment of the
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (without any
reduction of interest or other payments in respect of such early payment).
Payments of accrued Distributions will be payable to Holders of record of Trust
Common Securities as they appear on the books and records of the Trust on the
record date with respect to the payment date for the Trust Common Securities
which corresponds to the payment date fixed by the Partnership with respect to
the payment of cumulative distributions on the Partnership Preferred
Securities.
The Trust Common Securities shall be redeemable as provided in the
Declaration.
A-2-2
<PAGE> 60
----------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common
Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Trust Common Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
-----------------------
Signature:
------------------
(Sign exactly as your name appears on the other side
of this Trust Common Security Certificate)
A-2-3
<PAGE> 1
EXHIBIT 4(c)
CERTIFICATE OF LIMITED PARTNERSHIP
OF
ENRON PREFERRED FUNDING II, L.P.
This Certificate of Limited Partnership of Enron Preferred
Funding II, L.P. (the "Partnership"), dated as of December 23, 1996, is being
duly executed and filed by Enron Corp., a Delaware corporation, as general
partner, to form a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. Section 17-101, et seq.).
i. Name. The name of the limited partnership
formed hereby is Enron Preferred Funding II, L.P.
ii. Registered Office. The address of the
registered office of the Partnership in the State
of Delaware is c/o Corporation Trust Company, 1209
Orange Street, Wilmington, New Castle County,
Delaware 19801.
iii. Registered Agent. The name and address of
the registered agent for service of process on the
Partnership in the State of Delaware is Corporation
Trust Company, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
iv. General Partner. The name and the business
mailing address of the sole general partner of the
Partnership is: Enron Corp., 1400 Smith Street,
Houston, Texas 77002.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
of Limited Partnership as of the date first written above.
ENRON CORP.,
as sole general partner
By: /s/ PEGGY B. MENCHACA
--------------------------
Name: Peggy B. Menchaca
Title: Vice President and
Secretary
<PAGE> 1
EXHIBIT 4(d)
================================================================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENRON PREFERRED FUNDING II, L.P.
Dated as of ___________, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2 NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 PURPOSES OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.4 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.5 REGISTERED AGENT AND OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 PRINCIPAL PLACE OF ACTIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP
PREFERRED SECURITIES; WITHDRAWAL OF INITIAL LIMITED
PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 PARTNERSHIP PREFERRED
SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3 CAPITAL ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.2 SPECIAL ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.3 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.2 LIMITATIONS ON DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING
PARTNERSHIP PREFERRED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.2 PARTNERSHIP PREFERRED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . 18
Section 7.3 ASSUMPTION OF OBLIGATIONS AND
RELEASE OF INVESTMENT AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.2 ACCOUNTING METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.3 ANNUAL AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE X
POWERS, RIGHTS AND DUTIESOF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 10.2 LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 10.3 PRIORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XI
POWERS, RIGHTS AND DUTIESOF THE GENERAL PARTNER
Section 11.1 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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Section 11.4 LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.5 OUTSIDE ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.7 EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.8 FIDUCIARY DUTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.9 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 11.10 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 12.2 TRANSFER OF L.P. CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.3 DEFINITIVE L.P. CERTIFICATES;
PERSONS DEEMED PARTNERSHIP PREFERRED SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . 27
Section 12.4 BOOK-ENTRY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 13.2 DISSOLUTION OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 13.3 LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 13.4 DISTRIBUTION IN LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 13.5 RIGHTS OF LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13.6 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 14.2 AMENDMENT OF CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 14.3 MEETINGS OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 15.2 POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.3 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.5 EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.6 PRONOUNS AND NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.7 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.8 PARTIAL ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 15.9 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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Section 15.10 WAIVER OF PARTITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 15.11 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule 1 LIST OF PARTNERS
Annex A FORM OF L.P. CERTIFICATE
Exhibit A FORM OF INDENTURE OF ENRON CORP.
Exhibit B FORM OF INDENTURE FOR SUBSIDIARIES
</TABLE>
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<PAGE> 6
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
ENRON PREFERRED FUNDING II, L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Enron Preferred
Funding II, L.P., a Delaware limited partnership (the "Partnership"), dated as
of _________________, 1997, among Enron Corp., a Delaware corporation (the
"Company"), as the general partner, Organizational Partner, Inc., a Delaware
corporation, as the initial limited partner (the "Initial Limited Partner") and
such other Persons (as defined herein) who become Limited Partners (as defined
herein) as provided herein.
WHEREAS, the Company and the Initial Limited Partner entered into an
Agreement of Limited Partnership, dated as of December ___, 1996, (the
"Original Partnership Agreement"), and the Partners (as defined herein) desire
to continue the Partnership under the Act (as defined herein) and to amend and
restate the Original Partnership Agreement in its entirety;
WHEREAS, the Certificate of Limited Partnership of the Partnership was
filed with the Office of the Secretary of State of the State of Delaware on
December ____, 1996;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Partnership Agreement as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. Terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Declaration.
"Act" means the Delaware Revised Uniform Limited Partnership Act, Del.
Code Ann. tit. 6, Section 17-101 et seq., as amended from time to time.
"Affiliate" has the meaning set forth in Section 1.1 of the Declaration.
"Affiliate Investment Instruments" has the meaning set forth in Section
7.1 of this Agreement.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.
"Assuming Investment Affiliate" has the meaning set forth in Section 7.3
of this Agreement.
"Beneficiaries" has the meaning set forth in Section 11.3 of this
Agreement.
"Book-Entry Interest" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book-entries of a Clearing Agency as set forth in Section 12.4 of this
Agreement.
<PAGE> 7
"Business Day" means a day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close.
"Capital Account" has the meaning set forth in Section 3.3 of this
Agreement.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
December _____, 1996, as it may be amended and restated from time to time.
"Change in 1940 Act Law" has the meaning set forth in Section 1.1 of the
Declaration.
"Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Company" means Enron Corp., a Delaware corporation.
"Compounded Distributions" has the meaning set forth in Section 6.2 of
this Agreement.
"Declaration" means the Amended and Restated Declaration of Trust by and
among the Company, as Sponsor, the Property Trustee, the Delaware Trustee, and
the Regular Trustees, dated as of _____, 1997.
"Definitive L.P. Certificates" has the meaning set forth in Section
12.4(a) of this Agreement.
"Delaware Trustee" has the meaning set forth in Section 6.2 of the
Declaration.
"Distribution Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"Distributions" means the right to receive the amount of the cumulative
cash distributions payable by the Partnership with respect to the Interests
represented by the Partnership Preferred Securities, which amounts will accrue
on the $25 liquidation preference of each Partnership Preferred Security from
the Closing Date and are payable quarterly in arrears in accordance with
Sections 5.1 and 6.2(b) of this Agreement.
"DTC" means the Depository Trust Company, the initial Clearing Agency.
"Eligible Debt Securities" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with the
Company represented by instruments in registered form which evidence any of the
following: (a) any security issued or guaranteed as to principal or interest
by the United States, or by a person controlled or supervised by and acting as
an instrumentality of the Government of the United States pursuant to authority
granted by the Congress of the United States, or any certificate of deposit for
any of the foregoing; (b) commercial paper issued pursuant to Section 3(a)(3)
of the Securities Act of 1933 (the "Securities Act") and having, at the time of
the investment or contractual commitment to invest therein, a rating from each
of S&P and Moody's in the highest rating category granted by such rating agency
and having a maturity not in excess of nine months; (c) demand deposits, time
deposits and certificates of deposit which are fully insured by the FDIC; (d)
repurchase obligations with respect to any security that is a direct obligation
of, or fully guaranteed by, the Government of the United States of America or
any agency or instrumentality thereof, the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company which is an
Eligible Institution and the deposits of which are insured by the FDIC; and (e)
any other security which is identified as a permitted investment of a finance
subsidiary pursuant to Rule 3a-5 under the 1940 Act at the time it is acquired
by the Partnership.
"Eligible Institution" means a depository institution organized under
the laws of the United States of America or any one of the states thereof or
the District of Columbia (or any domestic branch of a foreign bank),
2
<PAGE> 8
(1)(i) which has either (A) a long-term unsecured debt rating of AA or better
by S&P and Aa or better by Moody's or (B) a short-term unsecured debt rating or
a certificate of deposit rating of A-1+ or better by S&P and P-1 or better by
Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of
which has a long-term or short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by the FDIC.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means (i) the period commencing upon the formation of the
Partnership and ending on December 31, 1996, and (ii) any subsequent calendar
year.
"General Partner" means the Company in its capacity as the general
partner of the Partnership, its permitted successors, or any successor general
partner in the Partnership admitted as such pursuant to the terms of this
Agreement.
"General Partner Capital Contribution" means the contribution by the
General Partner to the Partnership made contemporaneous with the issuance of
the Partnership Preferred Securities.
"General Partner Interest" means the Interest of the General Partner in
the Partnership.
"Holder" or "Partnership Preferred Security Holder" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.
"Indentures" means the Indentures between the Company or certain of its
subsidiaries, as the case may be, and The Chase Manhattan Bank, as Indenture
Trustee, dated as of _______________, 1997, forms of which are attached hereto
as Exhibits A and B, respectively.
"Independent Financial Adviser" shall mean (i) Merrill Lynch, Pierce,
Fenner & Smith Incorporated or (ii) such other nationally recognized investment
banking firm which shall be designated by the Company and which firm does not
(and whose directors, officers, employees and affiliates do not) have a direct
or indirect material equity interest in the Company or any of its subsidiaries
or (iii) another entity which is an investment banking, accounting or financial
services firm selected by the Company and approved by the Holders of a Majority
in Liquidation Preference of Partnership Preferred Securities.
"Initial Affiliate Debentures" has the meaning set forth in Section
7.1(b) of this Agreement.
"Initial Company Debenture" has the meaning set forth in Section 7.1(b)
of this Agreement.
"Initial Debentures" means collectively, the Initial Company Debentures
and the Initial Affiliate Debentures.
"Initial Limited Partner" means Organizational Partner, Inc., a Delaware
corporation.
"Initial Partnership Proceeds" means the aggregate proceeds received by
the Partnership from the sale of the Partnership Preferred Securities and the
General Partner Capital Contribution.
"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, and losses of, and distributions from, the
Partnership.
3
<PAGE> 9
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that is controlled by the Company and is not an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act.
"Investment Event of Default" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its obligations under any Affiliate Investment
Instrument that is an equity instrument.
"Investment Guarantee" has the meaning specified in Section 1.1 of the
Declaration.
"Investment Offer" has the meaning specified in Section 7.2(b) of this
Agreement.
"Limited Partner" means any Person who is admitted to the Partnership as
a limited partner pursuant to the terms of this Agreement, in such Person's
capacity as a limited partner of the Partnership.
"Liquidator" has the meaning specified in Section 13.3 of this
Agreement.
"L.P. Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities
held by a Limited Partner.
"Majority in Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of Partnership Preferred
Securities whose aggregate liquidation preferences represent more than 50% of
the aggregate liquidation preference of all Partnership Preferred Securities
then outstanding.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Net Income" and "Net Loss", respectively, for any Fiscal Period mean
the income and loss, respectively, of the Partnership for such Fiscal Period as
determined in accordance with the method of accounting followed by the
Partnership for United States federal income tax purposes, including, for all
purposes, the net income, if any, from the Affiliate Investment Instruments,
Eligible Debt Securities and any income exempt from tax and any noncapital,
nondeductible expenditures of the Partnership which are described in the Code.
"1940 Act" has the meaning set forth in Section 1.1 of the Declaration.
"Original Partnership Agreement" has the meaning set forth in the
recitals to this Agreement.
"Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.
"Partnership Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner of its respective Affiliates, or any
employee or agent of the Partnership or its Affiliates or any Special
Representative.
"Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.
"Partnership Guarantee" means the Partnership Guarantee Agreement dated
as of ______, 1997 by the Company in favor of the Partnership Preferred
Security Holders with respect to the Partnership Preferred Securities, as
amended or supplemented from time to time.
"Partnership Indemnified Person" means the General Partner, any Special
Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or agent
of the Partnership or its Affiliates.
4
<PAGE> 10
"Partnership Investment Company Event" means that the General Partner
shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in 1940 Act
Law, the Partnership is or will be considered an "investment company" which is
required to be registered under the 1940 Act.
"Partnership Liquidation Distribution" has the meaning set forth in
Section 6.2(g) of this Agreement.
"Partnership Preferred Securities" represent the Interests of Limited
Partners and have the preference and designation set forth in Section 6.2(a) of
this Agreement.
"Partnership Preferred Security Owner" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest as reflected on the books of DTC, or on the books of a Person
maintaining an account with DTC (directly as a participant or as an indirect
participant, in each case in accordance with the rules of DTC or such
participant).
"Partnership Special Event" means either a Partnership Tax Event or a
Partnership Investment Company Event.
"Partnership Successor Securities" has the meaning set forth in Section
11.11 of this Agreement.
"Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that there has been a Tax
Action that results in there being more than an insubstantial risk that (i) the
Partnership is, or will be, subject to United States federal income tax with
respect to income accrued or received on the Affiliate Investment Instruments
or the Eligible Debt Securities, (ii) the Partnership is, or will be, subject
to more than a de minimis amount of other taxes, duties or other governmental
charges or (iii) interest payable by an Investment Affiliate with respect to
any Initial Debenture issued by such Investment Affiliate to the Partnership is
not, or will not be, deductible by such Investment Affiliate for United States
federal income tax purposes.
"Paying Agent" shall have the meaning set forth in Section 12.5 of this
Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Power of Attorney" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.
"Property Trustee" has the meaning set forth in Section 1.1 of the
Declaration.
"Purchase Agreement" means the Purchase Agreement dated ________, 1997
among the Company, the Trust, the Partnership, Merrill Lynch & Co. and Merrill,
Lynch, Pierce, Fenner & Smith Incorporated as representatives of the other
underwriters named in Schedule A thereto.
"Record Date" means (i) as long as the Trust Preferred Securities remain
(or, in the event that the Trust is liquidated in connection with a Trust
Special Event, as long as the Partnership Preferred Securities remain) in book-
entry only form, one Business Day prior to the relevant payment dates and (ii)
in the event that the Trust Preferred Securities (or in the event that the
Trust is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities) shall not continue to remain in book-entry only form, the
15th day of the month of the relevant payment date.
"Redemption Notice" has the meaning set forth in Section 6.2(e) of this
Agreement.
"Redemption Price" has the meaning set forth in Section 6.2(c) of this
Agreement.
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<PAGE> 11
"Registrar" has the meaning set forth in Section 12.5 of this Agreement.
"Regular Trustees" has the meaning set forth in Section 1.1 of the
Declaration.
"Reinvestment Criteria" has the meaning specified in Section 7.2(d) of
this Agreement.
"Released Investment Affiliate" has the meaning set forth in Section 7.3
of this Agreement.
"S&P" means Standard & Poor's Ratings Services or any successor thereof.
"Special Representative" has the meaning set forth in Section 6.2(h)(i)
of this Agreement.
"Tax Action" has the meaning set forth in Section 1.1 of the
Declaration.
"Tax Matters Partner" means the General Partner designated as such in
Section 11.10 of this Agreement.
"10% in Liquidation Preference" means Holders of the Partnership
Preferred Securities voting together as a single class representing 10% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Partnership
Preferred Securities.
"Treasury Regulations" has the meaning set forth in Section 1.1 of the
Declaration.
"Trust" means Enron Capital Trust II, a Delaware business trust, formed
under the Declaration.
"Trust Common Securities" has the meaning specified in Section 8.1 of
the Declaration.
"Trust Common Securities Guarantee" means the Trust Common Securities
Guarantee Agreement dated as of ________, 1997, entered into by the Company, as
Guarantor, for the benefit of the holders of the Trust Common Securities.
"Trust Preferred Securities" has the meaning specified in Section 8.1 of
the Declaration.
"Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of _______, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Preferred
Securities.
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto agree
to continue the Partnership in accordance with the terms of this Agreement.
The General Partner, for itself and as agent for the Limited Partners, shall
make every reasonable effort to assure that all certificates and documents are
properly executed and shall accomplish all filing, recording, publishing and
other acts necessary or appropriate for compliance with all the requirements
for the continuation of the Partnership as a limited partnership under the Act
and under all other laws of the State of Delaware or such other jurisdictions
in which the General Partner determines that the Partnership may conduct
activities. The rights and duties of the Partners shall be as provided herein
and, subject to the terms hereof, under the Act.
6
<PAGE> 12
Section 2.2 NAME. The name of the Partnership is "Enron Preferred
Funding II, L.P.", as such name may be modified from time to time by the
General Partner following written notice to the Limited Partners.
Section 2.3 PURPOSES OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership
in the form of Partnership Preferred Securities, (b) to receive the General
Partner Capital Contribution, (c) to use substantially all of the Initial
Partnership Proceeds to purchase, as an investment, the Initial Debentures, (d)
to invest, at all times, an amount equal to at least 1% of the Initial
Partnership Proceeds in Eligible Debt Securities, (e) to receive interest and
other payments on the Affiliate Investment Instruments and the Eligible Debt
Securities held by the Partnership from time to time, (f) to make Distributions
on the Partnership Preferred Securities and distributions on the General
Partner Interest if, as and when declared by the General Partner in its sole
discretion, (g) subject to the restrictions and conditions contained in this
Agreement, to make additional investments in Affiliate Investment Instruments
and Eligible Debt Securities and to dispose of any such investments and (h)
except as otherwise limited herein, to enter into, make and perform all
contracts and other undertakings, and engage in those activities and
transactions as the General Partner may reasonably deem necessary or advisable
for the carrying out of the foregoing purposes of the Partnership. The
Partnership may not engage in any other activities or operations except as
contemplated by the preceding sentence.
Section 2.4 TERM. The term of the Partnership shall commence upon the
filing of the Certificate in the Office of the Secretary of State of the State
of Delaware and shall continue until the Partnership is dissolved in accordance
with the provisions of this Agreement.
Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's registered
agent and office in Delaware shall be Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. At any time, the
General Partner may designate another registered agent and/or registered
office.
Section 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be c/o Enron Corp., 1400 Smith Street,
Houston, Texas 77002. Upon ten days' written notice to the Partners, the
General Partner may change the location of the Partnership's principal place of
activity, provided that such change has no material adverse effect upon any
Partner.
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and address
of the General Partner are as follows:
Enron Corp.
1400 Smith Street
Houston, TX 77002
Attention: Treasury Department
The General Partner may change its name or address from time to time, in which
event the General Partner shall promptly notify the Limited Partners of any
such change.
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner
shall cause the Partnership to become qualified, formed or registered under the
applicable qualification, fictitious name or similar laws of any jurisdiction
in which the Partnership conducts activities.
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED SECURITIES;
WITHDRAWAL OF INITIAL LIMITED PARTNER.
(a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such Person
that the books and records of the Partnership reflect such Person's admission
as a Limited Partner, such Person shall be admitted to the Partnership as a
Limited Partner and shall become bound by this Agreement.
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(b) Following the first admission of a Partnership Preferred Security
Holder to the Partnership as a Limited Partner, the Initial Limited Partner
shall withdraw from the Partnership and shall receive the return of its capital
contribution, if any, without interest or deduction.
(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed
on the books and records of the Partnership. The General Partner shall be
required to update the books and records from time to time as necessary to
accurately reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
Section 3.1 CAPITAL CONTRIBUTIONS.
(a) Contemporaneous with the issuance of the Partnership Preferred
Securities, the General Partner shall make the General Partner Capital
Contribution. The General Partner shall, from time to time, make such
additional capital contributions as are necessary to maintain at all times a
positive Capital Account balance equal to at least one percent (1%) of the
aggregate positive Capital Account balances of all Partners at the end of such
period.
(b) On the Closing Date, the Trust shall, in exchange for a
definitive L.P. Certificate, contribute to the capital of the Partnership on
behalf of the Trust an amount in cash equal to the gross proceeds from the sale
of the Trust Preferred Securities and the Trust Common Securities (such amount
being a capital contribution to the Partnership). On such date, immediately
following the withdrawal of the Initial Limited Partner, the Trust shall be the
sole Limited Partner.
(c) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's Interest shall be represented by the Partnership Preferred
Securities held by or on behalf of such Partner. Each Partnership Preferred
Security Holder's respective ownership of Partnership Preferred Securities
shall be set forth on the books and records of the Partnership. Each Partner
hereby agrees that its Interest in the Partnership shall for all purposes be
personal property. No Partner shall have an interest in specific Partnership
property.
Section 3.3 CAPITAL ACCOUNTS.
(a) Establishment and Maintenance of Capital Accounts. The
Partnership shall establish and maintain a separate account (the "Capital
Account") for each Partner. The initial balance of the Capital Account for
each Partner shall be the amount as set out opposite the name of each of the
Partners on Schedule 1 attached hereto. The Capital Account of each Partner
shall be increased by (i) the dollar amount of any additional contributions
made by such Partner and (ii) allocations to such Partner of income and gain
(including income exempt from tax). The Capital Account of each Partner shall
be decreased by (i) the dollar amount of any distributions made to such
Partner, and (ii) allocations to such Partner of loss and deduction (including
noncapital, nondeductible expenditures not deductible in computing the
Partnership's income or loss for United States federal income tax purposes).
(b) Compliance with Regulations. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of Section 3.3(a) hereof
regarding the maintenance of Capital Accounts shall be construed so as to
comply with the Treasury Regulations promulgated under section 704 of the Code.
The General Partner,
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in its sole discretion, is authorized to modify such provisions to the minimum
extent necessary to comply with such Treasury Regulations.
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. No Partner shall be
entitled to interest on or with respect to any capital contribution to the
Partnership.
Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. Subject
to Section 2.9(b) hereof, no Partner shall be entitled to withdraw any part of
such Partner's capital contribution to the Partnership. No Partner shall be
entitled to receive any distributions from the Partnership, except as provided
in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 PROFITS AND LOSSES. After giving effect to the special
allocation provisions set forth in Section 4.2, which special allocations shall
take precedence over any allocations made pursuant to this Section 4.1,
(a) The Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder of a Partnership Preferred Security
in an amount equal to the excess, if any, of (x) the amount of Net
Losses, if any, allocated to each such Holder from the date of issuance
of the Partnership Preferred Security through and including the close of
such Fiscal Period pursuant to Section 4.1(b)(ii) below over (y) the
amount of Net Income, if any, allocated to each such Holder pursuant to
this Section 4.1(a)(i) in all prior Fiscal Periods.
(ii) Second, to the Holders of the Partnership Preferred
Securities, an amount of Net Income equal to the excess of (x) the
Distributions accrued on the Partnership Preferred Securities from the
date of their issuance through and including the last day of such Fiscal
Period, including any Compounded Distributions payable with respect
thereto, over (y) the amount of Net Income allocated to the Holders of
the Partnership Preferred Securities pursuant to this Section 4.1(a)(ii)
in all prior Fiscal Periods. Amounts allocated to all Partnership
Preferred Security Holders shall be allocated among such Holders in
proportion to the number of Partnership Preferred Securities held by
such Holders.
(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the
General Partner's Capital Account is reduced to zero, provided, however,
that the aggregate amount of Net Losses allocated to the General Partner
pursuant to this Section 4.1(b)(i) shall not exceed the sum of 14% of
the total capital contributions of all Partners plus the aggregate Net
Income allocated to the General Partner pursuant to this Section 4.1.
(ii) Second, among the Holders in proportion to their
respective aggregate Capital Account balances, until the Capital Account
balances of such Holders are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) Daily Determination. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily basis, unless the General
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Partner determines that another method is permissible under Section 704 of the
Code and the Treasury Regulations promulgated thereunder. Unless otherwise
specified, such profits, losses or other items shall be determined for each
Fiscal Period.
Section 4.2 SPECIAL ALLOCATION.
(a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out
of its own funds shall be allocated entirely to the General Partner.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's Net Income
shall be specially allocated to such Partner in a manner sufficient to
eliminate the deficit, if any, in the balance of the Capital Account of such
Partner as quickly as possible. The foregoing is intended to be a "qualified
income offset" provision as described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in
accordance with such Treasury Regulation.
(c) Section 704 Compliance. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions
that are not expected to occur as regards the Partnership, the Partners intend
that the allocations under Section 4.1 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain
chargeback, chargeback of partner nonrecourse debt minimum gain and partner
nonrecourse debt provisions of such Treasury Regulations), and, to the extent
necessary due to the occurrence of unexpected events, the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.
(d) Adjustment of Allocations. If the allocations set forth in this
Article IV are adjusted by the Internal Revenue Service and the Tax Matters
Partner agrees to such adjustments, such allocations shall be amended to the
minimum extent necessary to conform with such adjustments.
(e) Additional Allocations. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Losses (and other tax items)
under this Article IV, the distributions to be made in accordance with the
positive Capital Account balances would result in a distribution that would be
different from a distribution under Article XIII, then gross items of income
and gain (and other tax items) for the taxable year of the final dissolution
and termination (and, to the extent permitted under section 761(c) of the Code,
gross items of income and gain, and other tax items, for the immediately
preceding taxable year) shall be allocated to the Partners to increase or
decrease their respective Capital Account balances so that the final
distribution will occur in the same manner as a distribution under Section
13.4.
(f) General Partner Allocations. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each
item of Partnership income, gain, loss, deduction, or credit shall, at all
times during the existence of the Partnership, be equal to at least (A) at any
time that the aggregate capital contributions to the Partnership are equal to
or less than $50,000,000, one percent (1%) of each such item and (B) at any
time that the aggregate capital contributions to the Partnership are greater
than $50,000,000, at least a percentage equal to the product of (i) one percent
(1%) and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator
of which is $50,000,000 and the denominator of which is the lesser of (x) the
aggregate Capital Account balances of the Capital Accounts of all Partners at
such time and (y) the aggregate capital contributions to the Partnership of all
Partners at such time.
Section 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Partnership is required to withhold and pay over any
amounts to any authority with respect to distributions or allocations to any
Partner, the amount withheld shall be deemed to be a distribution
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in the amount of the withholding to the Partner. In the event of any claimed
over-withholding, Partners shall be limited to an action against the applicable
jurisdiction. If the amount withheld was not withheld from actual
distributions, the Partnership may reduce subsequent distributions by the
amount of such withholding. Each Partner agrees to furnish the Partnership
with any representations and forms as shall reasonably be requested by the
Partnership to assist it in determining the extent of, and in fulfilling, its
withholding obligations.
ARTICLE V
DISTRIBUTIONS
Section 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic
Distributions and Compounded Distributions, if any, redemption payments and
liquidation distributions in accordance with the terms of the Partnership
Preferred Securities set forth in Article VI. The General Partner shall in its
sole discretion determine whether and when Distributions shall be payable;
provided, however, that if the General Partner shall determine a Distribution
will not be paid on a scheduled Distribution Payment Date, the General Partner
shall give notice of its determination not to pay such Distribution to Limited
Partners of record as of the Record Date for the payment of such Distribution;
provided, further, however, that the General Partner shall not declare
distributions, and no distributions shall be payable by the Partnership to the
General Partner in respect of its General Partner Interest unless all
accumulated and unpaid Distributions, including any Compounded Distributions,
have been paid in full for all prior Fiscal Periods. Subject to the
immediately preceding sentence, to the extent that the aggregate payments of
interest (or dividends) received by the Partnership in respect of Affiliate
Investment Instruments and Eligible Debt Securities for each Fiscal Period
exceed the amount of Distributions, including any Compounded Distributions,
paid on the Partnership Preferred Securities for such Fiscal Period, the
General Partner, in its sole discretion may declare and distribute such excess
funds to the General Partner in respect of its General Partner Interest.
Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a Distribution to any Partner on account of such Partner's Interest if
such Distribution would violate Section 17-607 of the Act or other applicable
law.
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.
(a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater
than $_____________ and having the designation, annual distribution rate,
liquidation preference, redemption terms, and other powers, preferences and
special rights and limitations set forth in this Article VI.
(b) The payment of Distributions (including payments of distributions
by the Partnership in liquidation or in redemption in respect of Partnership
Preferred Securities) shall be guaranteed by the Company pursuant to and to the
extent set forth in the Partnership Guarantee. The Partnership Preferred
Security Holders hereby authorize the General Partner to hold the Guarantee on
behalf of the Partnership Preferred Security Holders. In the event of an
appointment of a Special Representative pursuant to Section 6.2(i), among other
things, to enforce the Partnership Guarantee, the Special Representative may
take possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge
and agree to the subordination provisions in, and other terms of, the
Partnership Guarantee.
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(c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to
all other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Partnership
Preferred Securities will be issued in registered form only.
(d) No Holder shall be entitled as a matter of right to subscribe for
or purchase, or have any preemptive right with respect to, any part of any new
or additional limited partnership interests, or of securities convertible into
any Partnership Preferred Securities or other limited partnership interests,
whether now or hereafter authorized and whether issued for cash or other
consideration or by way of a distribution.
(e) Any of the Partnership Preferred Securities that are owned by the
Company or by any entity more than 50% of which is owned by the Company, either
directly or indirectly, shall not be entitled to vote or consent with respect
to any Partnership Preferred Security owned by it, and shall, for purposes of
such vote or consent, be treated as if they were not outstanding; provided,
however, that persons otherwise eligible to vote to whom the Company or any of
its subsidiaries have pledged Partnership Preferred Securities may vote or
consent with respect to such pledged Partnership Preferred Securities under any
of the circumstances described in Section 6.2.
Section 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) Designation. A total of ______________ Partnership Preferred
Securities, liquidation preference $25 per Partnership Preferred Security, are
hereby designated as "___% Partnership Preferred Securities".
(b) Distributions.
(i) Partnership Preferred Security Holders shall be entitled
to receive cumulative Distributions and Compounded Distributions (as
defined below) (if any), if, as and when declared by the General
Partner, in its sole discretion, out of the assets of the Partnership
legally available therefor, at a rate per annum of ___% of the stated
liquidation preference of $25 per Partnership Preferred Security,
calculated on the basis of a 360-day year consisting of twelve 30-day
months. For any period shorter than a full 90-day quarter,
Distributions will be computed on the basis of the actual number of days
elapsed in such 90-day quarter. Such Distributions shall, from the date
of original issue, accrue and be cumulative and shall be payable
quarterly, when, if, and as declared by the General Partner on the dates
specified in Section 6.2(b)(ii) below. Distributions and Compounded
Distributions (as defined below) (if any) on the Partnership Preferred
Securities shall be cumulative from the Closing Date. Distributions not
paid on the scheduled Distribution Payment Date will accumulate and
compound quarterly at the rate of ___% per annum ("Compounded
Distributions"). In the event that any date on which Distributions are
payable on the Partnership Preferred Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on
the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day (without any
reduction in interest or other amounts in respect of such early
payment).
(ii) Distributions on the Partnership Preferred Securities will
be payable quarterly in arrears if, as and when, declared by the General
Partner on March 31, June 30, September 30 and December 31 of each year,
commencing on _________, 1997 (each a "Distribution Payment Date").
Distributions will be payable to the Holders as they appear on
the books and records of the Partnership on the relevant Record Date.
If the Trust or the Property Trustee is the Holder of the Partnership
Preferred Securities, all distributions of cash shall be made by wire
transfer of same day funds to such Holder by 10:00 a.m., New York City
time, on the applicable Distribution Payment Date. Distributions
payable on any Partnership Preferred Securities that are not punctually
paid on any Distribution
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Payment Date will cease to be payable to the Person in whose name such
Partnership Preferred Securities are registered on the relevant record
date, and such Distribution will instead be payable to the Person in
whose name such Partnership Preferred Securities are registered on the
record date for payment of such defaulted or accrued Distribution.
(c) Optional Redemption. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after ________, 2002, upon not less than 30 nor more than 60
days' notice, at an amount per Partnership Preferred Securities equal to $25
plus accrued and unpaid Distributions thereon, including any Compounded
Distributions (the "Redemption Price"). The Partnership may not redeem the
Partnership Preferred Securities in part unless all accumulated and unpaid
Distributions, including any Compounded Distributions, have been paid in full
on all Partnership Preferred Securities for all Fiscal Periods terminating on
or prior to the date of redemption. If a partial redemption of the Partnership
Preferred Securities would result in the delisting of the Trust Preferred
Securities (or, if the Trust is liquidated in connection with a Trust Special
Event, the delisting of the Partnership Preferred Securities), the Partnership
may only redeem the Partnership Preferred Securities in whole but not in part.
(d) Special Event Redemptions. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days' notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, the Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause
(ii), the General Partner shall pay any and all costs and expenses incurred by
or payable by the Partnership which are attributable to the Partnership Special
Event.
(e) Redemption Procedures.
(i) Notice of any redemption of Partnership Preferred
Securities (a "Redemption Notice") will be given by the General Partner
on behalf of the Partnership by mail to each Holder of Partnership
Preferred Securities to be redeemed not fewer than 30 nor more than 60
days before the date fixed for redemption. For purposes of the
calculation of the date of redemption and the dates on which notices are
given pursuant to this Section 6.2(e)(i), a Redemption Notice shall be
deemed to be given on the day such notice is first mailed, by
first-class mail, postage prepaid, to Holders of Partnership Preferred
Securities. Each Redemption Notice shall be addressed to the Holders of
Partnership Preferred Securities at the address of each such Holder
appearing in the books and records of the Partnership. No defect in the
Redemption Notice or in the mailing thereof with respect to any Holder
shall affect the validity of the redemption proceedings with respect to
any other Holder.
(ii) In the event that fewer than all the outstanding
Partnership Preferred Securities are to be redeemed, the Partnership
Preferred Securities to be redeemed shall be redeemed pro rata provided,
that, in the event Partnership Preferred Securities are held in
book-entry only form by DTC or its nominee (or any successor Clearing
Agency or its nominee), DTC will reduce, in accordance with DTC's
customary procedures, the amount of the interest of each Clearing Agency
Participant in the Partnership Preferred Securities to be redeemed.
(iii) If the Partnership gives a Redemption Notice (which notice
will be irrevocable), then by 12:00 noon, New York City time, on the
redemption date, the General Partner on behalf of the Partnership (A) if
the Partnership Preferred Securities are in book-entry only form with
DTC, will deposit irrevocably with DTC funds sufficient to pay the
applicable Redemption Price and will give DTC irrevocable instructions
and authority to pay the Redemption Price in respect of the Partnership
Preferred Securities held
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through DTC in global form or (B) if the Partnership Preferred
Securities are held in certificated form, will deposit with the Paying
Agent, funds sufficient to pay the applicable Redemption Price of the
amount of any such Partnership Preferred Securities and will give to the
Paying Agent irrevocable instructions and authority to pay such amounts
to the Holders of Partnership Preferred Securities, upon surrender of
their certificates, by check, mailed to the address of the relevant
Holder appearing on the books and records of the Partnership on the
redemption date; provided, however, that for so long as the Trust or the
Property Trustee of the Trust shall hold the Partnership Preferred
Securities, payment of cash shall be made by wire in same day funds to
the Holder by 12:00 Noon, New York City time, on the redemption date.
For these purposes, the applicable Redemption Price shall not include
Distributions which are being paid to Holders who were Holders on a
relevant record date. Upon satisfaction of the foregoing conditions,
then immediately prior to the close of business on the date of such
deposit or payment, all rights of Holders of such Partnership Preferred
Securities so called for redemption will cease, except the right of the
Holders to receive the Redemption Price, but without interest on such
Redemption Price, and from and after the date fixed for redemption, such
Partnership Preferred Securities will not accrue distributions or bear
interest.
In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next
succeeding Business Day (and without any interest in respect of any such
delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day (without any reduction in interest on other amounts in respect of
any such early payment). In the event that payment of the Redemption
Price is improperly withheld or refused and not paid by either the
Partnership or the Company pursuant to the Partnership Guarantee,
Distributions on the Partnership Preferred Securities called for
Redemption will continue to accrue, to the extent that payment of such
interest is legally available, from the original redemption date until
the Redemption Price is actually paid.
The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which
have been called for redemption.
(f) Company Purchases. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Declaration) of Trust Preferred Securities, the Company or any
of its subsidiaries may at any time and from time to time purchase outstanding
Partnership Preferred Securities by tender, in the open market, or by private
agreement.
(g) Liquidation Distribution Upon Dissolution. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "Partnership
Liquidation Distribution") payable in cash.
(h) Voting Rights.
(i) Special Representative.
(1) If one or more of the following events shall occur and be
continuing (each a "Partnership Enforcement Event"): (i) arrearages on
distributions on the Partnership Preferred Securities shall exist for
six consecutive quarterly distribution periods, (ii) the Company is in
default on any of its obligations under the Partnership Guarantee or
(iii) an Investment Event of Default on any Affiliate Investment
Instrument or a default under any Investment Guarantee, as the case may
be, the Holders of the Partnership Preferred Securities, upon the
affirmative vote of at least a Majority in Liquidation Preference of the
Partnership Preferred Securities, shall have the right, to the exclusion
of the General Partner, (a) to appoint and authorize a special
representative of the Partnership and the Limited Partners (a "Special
Representative") to enforce (1) to the maximum extent permitted by
applicable law, the Partnership's creditors' rights and other rights
with respect to the Affiliate Investment Instruments and the Investment
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Guarantees, (2) the rights of the Holders of the Partnership Preferred
Securities under the Partnership Guarantee, and (3) the rights of the
Holders of the Partnership Preferred Securities to receive Distributions
(only if, and to the extent, declared by the General Partner, in its
sole discretion, out of funds legally available therefor) on the
Partnership Preferred Securities, and (b) under the Partnership
Guarantee to enforce the terms of the Partnership Guarantee, including
the right to enforce the covenant restricting certain payments. Under
no circumstances, however, shall the Special Representative have
authority to cause the General Partner to declare Distributions on the
Partnership Preferred Securities or have any authority concerning the
selection of Partnership Investments. When the Special Representative
acts to enforce the Partnership's creditors' rights and other rights
with respect to the Affiliate Investment Instruments and the Investment
Guarantees, the Special Representative acts as an agent of the
Partnership. When the Special Representative acts to enforce the rights
of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee or their rights to receive Distributions on the
Partnership Preferred Securities, the Special Representative acts as an
agent of the Holders of the Partnership Preferred Securities. In
addition, the Special Representative shall not, by virtue of acting in
such capacity, be admitted as a general or limited partner in the
Partnership or otherwise be deemed to be a general or limited partner in
the Partnership and shall have no liability for the debts, obligations,
or liabilities of the Partnership.
(2) In furtherance of the foregoing, and without limiting the
powers of any Special Representative so appointed and to avoid any doubt
concerning the powers of the Special Representative, any Special
Representative, in its own name, in the name of the Partnership, in the
name of the Limited Partners, or otherwise, may institute, or cause to
be instituted, a proceeding, including, without limitation, any suit in
equity, an action at law or other judicial or administrative proceeding,
to enforce on behalf of the Partnership the Partnership's rights
directly against the Company or any other obligor in connection with its
obligations to the Partnership, and may prosecute such proceeding to
judgment or final decree, and enforce the same against the Company or
any other obligor in connection with such obligations and collect, out
of the property, wherever situated, of the Company or any such other
obligor upon such obligations, the monies adjudged or decreed to be
payable in the manner provided by law. The General Partner agrees to
execute and deliver such documents as may be necessary, appropriate or
convenient for the Special Representative to enforce the foregoing
rights and obligations on behalf and in the name of the Partnership.
(3) If the Special Representative fails to enforce its rights
under any Affiliate Investment Instrument after a holder of Partnership
Preferred Securities has made a written request, such holder of record
of Partnership Preferred Securities may to the fullest extent permitted
by law directly institute a legal proceeding against the applicable
Investment Affiliate to enforce the rights of the Special Representative
and the Partnership under the Affiliate Investment Instrument without
first instituting any legal proceeding against the Special
Representative, the Partnership or any other person or entity. In any
event, if a Partnership Enforcement Event has occurred and is continuing
and such event is attributable to the failure of an Investment Affiliate
to make any required payment when due on any Affiliate Investment
Instrument, then a holder of Partnership Preferred Securities may to the
fullest extent permitted by law on behalf of the Partnership directly
institute a proceeding against such Investment Affiliate with respect to
such Affiliate Investment Instrument for enforcement of payment. In
addition, the Partnership acknowledges that, for so long as the Trust
holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership
under the Affiliate Investment Instruments after a holder of Trust
Securities has made a written request, a holder of record of Trust
Securities may to the fullest extent permitted by law on behalf of the
Partnership directly institute a legal proceeding against the Investment
Affiliates under the Affiliate Investment Instruments, without first
instituting any legal proceeding against the Property Trustee, the
Trust, the Special Representative or the Partnership. In any event, for
so long as the Trust is the holder of any Partnership Preferred
Securities, if a Trust Enforcement Event has occurred and is continuing
and such event is attributable to the failure of an Investment Affiliate
to make any required payment when due on any Affiliate Investment
Instrument or the failure of the Company to make any required payment
when due on any Investment Guarantee, then
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the Partnership acknowledges that a holder of Trust Securities may to
the fullest extent permitted by law on behalf of the Partnership
directly institute a proceeding against such Investment Affiliate with
respect to such Affiliate Investment Instrument or against the Company
with respect to any such Investment Guarantee, in each case for
enforcement of payment. Under no circumstances shall the Special
Representative, any holder of Partnership Preferred Securities or any
holder of Trust Preferred Securities have authority to cause the General
Partner to declare distributions on the Partnership Preferred
Securities.
(4) For purposes of determining whether the Partnership has
deferred payment of Distributions for six (6) consecutive quarters,
Distributions shall be deemed to remain in arrears, notwithstanding any
payments in respect thereof, until full cumulative Distributions,
including Compounded Distributions, have been or contemporaneously are
paid with respect to all quarterly Distribution periods terminating on
or prior to the date of payment of such full cumulative Distributions.
Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for
election of a Special Representative. If the General Partner fails to
convene such meeting within such 30-day period, the Holders of not less
than 10% in Liquidation Preference of the Outstanding Partnership
Preferred Securities will be entitled to convene such meeting. The
provisions of Section 14.3 relating to the convening and conduct of
meetings of the Partners will apply with respect to any such meeting.
In the event that, at any such meeting, Holders of less than a Majority
in Liquidation Preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of
the Partnership and/or the Limited Partners if (x) the Partnership (or
the Company pursuant to the Partnership Guarantee) shall have paid in
full all accrued and unpaid Distributions on the Partnership Preferred
Securities, (y) the relevant Investment Event of Default shall have been
cured, and (z) the Company is in compliance with all its obligations
under the Partnership Guarantee, and the Company, in its capacity as the
General Partner, shall continue the activities of the Partnership
without dissolution. Notwithstanding the appointment of any such
Special Representative, the Company shall continue as General Partner
and shall retain all rights under this Agreement, including the right to
determine whether to declare, in its sole discretion, the payment of
Distributions on the Partnership Preferred Securities.
(ii) Certain Amendments; Waiver. (1) If any proposed
amendment of this Agreement provides for, or the General Partner
otherwise proposes to effect, (x) any action that would adversely affect
the powers, preferences or special rights of the Holders of the
Partnership Preferred Securities, whether by way of amendment of this
Agreement or otherwise (including, without limitation, the authorization
or issuance of any limited partnership interests in the Partnership
ranking, as to participation in profits or distributions, or in the
assets of the Partnership, senior to the Partnership Preferred
Securities); or (y) the dissolution, winding-up or termination of the
Partnership, other than (1) in connection with the occurrence of a
Partnership Special Event or (2) as described under Sections 11.11 and
13.2 of this Agreement, then the Holders of outstanding Partnership
Preferred Securities will be entitled to vote on such amendment or
proposal of the General Partner (but not on any other amendment or
proposal) as a class and such amendment or proposal shall not be
effective except with the approval of Holders of a Majority in
Liquidation Preference of such outstanding Partnership Preferred
Securities having a right to vote on the matter; provided, however, that
if the Property Trustee on behalf of the Trust is the Holder of the
Partnership Preferred Securities, any such amendment or proposal not
excepted by (1) or (2) above shall not be effective without the prior or
concurrent approval of the Holders of a majority in liquidation amount
of the outstanding Trust Preferred Securities having a right to vote on
such matters; provided, further that no such approval shall be required
if the dissolution, winding-up or termination of the Partnership is
proposed or initiated upon the initiation of proceedings, or after
proceedings have been initiated, for the dissolution, winding-up,
liquidation or termination of the Company.
(2) The Holders of a Majority in Liquidation Preference
of Partnership Preferred Securities may, by vote, on behalf of
the Holders of all of the Partnership Preferred Securities,
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waive any past Partnership Enforcement Event with respect to the
Partnership Preferred Securities and its consequences; provided
that, if the underlying Investment Event of Default:
(A) is not waivable under the related Affiliate Investment
Instrument, such Partnership Enforcement Event shall also
not be waivable; or
(B) requires the consent or vote of the Holders of greater
than a majority in principal amount or liquidation
preference of the Affiliate Investment Instruments (a
"Super Majority") to be waived under the related Affiliate
Investment Instrument, the Partnership Enforcement Event
may only be waived by the vote of the Holders of the
relevant Super Majority in liquidation amount of the
Partnership Preferred Securities.
Upon such waiver, any such Partnership Enforcement Event shall
cease to exist, and shall be deemed to have been cured, for every
purpose of this Agreement, but no such waiver shall extend to any
subsequent or other Partnership Enforcement Event or impair any
right consequent thereon.
(3) A waiver of an Investment Event of Default by the
Special Representative, acting at the direction of the Holders of
the Partnership Preferred Securities, constitutes a waiver of the
corresponding Partnership Enforcement Event.
(iii) General Voting. (1) Neither the General Partner nor the
Special Representative shall (i) direct the time, method and place of
conducting any proceeding for any remedy available, (ii) waive any
Investment Event of Default that is waivable under the Affiliate
Investment Instruments, (iii) exercise any right to rescind or annul a
declaration that the principal of any Affiliate Investment Instruments
that are debt instruments shall be due and payable, (iv) waive the
breach of the covenant by the Company in the Partnership Guarantee to
restrict certain payments, or (v) consent to any amendment, modification
or termination of any Affiliate Investment Instrument, where such
consent shall be required from the holder thereof, without, in each
case, obtaining the prior approval of the Holders of at least a Majority
in Liquidation Preference of the Partnership Preferred Securities;
provided, however, that if the Property Trustee on behalf of the Trust
is the Holder of the Partnership Preferred Securities, such waiver,
consent or amendment or other action shall not be effective without the
prior or concurrent approval of at least a majority in liquidation
amount of the outstanding Trust Preferred Securities having a right to
vote on such matters. The General Partner shall not revoke any action
previously authorized or approved by a vote of the Holders of the
Partnership Preferred Securities. The General Partner shall notify all
Holders of the Partnership Preferred Securities of any notice of an
Investment Event of Default received with respect to any Affiliate
Investment Instrument.
(2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened
for such purpose or pursuant to written consent. The General Partner
will cause a notice of any meeting at which Holders of Partnership
Preferred Securities are entitled to vote, or of any matter upon which
the action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Partnership Preferred Securities.
Each such notice will include a statement setting forth (x) the date of
such meeting or the date by which such action is to be taken, (y) a
description of any matter proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matters upon which written
consent is sought and (z) instructions for the delivery of proxies or
consents. No vote or consent of the Holders of Partnership Preferred
Securities will be required for the Partnership to redeem and cancel
Partnership Preferred Securities in accordance with this Agreement.
(3) Notwithstanding that Holders of Partnership Preferred
Securities are entitled to vote or consent under any of the
circumstances described above, any of the Partnership Preferred
Securities at such time that are owned by the Company or by any entity
more than 50% of which is owned by the
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Company, either directly or indirectly, shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as
if they were not outstanding; provided, however, that persons otherwise
eligible to vote to whom the Company or any of its subsidiaries have
pledged Partnership Preferred Securities may vote or consent with
respect to such pledged Partnership Preferred Securities under any of
the circumstances described herein.
(4) Holders of the Partnership Preferred Securities shall have
no rights to remove or replace the General Partner.
(5) Holders of Partnership Preferred Securities shall have no
preemptive rights.
ARTICLE VII
PARTNERSHIP INVESTMENTS
Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.
(a) All Partnership funds will be invested in the securities of
Investment Affiliates (the "Affiliate Investment Instruments") and Eligible
Debt Securities. No more than 99% of the Initial Partnership Proceeds will be
used by the Partnership to purchase the Initial Debentures meeting the criteria
set forth in this Section 7.1. The remaining funds from the Initial
Partnership Proceeds will be used to purchase Eligible Debt Securities in
accordance with the terms of this Agreement.
(b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) a debt instrument of the Company (the
"Initial Company Debenture") in the aggregate principal amount of approximately
$______________ and (2) debt instruments of two wholly owned United States
subsidiaries of the Company totalling approximately $___________ (such debt
instruments collectively referred to as the "Initial Affiliate Debentures").
The Initial Company Debenture and the Initial Affiliate Debentures are
collectively referred to as the "Initial Debentures." The Partnership may
purchase the Initial Debentures only upon receipt of an opinion of the
Independent Financial Advisor to the effect that (i) if such Initial Debentures
were to be rated, at least one Rating Agency would rate all the Initial
Debentures investment grade at the time such Initial Debentures are purchased
by the Partnership, (ii) the Company and each Investment Affiliate which is a
subsidiary of the Company would have been capable of issuing and selling debt
instruments with the same terms and conditions as the applicable Initial
Debentures to unrelated third party investors, (iii) the terms and conditions
of the Initial Debentures taken as a whole are no more favorable to the
relevant Investment Affiliate than could have been obtained by such Investment
Affiliate from unrelated third party investors pursuant to a public offering or
a private placement pursuant to Rule 144A under the Securities Act of 1933 of
such Initial Debentures. On the Closing Date, the Partnership shall invest at
least 1% of such Initial Partnership Proceeds in Eligible Debt Securities. The
terms of the Initial Debentures will be as set forth in the Indentures attached
hereto as Exhibits A and B.
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.
(a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.
(b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "Investment Offer") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).
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(c) If the Independent Financial Advisor determines that the terms of
an Affiliate Investment Instrument (as set forth in the Investment Offer) do
not satisfy the Reinvestment Criteria, the Partnership shall be prohibited from
making any investment in such Affiliate Investment Instrument.
(d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "Reinvestment Criteria"): (i) the economic terms of each
Affiliate Investment Instrument shall be no less favorable to the Partnership
than terms that would otherwise be obtainable through a public offering or
private placement under Rule 144A of the Securities Act of 1933 of securities
by the requesting Investment Affiliate and the other terms and conditions of
each Affiliate Reinvestment Instrument are substantially similar to the terms
and conditions of similar securities that are offered to the public in a public
offering or private placement under Rule 144A of the Securities Act of 1933 of
such securities; (ii) the Partnership shall not have held any Affiliate
Investment Instruments of the Investment Affiliate submitting the Investment
Offer within the three-year period ending on the date of the Investment Offer;
(iii) there shall not have been a default on any debt obligation of the
Investment Affiliate submitting the Investment Offer that was owned by the
Partnership; (iv) no dividend arrearages shall have existed on any equity
security of the Investment Affiliate submitting the Investment Offer that was
owned by the Partnership; and (v) the Investment Affiliate submitting the
Investment Offer shall not be deemed to be an investment company by reason of
Section 3(a) or 3(b) of the 1940 Act.
(e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).
Section 7.3 ASSUMPTION OF OBLIGATIONS AND RELEASE OF INVESTMENT
AFFILIATE.
The General Partner, on behalf of the Partnership, may without the
approval of the Holders of Partnership Preferred Securities, release any
Investment Affiliate other than the Company (a "Released Investment Affiliate")
from its obligations under an Affiliate Investment Instrument but only upon (A)
the receipt of a written instrument of assumption evidencing the assumption by
another Investment Affiliate (an "Assuming Investment Affiliate") of all
obligations of the Released Investment Affiliate under such Affiliate
Investment Instrument, (B) the receipt of a written instrument of the Company
evidencing its agreement that its Investment Guarantee will continue to be
applicable to such Affiliate Investment Instrument following the assumption and
release and (C) the receipt of an opinion of the Independent Financial Advisor
that the terms of such Affiliate Investment Instrument would satisfy the
Reinvestment Criteria if such Affiliate Investment Instrument were entered into
de novo by the Assuming Investment Affiliate on the date of such assumption.
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 8.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest
during reasonable business hours.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by
applicable law, keep confidential from the Partners any information with
respect to the Partnership, the disclosure of which the General Partner
reasonably believes is not in the best interests
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of the Partnership, or is adverse to the interests of the Partnership, or which
the Partnership or the General Partner is required by law or by an agreement
with any Person to keep confidential.
(c) (i) For so long as the Partnership Preferred Securities are held
by the Property Trustee on behalf of the Trust, within one month after the
close of each Fiscal Year, the General Partner shall transmit to each Partner a
statement indicating such Partner's share of each item of Partnership income,
gain, loss, deduction or credit, for United States federal income tax purposes,
for such Fiscal Year.
(ii) In the event that the Partnership Preferred Securities are
no longer held by the Property Trustee on behalf of the Trust, as soon
as reasonably possible after the close of the Fiscal Year, the General
Partner shall transmit to each Partner the statement referred to in
Section 8.1(c)(i) hereof.
Section 8.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes, the books and records of the Partnership shall be kept on the accrual
method of accounting applied on a consistent basis and shall reflect all
Partnership transactions.
Section 8.3 ANNUAL AUDIT. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial
statements of the Partnership shall be audited by a firm of independent
certified public accountants selected by the General Partner in accordance with
applicable law. The cost of such audits will be an expense of the Partnership
and shall be paid by the General Partner.
ARTICLE IX
PAYMENT OF EXPENSES
Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the General Partner on behalf of the
Partnership hereby agrees, at any time while the Property Trustee is the Holder
of any Partnership Preferred Securities, to pay all the expenses of the Trust,
including, but not limited to, any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed on the Trust
by the United States, or any other taxing authority, so that the net amounts
received and retained by the Trust and the Property Trustee after paying such
expenses will be equal to the amounts the Trust and the Property Trustee would
have received had no such costs or expenses been incurred by or imposed on the
Trust. The General Partner shall be liable for, and shall pay all such
expenses on behalf of the Partnership solely out of its own funds. In
addition, if the Partnership is required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other taxing authority, then, in any case,
the General Partner will pay such taxes, duties, assessments or other
governmental charges on behalf of the Partnership out of its own funds.
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection with
the offering, sale and issuance of the Partnership Preferred Securities by the
Partnership, the General Partner shall:
(a) pay all costs and expenses of the Partnership (including, but not
limited to, costs and expenses relating to the organization of the Partnership,
the offering, sale and issuance of the Partnership Preferred Securities
(including commissions to the underwriters in connection therewith) the fees
and expenses of the Special Representatives (if any), and the costs and
expenses relating to the operation of the Partnership, including, without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses; and
(b) be primarily and fully liable for any indemnification obligations
arising with respect to this Agreement.
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ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 10.1 LIMITATIONS. The Limited Partners shall not participate
in the management or control of the Partnership's investment activity, property
or other assets, nor shall the Limited Partners engage in any activities for
the Partnership, nor shall the Limited Partners have the power to act for or
bind the Partnership, such powers being vested solely and exclusively in the
General Partner (and, upon appointment, and to the extent set forth herein, the
Special Representative). The Limited Partners shall have such rights as are
set forth herein and in the Partnership Guarantee. The Limited Partners shall
have no interest in the properties or assets of the General Partner, or any
equity therein, or in any proceeds of any sales thereof (which sales shall not
be restricted in any respect), by virtue of acquiring or owning an Interest in
the Partnership.
Section 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
Section 10.3 PRIORITY. No Limited Partner shall have priority over any
other Limited Partner as to Partnership allocations or distributions.
ARTICLE XI
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 11.1 AUTHORITY. Subject to the provisions of Section 6.2(h)(i)
with respect to the Special Representative, the General Partner shall have
exclusive and complete authority and discretion to manage the operations and
affairs of the Partnership and to make all decisions regarding the investment
activity of the Partnership. Any action taken by the General Partner shall
constitute the act of and serve to bind the Partnership. In dealing with the
General Partner acting on behalf of the Partnership no Person shall be required
to inquire into the authority of the General Partner to bind the Partnership.
Persons dealing with the Partnership are entitled to rely conclusively on the
power and authority of the General Partner as set forth in this Agreement.
Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER. Subject to the
provisions of Section 6.2(h)(i) with respect to the Special Representative, the
General Partner shall have all rights and powers of a general partner under the
Act, and shall have all authority, rights and powers in the management of the
Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:
(a) to secure the necessary goods and services required in performing
the General Partner's duties for the Partnership;
(b) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under the
Affiliate Investment Instruments and the Partnership Guarantee;
(c) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
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(d) to act as registrar and transfer agent for the Partnership
Preferred Securities or designate an entity to act as registrar and transfer
agent;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Distributions and voting rights and to make determinations as to the
payment of Distributions, and make or cause to be made all other required
payments to Holders of the Partnership Preferred Securities and to the General
Partner;
(f) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Partnership;
(h) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(i) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence, rights,
franchises and privileges as a limited partnership under the laws of the State
of Delaware and of each other jurisdiction in which such existence is necessary
to protect the limited liability of the Limited Partners or to enable the
Partnership to invest in the Affiliate Investment Instruments and Eligible Debt
Securities;
(j) to take all action not inconsistent with applicable law, the
Certificate or this Agreement, that the General Partner or, upon appointment
pursuant to Section 6.2(h)(i), the Special Representative, determines in its
sole discretion to be necessary or desirable to ensure, as long as such action
does not adversely affect the interests of the Partnership Preferred Security
Holders, or cause (i) the Partnership to be deemed to be an "investment
company" required to be registered under the 1940 Act, (ii) any Initial
Debenture (or any subsequent Affiliate Investment Instrument that is intended
to be classified as debt) to not be treated as indebtedness for United States
federal income tax purposes, or (iii) the Partnership to be treated as an
association or as a publicly traded partnership taxable as a corporation;
(k) to cause the Partnership to enter into and perform the Purchase
Agreement and to purchase Eligible Debt Securities and Affiliate Investment
Instruments, as the case may be, without any further act, vote or approval of
any Partner; and
(l) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER.
(a) The General Partner hereby assumes and shall be liable for the
debts, obligations and liabilities of the Partnership, including, but not
limited to, any liabilities arising under the Securities Act or the Exchange
Act and all costs and expenses relating to the investment by the Partnership in
any Affiliate Investment Instruments (but not any losses related to any
non-payment with respect to such investments), and agrees to pay on behalf of
the Partnership and solely out of its own funds to each Person to whom the
Partnership is now or hereafter becomes indebted or liable (the
"Beneficiaries"), whether such indebtedness, obligations or liabilities arise
in contract, tort or otherwise (excluding payment obligations of the Company to
Holders of the Partnership Preferred Securities in such Holders' capacities as
Holders of such Partnership Preferred Securities, such obligations being
separately guaranteed under the Partnership Guarantee), the full payment of
such indebtedness and any and all liabilities, when and as due. This Agreement
is intended to be for the benefit of and to be enforceable by all such
Beneficiaries whether or not such Beneficiaries have received notice hereof.
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(b) The General Partner agrees to pay on behalf of the Partnership
and solely out of its own funds and be responsible for:
(i) all costs and expenses of the Partnership including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of Partnership Preferred
Securities, the costs and expenses relating to the operation of the
Partnership (including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment, paying
agent(s), registrar(s), transfer agents, duplicating, travel and
telephone and other telecommunications expenses) and costs and expenses
incurred in connection with the acquisition, financing, and disposition
of the Partnership's assets; and
(ii) any and all taxes (other than federal, state and local
withholding taxes) and all liabilities, costs and expenses with respect
to such taxes of the Partnership.
Section 11.4 LIABILITY. Except as expressly set forth in this
Agreement or in the Guarantee Agreements, (a) the General Partner shall not be
personally liable for the return of any portion of the capital contributions
(or any return thereon) of the Limited Partners; (b) the return of such capital
contributions (or any return thereon) shall be made solely from assets of the
Partnership; and (c) the General Partner shall not be required to pay to the
Partnership or to any Limited Partner any deficit in any Limited Partner's
Capital Account upon dissolution, winding-up or otherwise. Other than as
expressly provided in this Agreement or under the Act, no Limited Partner shall
have the right to demand or receive property other than cash for its respective
Interest in the Partnership. The General Partner shall be liable to an
unlimited extent for the debts and other obligations of the Partnership.
Section 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof may
engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or
the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary)
or to recommend to others any such particular investment opportunity.
Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:
(i) acquire any assets other than as expressly provided
herein;
(ii) do any act which would make it impractical or impossible
to carry on the ordinary activity of the Partnership as set forth in
Section 2.3;
(iii) possess Partnership property for other than a Partnership
purpose;
(iv) admit a Person as a Partner, except as expressly provided
in this Agreement;
(v) make any advances of funds to the General Partner or its
Affiliates, other than such as represented by the Affiliate Investment
Instruments;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
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(viii) without the written consent of the Holders of 66-2/3% in
Liquidation Preference of the Partnership Preferred Securities, have an
order for relief entered with respect to the Partnership or commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent
to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of the Partnership's
property, or make any assignment for the benefit of creditors of the
Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or to engage in any financial or other trade or business.
Section 11.7 EXCULPATION.
(a) No Partnership Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Partnership or any Partnership
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Partnership Indemnified Person in good
faith on behalf of the Partnership and in a manner such Partnership Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Partnership Indemnified Person by this Agreement or by law, except that a
Partnership Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Partnership Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) A Partnership Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership by
any Person as to matters the Partnership Indemnified Person reasonably believes
are within such other Person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Partnership,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Partners might properly be paid.
Section 11.8 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, a Partnership
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Partnership or to any other Partnership Covered Person,
a Partnership Indemnified Person acting under this Agreement shall not be
liable to the Partnership or to any other Partnership Covered Person for its
good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of
a Partnership Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Partnership Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons, or
(ii) whether this Agreement or any other agreement contemplated herein or
therein provides that a Partnership Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Partnership or
any Partner, the Partnership Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
such interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Partnership Indemnified Person, the resolution,
action or term so made, taken or provided by the Partnership Indemnified Person
shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of the Partnership Indemnified
Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be
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entitled to consider such interests and factors as it desires, including its
own interest, and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Partnership or any other Person, or
(ii) in its "good faith" or under another express standard, the Partnership
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Agreement or by
applicable law.
Section 11.9 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the
Partnership shall indemnify and hold harmless each Partnership Indemnified
Person from and against any loss, damage or claim incurred by such Partnership
Indemnified Person by reason of any act or omission performed or omitted by
such Partnership Indemnified Person in good faith on behalf of the Partnership
and in a manner such Partnership Indemnified Person reasonably believed to be
within the scope of authority conferred on such Partnership Indemnified Person
by this Agreement, except that no Partnership Indemnified Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Partnership Indemnified Person by reason of gross negligence or willful
misconduct with respect to such acts or omissions; provided, however, that any
indemnity under this Section 11.9 shall be provided out of and to the extent of
Partnership assets only, and no Partnership Covered Person shall have any
personal liability on account thereof.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).
Section 11.10 TAX MATTERS
(a) For purposes of section 6231(a)(7) of the Code, the "Tax
Matters Partner" shall be the Company as long as it remains the general partner
of the Partnership. The Tax Matters Partner shall keep the Limited Partners
fully informed of any inquiry, examination or proceeding.
(b) Neither the Partnership, nor the Tax Matters Partner on behalf
of the Partnership, shall make an election under section 754 of the Code.
(c) The General Partner and the Partnership Preferred Security
Holders acknowledge that they intend, for United States federal income tax
purposes, that the Partnership shall be treated as a "partnership" (other than
a publicly traded partnership taxable as a corporation) and that the General
Partner and the Partnership Preferred Security Holders shall be treated as
"partners" of the Partnership.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS. The
Partnership may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as permitted pursuant to
this Section 11.11. The Partnership may, without the consent of the Holders of
the Partnership Preferred Securities, consolidate, amalgamate, merge with or
into, or be replaced by a limited partnership, limited liability company or
trust organized as such under the laws of any state of the United States of
America, provided that (i) such successor entity either (x) expressly assumes
all of the obligations of the Partnership under the Partnership Preferred
Securities or (y) substitutes for the Partnership Preferred Securities other
securities having substantially the same terms
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as the Partnership Preferred Securities (the "Partnership Successor
Securities") so long as the Partnership Successor Securities are not junior to
any other equity securities of the successor entity, with respect to
participation in the profits and distributions, and in the assets, of the
successor entity, (ii) the Investment Affiliates expressly acknowledge such
successor entity as the holder of the Affiliate Investment Instruments, (iii)
the Partnership Preferred Securities continue to be or any Partnership
Successor Securities are or will be listed, upon notification of issuance, on
any national securities exchange or other organization on which the Partnership
Preferred Securities, if so listed, are then listed, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Trust Preferred
Securities (or, in the event that the Trust is liquidated in connection with a
Trust Special Event, the Partnership Preferred Securities (including any
Partnership Successor Securities)) to be downgraded by any nationally
recognized statistical securities rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
powers, preferences and other special rights of the holders of the Trust
Preferred Securities or the Holders of the Partnership Preferred Securities
(including any Partnership Successor Securities)) in any material respect
(other than, in the case of the Partnership Preferred Securities, with respect
to any dilution of the Holders' interest in the new resulting entity), (vi)
such successor entity has a purpose substantially identical to that of the
Partnership, (vii) prior to such merger, consolidation, amalgamation or
replacement, the Company has received an opinion of nationally recognized
independent counsel to the Partnership experienced in such matters to the
effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and not as an association or a
publicly traded partnership taxable as a corporation, (B) such merger,
consolidation, amalgamation or replacement will not cause the Trust to be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes, (C) following such
merger, consolidation, amalgamation or replacement, the Company and such
successor entity will be in compliance with the 1940 Act without registering
thereunder as an investment company, and (D) such merger, consolidation,
amalgamation or replacement will not adversely affect the limited liability of
the Holders of the Partnership Preferred Securities and (viii) the Company
guarantees the obligations of such successor entity under the Partnership
Successor Securities at least to the extent provided by the Partnership
Guarantee.
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
Section 12.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be freely transferable
by a Holder.
(b) Except as provided in the next sentence, the General Partner
may not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66-2/3% in Liquidation Preference
of the Partnership Preferred Securities. The General Partner may assign or
transfer its Interest in the Partnership without such consent only to an entity
that is the survivor of a merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced in such
matters to the effect that after such assignment or transfer the Partnership
will continue to be treated as a partnership for United States federal income
tax purposes and will not be treated as an association or a publicly traded
partnership taxable as a corporation. "Permitted Successor" shall mean an
entity that is an assignee or transferee of the Interest of the General Partner
as permitted by this Section 12.1(b). The admission of a Permitted Successor
as a general partner of the Partnership shall be effective upon the filing of
an amendment to the Certificate with the Secretary of State of the State of
Delaware which indicates that the Permitted Successor has been admitted as a
general partner of the Partnership. If the General Partner assigns its entire
Interest, the General Partner shall cease to be a general partner of the
Partnership simultaneously with the admission of the Permitted Successor as a
general partner of the Partnership. Any such Permitted Successor is hereby
authorized to and shall continue the business of the Partnership without
dissolution.
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(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.
Section 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of
L.P. Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every
L.P. Certificate surrendered for registration of transfer shall be accompanied
by a written instrument of transfer in form satisfactory to the General Partner
duly executed by the Partnership Preferred Security Holder or his or her
attorney duly authorized in writing. Each L.P. Certificate surrendered for
registration of transfer shall be canceled by the General Partner. A
transferee of an L.P. Certificate shall be admitted to the Partnership as a
Limited Partner, shall become bound by this Agreement and shall be entitled to
the rights and subject to the obligations of a Partnership Preferred Security
Holder hereunder upon the receipt by the transferee of an L.P. Certificate,
which receipt shall be deemed to constitute a request by such transferee that
the books and records of the Partnership reflect such transferee's admission as
a limited partner. The transferor of an L.P. Certificate, in whole, shall
cease to be a Limited Partner at the time that the transferee of such L.P.
Certificate is admitted to the Partnership as a Limited Partner in accordance
with this Section 12.2.
Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS.
(a) Unless and until the Partnership issues a global L.P.
Certificate pursuant to Section 12.4(a), the Partnership shall only issue
definitive L.P. Certificates to the Partnership Preferred Security Holders.
(b) The Partnership may treat the Person in whose name any L.P.
Certificate shall be registered on the books and records of the Partnership as
the sole holder of such L.P. Certificate and of the Partnership Preferred
Securities represented by such L.P. Certificate for purposes of receiving
Distributions and for all other purposes whatsoever (including without
limitation, tax returns and information reports) and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such L.P.
Certificate or in the Partnership Preferred Securities represented by such L.P.
Certificate on the part of any other Person, whether or not the Partnership
shall have actual or other notice thereof.
Section 12.4 BOOK-ENTRY PROVISIONS.
(a) General. The provisions of this Section 12.4 shall apply only
in the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event. Upon the occurrence of such event, a
global L.P. Certificate representing the Book-Entry Interests shall be
delivered to DTC, the initial Clearing Agency, by, or on behalf of, the
Partnership and any previously issued and still outstanding definitive L.P.
Certificates shall be of no further force and effect. The global L.P.
Certificate shall initially be registered on the books and records of the
Partnership in the name of Cede & Co., the nominee of DTC, and no Holder of a
Partnership Preferred Security will receive a new definitive L.P. Certificate
representing such Holder's interests in such L.P. Certificate, except as
provided in Section 12.4(c). In connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, shall
automatically be admitted to the Partnership as a Limited Partner. Receipt of
the global L.P. Certificate shall be deemed to constitute a request by Cede &
Co., the nominee of DTC, that the books and records of the Partnership reflect
its admission as a Limited Partner. Unless and until new definitive, fully
registered L.P. Certificates (the "Definitive L.P. Certificates") have been
issued to the Partnership Preferred Security Owners pursuant to Section
12.4(c):
(i) The provisions of this Section shall be in full force
and effect;
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(ii) The Partnership, the General Partner and any Special
Representative shall be entitled to deal with the Clearing Agency for
all purposes of this Agreement (including the payment of
Distributions, Redemption Price and liquidation proceeds on the L.P.
Certificates and receiving approvals, votes or consents hereunder) as
the Partnership Preferred Security Holder and the sole holder of the
L.P. Certificates and shall have no obligation to the Partnership
Preferred Security Owners;
(iii) None of the Partnership, the Trust, the General
Partner, any Special Representative or any agents of any of the
foregoing shall have any liability or responsibility for any aspect of
the records relating to or payments made on account of beneficial
ownership interests in a global L.P. Certificate for such beneficial
ownership interests or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests; and
(iv) Except as provided in Section 12.4(c) below, the
Partnership Preferred Security Owners will not be entitled to receive
physical delivery of the Partnership Preferred Securities in
definitive form and will not be considered Holders thereof for any
purpose under this Agreement, and no global L.P. Certificate
representing Partnership Preferred Securities shall be exchangeable,
except for another global L.P. Certificate of like denomination and
tenor to be registered in the name of DTC or Cede & Co., or to a
successor Depositary or its nominee. Accordingly, each Partnership
Preferred Security Owner must rely on the procedures of DTC or if such
person is not a Participant, on the procedures of the Participant
through which such person owns its interest to exercise any rights of
a Holder under the Agreement.
(b) NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Partnership Preferred Security Holders is required under
this Agreement, unless and until Definitive L.P. Certificates shall have been
issued to the Partnership Preferred Security Owners pursuant to Section
12.4(c), the General Partner and any Special Representative shall give all such
notices and communications specified herein to be given to the Partnership
Preferred Security Holders to the Clearing Agency, and shall have no
obligations to the Partnership Preferred Security Owners.
(c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates
shall be prepared by the Partnership and exchangeable for the global L.P.
Certificate or L.P. Certificates if and only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue its services as a securities
depositary and no successor depositary shall have been appointed, (ii) the
Depositary, at any time, ceases to be a clearing agency registered under the
Exchange Act at such time as the Depositary is required to be so registered to
act as such depositary and no successor depositary shall have been appointed,
or (iii) the Company, in its sole discretion, determines that such global L.P.
Certificate shall be so exchangeable. Upon surrender of the global L.P.
Certificate or L.P. Certificates representing the Book- Entry Interests by the
Clearing Agency, accompanied by registration instructions, the General Partner
shall cause Definitive L.P. Certificates to be delivered to Partnership
Preferred Security Owners in accordance with the instructions of the Clearing
Agency. Neither the General Partner nor the Partnership shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Any Person receiving a
Definitive L.P. Certificate in accordance with this Section 12.4 shall be
admitted to the Partnership as a Limited Partner upon receipt of such
Definitive L.P. Certificate and shall be registered on the books and records of
the Partnership as a Partnership Preferred Security Holder. The Clearing
Agency or the nominee of the Clearing Agency, as the case may be, shall cease
to be a Limited Partner under this Section 12.4(c) at the time that at least
one additional Person is admitted to the Partnership as a Limited Partner in
accordance herewith. The Definitive L.P. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as may be
required by any national securities exchange on which Partnership Preferred
Securities may be listed and is reasonably acceptable to the General Partner,
as evidenced by its execution thereof.
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Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.
(a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.
(b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office
or agency where Partnership Preferred Securities may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Partnership
Preferred Securities and of their transfer and exchange. The Partnership may
appoint the Registrar and the Paying Agent and may appoint one or more
co-registrars and one or more additional paying agents in such other locations
as it shall determine. The term "Paying Agent" includes any additional paying
agent. The Partnership may change any Paying Agent, Registrar or co-registrar
without prior notice to any Holder. If the Partnership fails to appoint or
maintain another entity as Registrar or Paying Agent, the General Partner shall
act as such.
(c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on behalf of the Partnership, but upon
payment (with the giving of such indemnity as the Partnership or the General
Partner may require) in respect of any tax or other governmental charges that
may be imposed.
(d) The Partnership will not be required to register or cause to
be registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall
not at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold
harmless the Partnership and the other Partners from and against any losses,
expenses, judgments, fines, settlements or damages suffered or incurred by the
Partnership or such other Partners arising out of or resulting from such
retirement or withdrawal.
Section 13.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death,
withdrawal, bankruptcy or dissolution of a Limited Partner, or the occurrence
of any other event which terminates the Interest of a Limited Partner in the
Partnership, shall not, in and of itself, cause the Partnership to be dissolved
and its affairs wound up. To the fullest extent permitted by applicable law,
upon the occurrence of any such event, the General Partner may, without any
further act, vote on approval of any Partner, admit any Person to the
Partnership as an additional or substitute limited partner in the Partnership,
which admission shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued without
dissolution.
(b) The Partnership shall be dissolved and its affairs shall be
wound up upon the earliest to occur of any of the following events:
(i) upon the bankruptcy, insolvency or dissolution of the
General Partner;
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(ii) upon the assignment by the General Partner of its
entire interest in the Partnership when the assignee is not admitted
to the Partnership as a general partner of the Partnership in
accordance with this Agreement, or the filing of a certificate of
dissolution or its equivalent with respect to the General Partner, or
the revocation of the General Partner's charter and the expiration of
90 days after the date of notice to the General Partner of revocation
without a reinstatement of its charter, or if any other event occurs
that causes the General Partner to cease to be a general partner of
the Partnership under the Partnership Act, unless the business of the
Partnership is continued in accordance with the Partnership Act;
(iii) the Partnership has redeemed or otherwise purchased
all of the Partnership Preferred Securities;
(iv) the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(v) the written consent of all Partners.
(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
Section 13.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant to
Section 13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of
not less than 66 2/3% in Liquidation Preference of the Partnership Preferred
Securities (the General Partner or such Person so appointed is hereinafter
referred to as the "Liquidator")) shall commence to wind up the affairs of the
Partnership and to liquidate the Partnership's assets; provided, however, that
a reasonable time shall be allowed for the orderly liquidation of the assets of
the Partnership and the satisfaction of liabilities to creditors so as to
enable the Partners to minimize the normal losses attendant upon liquidation.
The Partners shall continue to share all income, losses and distributions
during the period of liquidation in accordance with Articles IV and V. Subject
to the provisions of this Article XIII, the Liquidator shall have full right
and unlimited discretion to determine the time, manner and terms of any sale or
sales of Partnership property pursuant to such liquidation, giving due regard
to the activity and condition of the relevant market and general financial and
economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not a
General Partner shall not, by virtue of acting in such capacity, be deemed a
Partner in this Partnership and shall not have any of the economic interests in
the Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at normal customary and competitive rates for its
services to the Partnership as reasonably determined by all the Limited
Partners.
Section 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):
(i) first, to creditors of the Partnership, including
Partners who are creditors, to the extent otherwise permitted by law,
in satisfaction of the liabilities of the Partnership (whether by
payment or the making of reasonable provisions for payment thereof),
other than liabilities for distributions (including Distributions) to
Partners;
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(ii) second, following any allocations required under
Section 4.2(e) of the Agreement, to the Limited Partners, an amount
equal to the aggregate liquidation preference of their Partnership
Preferred Securities, plus the amount of Distributions (including any
Compounded Distributions) that are accrued and unpaid as of the date
of such liquidating distribution; and
(iii) thereafter, to the General Partner.
Section 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner
shall look solely to the assets of the Partnership for all distributions with
respect to the Partnership and such Partner's capital contribution (including
returns thereof), and such Partner's share of profits or losses thereof, and
shall have no recourse therefor (upon dissolution or otherwise) against the
General Partner, except under the Partnership Guarantee. No Partner shall have
any right to demand or receive property other than cash upon dissolution and
termination of the Partnership.
Section 13.6 TERMINATION. The Partnership shall terminate when
all of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.
ARTICLE XIV
AMENDMENTS AND MEETINGS
Section 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(i), this Agreement may be amended by, and only by, a written
instrument executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the extent the result
thereof would be to (A) cause the Partnership to be treated for United States
federal income tax purposes as an association or a publicly traded partnership
taxable as a corporation, (B) require the Partnership to register under the
1940 Act or (C) materially adversely affect the rights, privileges or
preferences of the Partnership Preferred Securities. Notwithstanding any
provision to the contrary, in the event of (i) a liquidation of the Trust for
any reason or (ii) any other distribution which effectively causes Partnership
Preferred Securities to be distributed to Holders of Trust Preferred
Securities, the General Partner may amend this Agreement without the consent of
the Limited Partners to provide for (A) orderly dissemination, purchase, sale,
exchange and replacement of such Partnership Preferred Securities, (B) all
other matters to the extent required by or desirable under then applicable law
and (C) such other matters reasonably incidental or related thereto; provided,
however, that no such amendment may materially adversely affect the rights,
privileges, or preferences of the Partnership Preferred Securities without the
consent of a majority in interest of the Partners so affected.
Section 14.2 AMENDMENT OF CERTIFICATE. In the event this
Agreement shall be amended pursuant to Section 14.1, the General Partner shall
amend the Certificate to reflect such change if it deems such amendment of the
Certificate to be necessary or appropriate.
Section 14.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be called
at any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do so
by Holders of no less than 10% in Liquidation Preference as permitted by this
Agreement. Such direction shall be given by delivering to the General Partner
a request in writing stating that the signing Limited Partners desire to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Limited Partners calling a meeting shall specify in writing
the L.P. Certificates held by the Limited Partners exercising the right to call
a meeting and only those specified Interests shall be counted for purposes of
determining whether the required per-
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centage set forth in the second sentence of this paragraph has been met.
Except to the extent otherwise provided in this Agreement, the following
provisions shall apply to meetings of Partners.
(b) Notice of any such meeting shall be given to all Limited
Partners having a right to vote thereat not less than seven Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall
set forth the date, time and place of the meeting, a description of any matter
on which Holders are entitled to vote and instructions for the delivery of
proxies or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at a
meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not consented
in writing. The General Partner may provide that any written ballot submitted
to the Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for it by proxy
on all matters as to which a Partner is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be
valid after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
Partner executing it. Except as otherwise provided herein, or pursuant to
Section 14.3(f), all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as if
the Partnership were a Delaware corporation and the Limited Partners were
stockholders of a Delaware corporation.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable
procedures relating to meetings of Limited Partners or the giving of written
consents, in addition to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to be voted on by any
Partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XV
MISCELLANEOUS
Section 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner at
the Partnership's mailing address set forth below:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Treasury Department
32
<PAGE> 38
(b) if given to the General Partner, at its mailing address set
forth below:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Treasury Department
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
Section 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner, and
if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign, deliver
and file (a) any amendment of the Certificate required because of an amendment
of this Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such other
instruments, documents and certificates which from time to time may be required
by the laws of the United States of America, the State of Delaware or any other
jurisdiction, or any political subdivision or agency thereof, to effectuate,
implement and continue the valid and subsisting existence of the Partnership or
to dissolve the Partnership for any other purpose consistent with this
Agreement and the transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and (b)
extend to such Holder's successors, assigns and legal representatives.
Section 15.3 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any manner
other than as set forth herein.
Section 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
Section 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural
shall include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 15.7 CAPTIONS. Captions, headings, and subheadings
contained in this Agreement are included for convenience and identification
purposes only and in no way define, limit or extend the scope or intent of this
Agreement or any provision herein.
Section 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 15.9 COUNTERPARTS. This Agreement may contain more than
one counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
33
<PAGE> 39
Section 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.
Section 15.11 REMEDIES. The failure of any party to seek redress
for violation of, or to insist upon the strict performance of, any provision of
this Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of
any one right or remedy by any party shall not preclude or waive its right to
use any or all other remedies. Said rights and remedies are given in addition
to any other rights the parties may have by law, statute, ordinance or
otherwise.
34
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
GENERAL PARTNER:
ENRON CORP.
a Delaware corporation
By:
---------------------------------
Name:
Title:
INITIAL LIMITED PARTNER:
Organizational Limited Partner, Inc.
By:
---------------------------------
Name:
Title:
35
<PAGE> 41
ANNEX A
FORM OF L.P. CERTIFICATE
[IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security is a Global Certificate within the
meaning of the Partnership Agreement hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Partnership Preferred Security is exchangeable for
Partnership Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in
the Partnership Agreement and no transfer of this Partnership Preferred
Security (other than a transfer of this Partnership Preferred Security as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York), a New York corporation, to the Partnership or its agent for
registration of transfer, exchange or payment, and any Partnership Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary and any payment
hereon is made to Cede & Co. or such other entity as is requested by an
authorized representative of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
A-1
<PAGE> 42
PS-1 [ ]
Certificate Evidencing Partnership Preferred Securities
of
ENRON PREFERRED FUNDING II, L.P.
% Partnership Preferred Securities
(liquidation amount $25 per Partnership Preferred Security)
ENRON PREFERRED FUNDING II, L.P., a limited partnership formed under
the laws of the State of Delaware (the "Partnership"), hereby certifies that
The Chase Manhattan Bank, a property trustee pursuant to the Amended and
Restated Declaration of Trust of Enron Capital Trust II, dated _______, 1997
(the "Holder") is the registered owner of _____________ preferred securities
of the Partnership representing limited partner interests in the Partnership
designated the % Partnership Preferred Securities (liquidation amount $25
per Partnership Preferred Security) (the "Partnership Preferred Securities").
The Partnership Preferred Securities are freely transferable on the books and
records of the Partnership, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, powers, privileges, restrictions, preferences and
other terms and provisions of the Partnership Preferred Securities represented
hereby are set forth in, issued under and shall in all respects be subject to
the provisions of the Amended and Restated Agreement of Limited Partnership
dated as of _____________, 1997, as the same may be amended from time to time
(the "Partnership Agreement"). Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement. The Holder is
entitled to the benefits of the Partnership Guarantee to the extent provided
therein. The Partnership will provide a copy of the Partnership Agreement and
the Partnership Guarantee to a Holder without charge upon written request to
the Partnership at its principal place of business.
Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder. Each Holder of a Partnership Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated as
debt instruments by the relevant Investment Affiliate and by the Partnership,
as indebtedness for United States federal income tax purposes.
A-2
<PAGE> 43
IN WITNESS WHEREOF, the Partnership has executed this certificate this
____ day of _______, ______.
ENRON PREFERRED FUNDING II, L.P.
By: ENRON CORP.,
as General Partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
(See reverse for additional terms)
A-3
<PAGE> 44
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of ___% of the stated liquidation amount of $25 per
Partnership Preferred Security. Distributions not paid on the scheduled
payment date will accumulate and compound quarterly (to the extent permitted by
applicable law) at the rate of ___% per annum. The term "Distributions" as
used herein shall mean ordinary cumulative distributions in respect of each
Fiscal Period together with any such Compounded Distributions. Distributions
on the Partnership Preferred Securities will only be made to the extent that
the Partnership has funds legally available for the payment of such
distributions. Amounts available to the Partnership for distribution to the
holders of the Partnership Preferred Securities will be limited to payments
received by the Partnership from the Company and certain wholly owned
subsidiaries on the Affiliate Investment Instruments or from the Company on the
Partnership Guarantee or on the Eligible Debt Securities. Distributions on the
Partnership Preferred Securities will be paid only if, as and when declared in
the sole discretion of the Company, as the General Partner of the Partnership.
The amount of Distributions payable for any period will be computed for any
full quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly Distribution
period on the basis of the actual number of days elapsed in a 90-day quarter.
Except as otherwise described herein, distributions on the Partnership
Preferred Securities will be cumulative, will accrue from the date of initial
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ______, 1997, if, as
and when declared by the General Partner in its sole discretion. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry only form, Distributions will be payable to the
Holders of record of Partnership Preferred Securities as they appear on the
books and records of the Partnership on the relevant record dates, which will
be one Business Day prior to the relevant payment dates. If the Trust or the
Property Trustee is the Holder of the Partnership Preferred Securities, all
distributions of cash shall be made by wire transfer of same day funds to such
Holder by 10:00 a.m., New York City time, on the applicable Distribution
Payment Date. Distributions payable on any Partnership Preferred Securities
that are not punctually paid on any Distribution Payment Date will cease to be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the relevant record date, and such Distribution will instead be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the record date for payment of such defaulted or accrued
Distribution. If the Trust Preferred Securities (or, if the Trust is
liquidated, the Partnership Preferred Securities) are not in book-entry only
form, the relevant record dates shall be the 15th day of the month of the
relevant payment dates. In the event that any date on which distributions are
payable is not a Business Day, payment of such Distribution shall be made on
the next succeeding day which is a Business Day (without any interest or other
payment in respect of any such delay) except that, if such Business Day falls
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day (without any reduction in interest or other
amounts in respect of any such early payment).
The Partnership Preferred Securities shall be redeemable as provided
in the Partnership Agreement.
A-4
<PAGE> 45
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership
Preferred Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Partnership Preferred Security Certificate on the books
of the Partnership. The agent may substitute another to act for him or her.
Date:
----------------------------
Signature:
-----------------------
(Sign exactly as your name appears on the other side of this
Partnership Preferred Security Certificate)
A-5
<PAGE> 1
EXHIBIT 4(e)
================================================================================
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
ENRON CAPITAL TRUST II
DATED AS OF _____________, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . 4
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . 4
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee . . . . . . 4
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee Trustee . . . 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . 5
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . 5
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . 5
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee Trustee . 5
SECTION 3.2 Certain Rights of Trust Preferred Guarantee Trustee . . . . 7
SECTION 3.3 Not Responsible for Recitals or Issuance of Trust Preferred
Securities Guarantee . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility . . . . . . . 9
SECTION 4.2 Appointment, Removal and Resignation of Trust Preferred
Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . 10
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . 10
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . 12
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . 12
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . 14
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.3 Merger of the Guarantor . . . . . . . . . . . . . . . . . . 14
SECTION 9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.5 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE> 4
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Trust
Preferred Securities Guarantee"), dated as of ______________, 1997, is executed
and delivered by Enron Corp., a Delaware corporation (the "Guarantor" or the
"Company"), and The Chase Manhattan Bank, a New York banking corporation, as
trustee (the "Trust Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Trust Preferred Securities
(as defined herein) of Enron Capital Trust II, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _____________, 1997, among the trustees of the
Issuer named therein, Enron Corp., as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof __________ Trust Originated Preferred Securities,
having an aggregate liquidation amount of $___________, designated the ____%
Trust Originated Preferred Securities (the "Trust Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Trust Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Trust Preferred Securities Guarantee, to pay to
the Holders of the Trust Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein and;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Trust Common Securities Guarantee") in substantially identical
terms to this Trust Preferred Securities Guarantee for the benefit of the
holders of the Trust Common Securities (as defined herein), except that if the
Company is in default on any of its obligations under the Trust Preferred
Securities Guarantee, the Partnership Guarantee, or any Investment Guarantee,
or any default has occurred and is continuing with respect to an Affiliate
Investment Instrument (as defined herein), the rights of holders of the Trust
Common Securities to receive Guarantee Payments under the Trust Common
Securities Guarantee are subordinated to the rights of Holders of Trust
Preferred Securities to receive Guarantee Payments under this Trust Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Trust Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Trust Preferred
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) capitalized terms used in this Trust Preferred Securities
Guarantee but not otherwise defined herein shall have the
meanings assigned to them in the Declaration or the
Partnership Agreement, as the case may be;
(c) a term defined anywhere in this Trust Preferred Securities
Guarantee has the same meaning throughout;
<PAGE> 5
(d) all references to "the Trust Preferred Securities Guarantee"
or "this Trust Preferred Securities Guarantee" are to this
Trust Preferred Securities Guarantee as modified, supplemented
or amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Trust Preferred Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" means, with respect to any specified person, any other
person that directly or indirectly controls or is controlled by, or is under
common control with, such specified person.
"Affiliate Investment Instruments" has the meaning set forth in the
Partnership Agreement.
"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.
"Comparable Equity Interest" shall mean the 8% Cumulative Guaranteed
Monthly Income Preferred Shares of Enron Capital LLC, the 9% Cumulative
Guaranteed Preferred Securities, Series A of Enron Capital Resources, L.P., the
8.30% Trust Preferred Securities of Enron Capital Trust I and any preferred
security hereafter issued by any finance subsidiary of which the Company is the
parent company and the principal purpose of which is to lend the proceeds of
the sale thereof to the Company or to eligible affiliates of the Company.
"Corporate Trust Office" means the principal trust office of the Trust
Preferred Guarantee Trustee at which, at any particular time, its corporate
trust business shall be administered, which office at the date hereof is
located at 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Global Trust Services.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities to the extent the Issuer shall have funds
available therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Trust Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Partnership Preferred Securities to the
Holders as provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the Trust
Preferred Securities to the date of payment and (b) the amount of assets of the
Issuer, after satisfaction of all liabilities, remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Issuer of any Trust Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Trust Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
2
<PAGE> 6
"Indemnified Person" means the Trust Preferred Guarantee Trustee, any
Affiliate of the Trust Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Trust Preferred Guarantee Trustee.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that is controlled by the Company and is not an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act.
"Investment Event of Default" means an event of default under an
Affiliate Investment Instrument.
"Majority in liquidation amount of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Trust Preferred Securities, voting separately as a class, of more than 50% of
the liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Trust
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the
definition relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary
to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Partnership" means Enron Preferred Funding II, L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of __________, 1997, among
Enron Corp., a Delaware corporation, as general partner, Organizational
Partner, Inc., a Delaware corporation, as initial limited partner and such
other persons who become limited partners as provided therein.
"Partnership Preferred Securities" means those securities representing
limited partnership interests in the Partnership.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" means, with respect to the Trust Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the Trust
Preferred Guarantee Trustee, including any vice president, any assistant vice
president, any secretary, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Trust Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
3
<PAGE> 7
"Successor Trust Preferred Guarantee Trustee" means a successor Trust
Preferred Guarantee Trustee possessing the qualifications to act as Trust
Preferred Guarantee Trustee under Section 4.1.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Preferred Guarantee Trustee" means The Chase Manhattan Bank, a
national banking association, until a Successor Trust Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Trust Preferred Securities Guarantee and thereafter means each
such Successor Trust Preferred Guarantee Trustee.
"Trust Securities" means the Trust Common Securities together with the
Trust Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be
part of this Trust Preferred Securities Guarantee and shall,
to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Trust
Preferred Securities Guarantee limits, qualifies or conflicts
with the duties imposed by Section 310 to 317, inclusive, of
the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Trust Guarantee Trustee shall preserve in as current a
form as is reasonably practicable the most recent list
available to it of the names and addresses of Holders of Trust
Preferred Securities. If the Trust Guarantee Trustee is not
the Registrar, the Guarantor shall furnish to the Trust
Guarantee Trustee semi-annually on or before the last day of
June and December in each year, and at such other times as the
Trust Guarantee Trustee may request in writing, a list, in
such form and as of such date as the Trust Guarantee Trustee
may reasonably require, containing all the information in the
possession or control of the Registrar, the Guarantor or any
of its Paying Agents other than the Trust Guarantee Trustee as
to the names and addresses of Holders of Trust Preferred
Securities. If there are unregistered securities outstanding,
even if the Trust Guarantee Trustee is the Registrar, the
Company shall furnish to the Trust Guarantee Trustee such a
list containing such information with respect to Holders of
such unregistered securities only.
(b) The Trust Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b)
of the Trust Indenture Act.
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Trust Preferred
Guarantee Trustee shall provide to the Holders of the Trust Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Trust Preferred Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.
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SECTION 2.4 Periodic Reports to Trust Preferred Guarantee Trustee
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Trust Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Trust Preferred Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Trust Preferred Securities Guarantee, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Trust Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail,
first class postage prepaid, to the Holders of the Trust
Preferred Securities, notices of all Events of Default
actually known to a Responsible Officer of the Trust Preferred
Guarantee Trustee, unless such defaults have been cured before
the giving of such notice, provided, that, the Trust Preferred
Guarantee Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Trust
Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders
of the Trust Preferred Securities Trust Preferred Securities.
(b) The Trust Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Trust
Preferred Guarantee Trustee shall have received written
notice, or of which a Responsible Officer of the Trust
Preferred Guarantee Trustee charged with the administration of
the Declaration shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Trust Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Trust Preferred Guarantee Trustee
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Guarantee Trustee for the benefit of the
Holders of the Trust Preferred Securities, and the Trust
Preferred Guarantee Trustee shall not transfer this Trust
Preferred Securities Guarantee to any Person except a Holder
of Trust Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a
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Successor Trust Preferred Guarantee Trustee on acceptance by
such Successor Trust Preferred Guarantee Trustee of its
appointment to act as Successor Trust Preferred Guarantee
Trustee. The right, title and interest of the Trust Preferred
Guarantee Trustee shall automatically vest in any Successor
Trust Preferred Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Trust Preferred
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Trust Preferred Guarantee Trustee has occurred and is
continuing, the Trust Preferred Guarantee Trustee shall
enforce this Trust Preferred Securities Guarantee for the
benefit of the Holders of the Trust Preferred Securities.
(c) The Trust Preferred Guarantee Trustee, before the occurrence
of any Event of Default and after the curing or waiver of all
Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this
Trust Preferred Securities Guarantee, and no implied covenants
shall be read into this Trust Preferred Securities Guarantee
against the Trust Preferred Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Trust Preferred Guarantee Trustee,
the Trust Preferred Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Trust Preferred
Securities Guarantee, and use the same degree of care and
skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his
or her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee
shall be construed to relieve the Trust Preferred Guarantee
Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct,
except that:
(i) Prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of
Default that may have occurred:
(A) the duties and obligations of the Trust
Preferred Guarantee Trustee shall be
determined solely by the express provisions
of this Trust Preferred Securities Guarantee,
and the Trust Preferred Guarantee Trustee
shall not be liable except for the
performance of such duties and obligations as
are specifically set forth in this Trust
Preferred Securities Guarantee, and no
implied covenants or obligations shall be
read into this Trust Preferred Securities
Guarantee against the Trust Preferred
Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Trust Preferred Guarantee Trustee, the
Trust Preferred Guarantee Trustee may
conclusively rely, as to the truth of the
statements and the correctness of the
opinions expressed therein, upon any
certificates or opinions furnished to the
Trust Preferred Guarantee Trustee and
conforming to the requirements of this Trust
Preferred Securities Guarantee; but in the
case of any such certificates or opinions
that by any provision hereof are specifically
required to be furnished to the Trust
Preferred Guarantee Trustee, the Trust
Preferred Guarantee Trustee shall be under a
duty to examine the same to determine whether
or not they conform to the requirements of
this Trust Preferred Securities Guarantee;
(ii) The Trust Preferred Guarantee Trustee shall not be
liable for any error of judgment made in good faith
by a Responsible Officer of the Trust Preferred
Guarantee Trustee, unless it shall be proved that the
Trust Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such
judgment was made;
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(iii) The Trust Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to
be taken by it in good faith in accordance with the
direction of the Holders of Trust Preferred
Securities relating to the time, method and place of
conducting any proceeding for any remedy available to
the Trust Preferred Guarantee Trustee, or exercising
any trust or power conferred upon the Trust Preferred
Guarantee Trustee under this Trust Preferred
Securities Guarantee; and
(iv) No provision of this Trust Preferred Securities
Guarantee shall require the Trust Preferred Guarantee
Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance
of any of its duties or in the exercise of any of its
rights or powers, if the Trust Preferred Guarantee
Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not
reasonably assured to it under the terms of this
Trust Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Trust Preferred
Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 Certain Rights of Trust Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Guarantee Trustee may
conclusively rely, and shall be fully protected in
acting or refraining from acting upon, any
resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Trust Preferred Securities Guarantee shall be
sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Trust
Preferred Securities Guarantee, the Trust Preferred
Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking,
suffering or omitting any action hereunder, the Trust
Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence
of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered
by the Guarantor.
(iv) The Trust Preferred Guarantee Trustee shall have no
duty to see to any recording, filing or registration
of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Trust Preferred Guarantee Trustee may, at the
expense of the Sponsor, consult with counsel of its
selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and
complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include
any of its employees. The Trust Preferred Guarantee
Trustee shall have the right at any time to seek
instructions concerning the administration of this
Trust Preferred Securities Guarantee from any court
of competent jurisdiction.
(vi) The Trust Preferred Guarantee Trustee shall be under
no obligation to exercise any of the rights or powers
vested in it by this Trust Preferred Securities
Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Trust
Preferred Guarantee Trustee such security and
indemnity, reasonably satisfactory to the
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Trust Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and
the expenses of the Preferred Guarantee Trustee's
agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such
request or direction, including such reasonable
advances as may be requested by the Trust Preferred
Guarantee Trustee; provided that, nothing contained
in this Section 3.2(a)(vi) shall be taken to relieve
the Trust Preferred Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by
this Trust Preferred Securities Guarantee.
(vii) The Trust Preferred Guarantee Trustee shall not be
bound to make any investigation into the facts or
matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper
or document, but the Trust Preferred Guarantee
Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters
as it may see fit.
(viii) The Trust Preferred Guarantee Trustee may execute any
of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through
agents, nominees, custodians or attorneys, and the
Trust Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care
by it hereunder.
(ix) Any action taken by the Trust Preferred Guarantee
Trustee or its agents hereunder shall bind the
Holders of the Trust Preferred Securities, and the
signature of the Trust Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to
perform any such action. No third party shall be
required to inquire as to the authority of the Trust
Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of
this Trust Preferred Securities Guarantee, both of
which shall be conclusively evidenced by the Trust
Preferred Guarantee Trustee or its agent taking such
action.
(x) Whenever in the administration of this Trust
Preferred Securities Guarantee the Trust Preferred
Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Trust
Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in
liquidation amount of the Trust Preferred Securities,
(ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions
are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with
such instructions.
(xi) The Trust Preferred Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to
be taken by it in good faith and reasonably believed
by it to be authorized or within the discretion or
rights or powers conferred upon it by this Trust
Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Trust
Preferred Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be
illegal, or in which the Trust Preferred Guarantee Trustee
shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive
power or authority available to the Trust Preferred Guarantee
Trustee shall be construed to be a duty.
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SECTION 3.3 Not Responsible for Recitals or Issuance of Trust Preferred
Securities Guarantee
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Guarantee Trustee does not assume any responsibility for their correctness.
The Trust Preferred Guarantee Trustee makes no representation as to the
validity or sufficiency of this Trust Preferred Securities Guarantee.
ARTICLE IV
TRUST PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Trust Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Trust Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State
or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the
Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at
least annually, pursuant to law or to the
requirements of the supervising or examining
authority referred to above, then, for the purposes
of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Trust Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Trust
Preferred Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Trust Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Trust Preferred
Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Trust Preferred
Guarantee Trustee
(a) Subject to Section 4.2(b), the Trust Preferred Guarantee
Trustee may be appointed or removed without cause at any time
by the Guarantor except during an Event of Default.
(b) The Trust Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Trust
Preferred Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by
such Successor Trust Preferred Guarantee Trustee and delivered
to the Guarantor.
(c) The Trust Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Trust Preferred Guarantee
Trustee shall have been appointed or until its removal or
resignation. The Trust Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Trust Preferred
Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Trust
Preferred Guarantee Trustee has been appointed and has
accepted such appointment by instrument
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in writing executed by such Successor Trust Preferred
Guarantee Trustee and delivered to the Guarantor and the
resigning Trust Preferred Guarantee Trustee.
(d) If no Successor Trust Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this
Section 4.2 within 60 days after delivery of an instrument of
removal or resignation, the Trust Preferred Guarantee Trustee
resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Trust Preferred
Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper,
appoint a Successor Trust Preferred Guarantee Trustee.
(e) No Trust Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Trust Preferred
Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee
or removal or resignation of the Trust Preferred Guarantee
Trustee pursuant to this Section 4.2, and before the
appointment of any Successor Trust Preferred Guarantee Trustee
the Guarantor shall pay to the Trust Preferred Guarantee
Trustee all amounts to which it is entitled to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), if, as and when due, regardless of any defense, right of
setoff or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Trust Preferred Securities to be performed or observed by the
Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the
terms of the Trust Preferred Securities or the extension of
time for the performance of any other obligation under,
arising out of, or in connection with, the Trust Preferred
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or
other
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sum payable that results from the extension of any interest
payment period on the Partnership Preferred Securities or any
extension of the maturity date of the Partnership Preferred
Securities permitted by the Partnership Agreement);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant
to the terms of the Trust Preferred Securities, or any action
on the part of the Issuer granting indulgence or extension of
any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets
of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method
and place of conducting of any proceeding for any remedy
available to the Trust Preferred Guarantee Trustee in respect
of this Trust Preferred Securities Guarantee or exercising any
trust or power conferred upon the Trust Preferred Guarantee
Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Guarantee Trustee fails to enforce its
rights under the Trust Preferred Securities Guarantee after a
Holder of Trust Preferred Securities has made a written
request, such Holder of Trust Preferred Securities may
institute a legal proceeding directly against the Guarantor to
enforce the Trust Preferred Guarantee Trustee's rights under
this Trust Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Trust
Preferred Guarantee Trustee or any other person or entity.
Notwithstanding the foregoing, if the Guarantor has failed to
make a guarantee payment, a Holder of Trust Preferred
Securities may directly institute a proceeding in such
Holder's own name against the Guarantor for enforcement of the
Trust Preferred Securities Guarantee for such payment. The
Guarantor waives any right or remedy to require that any
action be brought first against the Issuer or any other person
or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Trust Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Trust Preferred
Securities
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Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Trust Preferred Securities Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Trust Preferred Securities Guarantee.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust
Preferred Securities, and that the Guarantor shall be liable as principal and
as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Trust Preferred Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Trust Preferred Securities remain outstanding, if for
any distribution period, (a) full distributions on a cumulative basis on any
Trust Preferred Securities have not been paid or declared and set apart for
payment, (b) an Investment Event of Default by any Investment Affiliate in
respect of any Affiliate Investment Instrument has occurred and is continuing,
or (c) the Company is in default of its obligations under the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee, the Partnership
Guarantee or any Investment Guarantee, then, during such period (i) the Company
shall not declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to any
of its capital stock (except for dividends or distributions in shares of its
common stock and exchanges of common stock of one class for common stock of
another class), (ii) the Company shall not make any payment or cause any
payment to be made that would result in and shall take such action as shall be
necessary to prevent, the payment of dividends on, any distribution with
respect to, any redemption, purchase or other acquisition of, or any
liquidation payment with respect to, any Comparable Equity Interest, and (iii)
the Company shall not make any guarantee payments with respect to the
foregoing.
SECTION 6.2 Ranking
This Trust Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, including, without
limitation, the fees, charges, expenses and indemnities due to the Property
Trustee or the Delaware Trustee in respect of the Declaration of Trust, the
Trust Preferred Securities Guarantee and the Affiliate Debenture Guarantee
Agreement, (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred security of
any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common
stock. Any similar guarantee given hereafter by the Company with respect to
Trust Preferred Securities that is silent as to seniority will rank pari passu
with this Trust Preferred Securities Agreement.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Trust Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Trust Preferred Securities, (ii)
upon the distribution of the Partnership Preferred Securities to the Holders of
all of the Trust Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Trust Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Trust Preferred Securities must restore payment of any sums
paid under the Trust Preferred Securities or under this Trust Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Trust
Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this
Trust Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such
information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's
professional or expert competence and who has been selected
with reasonable care by or on behalf of the Guarantor,
including information, opinions, reports or statements as to
the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Trust
Preferred Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without gross negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Trust Preferred Securities Guarantee or the earlier resignation or removal
of the Trust Preferred Guarantee Trustee.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Trust Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Trust Preferred Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all the outstanding Trust Preferred Securities.
The provisions of Section 13.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Merger of the Guarantor
The Guarantor covenants that it will not merge or consolidate with any
other corporation or other entity or sell or convey all or substantially all of
its assets to any person (other than such a sale or conveyance to a Subsidiary
or any successor thereto (such a sale or conveyance being called an "Asset
Drop-Down")), unless (i) either the Guarantor shall be the continuing
corporation or the successor corporation or other entity or the person which
acquires by sale or conveyance substantially all the assets of the Guarantor
shall expressly assume the obligations of the Guarantor hereunder, according to
their tenor, and the due and punctual performance and observance of all of the
covenants hereof to be performed or observed by the Guarantor, by instrument in
form satisfactory to the Trust Preferred Securities Guarantee Trustee, executed
and delivered to the Trust Preferred Securities Guarantee Trustee by such
corporation or other entity, and (ii) the Guarantor or such successor
corporation or other entity, as the case may be, shall not, immediately after
such merger or consolidation, or such sale or conveyance, be in default in the
performance of any such covenant or condition. In the event of any Asset
Drop-Down after the date hereof, any subsequent sale or conveyance of assets by
a Subsidiary to which assets were transferred in such Asset Drop-Down will be
deemed to be a sale or conveyance of assets by the Company for purposes of this
provision.
SECTION 9.4 Notices
All notices provided for in this Trust Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Trust Preferred Guarantee Trustee, at the
Trust Preferred Guarantee Trustee's mailing address set forth
below:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Global Trust Services
Telecopy: (212) 946-8158
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Trust Preferred
Securities):
14
<PAGE> 18
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Treasury Department
Telecopy: (713) 646-3422
(c) If given to any Holder of Trust Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.5 Benefit
This Trust Preferred Securities Guarantee is solely for the benefit of
the Holders of the Trust Preferred Securities and, subject to Section 3.1(a),
is not separately transferable from the Trust Preferred Securities.
SECTION 9.6 Governing Law
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
15
<PAGE> 19
THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
ENRON CORP.,
as Guarantor
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trust Preferred Guarantee Trustee
By:
------------------------------------
Name:
Title:
16
<PAGE> 1
Exhibit 4(f)
================================================================================
PARTNERSHIP GUARANTEE AGREEMENT
ENRON PREFERRED FUNDING II, L.P.
DATED AS OF _____________, 1997
================================================================================
<PAGE> 2
PARTNERSHIP GUARANTEE AGREEMENT
This PARTNERSHIP GUARANTEE AGREEMENT, dated as of ___________, 1997,
is executed and delivered by Enron Corp., a Delaware corporation (the "Company"
or the "Guarantor"), for the benefit of the holders from time to time of the
Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of
Enron Preferred Funding II, L.P., a Delaware limited partnership (the
"Issuer"), the Issuer may issue a single series of limited partner interests in
the Issuer (the "Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds received
by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby
irrevocably and unconditionally to agree, to the extent set forth herein, to
pay to the Holders the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby agrees
shall directly or indirectly provide material benefits to the Guarantor, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions
As used in this Partnership Guarantee Agreement, the terms set forth
below shall, unless the context otherwise requires, have the following
meanings. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned to such terms in the Partnership Agreement.
"Affiliate" means, with respect to any specified person, any other
person that directly or indirectly controls or is controlled by, or is under
common control with, such specified person.
"Affiliate Investment Instrument" shall have the meaning set forth in
the Partnership Agreement.
"Comparable Equity Interest" shall mean the 8% Cumulative Guaranteed
Monthly Income Preferred Shares of Enron Capital LLC, the 9% Cumulative
Guaranteed Preferred Securities, Series A of Enron Capital Resources, L.P., the
8.30% Trust Preferred Securities of Enron Capital Trust I and any preferred
security hereafter issued by any finance subsidiary of which the Company is the
parent company and the principal purpose of which is to lend the proceeds of
the sale thereof to the Company or to eligible affiliates of the Company.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accrued and
unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), payable out of funds legally available
therefor, with respect to any Partnership Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution,
<PAGE> 3
winding-up or termination of the Issuer, the lesser of (a) the aggregate of the
liquidation preference and all accrued and unpaid distributions on the
Partnership Preferred Securities to the date of payment and (b) the amount of
assets of the Issuer after satisfaction of all liabilities remaining available
for distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Partnership Preferred Securities; provided, however, that
in determining whether the holders of the requisite percentage of Partnership
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any entity owned more
than 50% by the Guarantor, either directly or indirectly.
"Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that is controlled by the Company and is not an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act.
"Investment Event of Default" means an event of default under an
Affiliate Investment Instrument.
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
setoff or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.
SECTION 2.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Issuer, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
SECTION 2.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Partnership Preferred Securities to be performed or observed by the
Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Partnership Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or in
connection with, the Partnership Preferred Securities; provided that
nothing in this Partnership Guarantee Agreement shall affect or impair
any valid extension;
2
<PAGE> 4
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Partnership Preferred Securities, or any action on the
part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Partnership Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 2.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.4 Rights of Holders
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee Agreement will be deposited with the General Partner to be held for
the benefit of the Holders; (ii) in the event of the appointment of a Special
Representative to, among other things, enforce this Partnership Guarantee
Agreement, the Special Representative may take possession of this Partnership
Guarantee Agreement for such purpose; (iii) if no Special Representative has
been appointed, the General Partner has the right to enforce this Partnership
Guarantee Agreement on behalf of the Holders; (iv) the Holders of not less than
a majority in aggregate liquidation preference of the Partnership Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available in respect of this Partnership
Guarantee Agreement including the giving of directions to the General Partner
or the Special Representative, as the case may be; and (v) if the General
Partner or Special Representative fails to enforce this Partnership Guarantee
Agreement as above provided, any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Partnership
Guarantee Agreement, without first instituting a legal proceeding against the
Issuer or any other person or entity. Notwithstanding the foregoing, if the
Guarantor has failed to make a guarantee payment, a Holder may directly
institute a proceeding against the Guarantor to enforce such payment under this
Partnership Guarantee Agreement.
SECTION 2.5 Guarantee of Payment
This Partnership Guarantee Agreement will constitute a guarantee of
payment and not of collection.
SECTION 2.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee Agreement provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Partnership Guarantee Agreement, if, at
the time of any such payment, any amounts are due and unpaid under this
Partnership Guarantee Agreement. If any amount shall be
3
<PAGE> 5
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 2.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
Preferred Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Partnership Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding, if
for any distribution period, (a) full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) an Investment Event of Default by any Investment
Affiliate in respect of any Affiliate Investment Instrument has occurred and is
continuing or (c) the Guarantor shall be in default with respect to its payment
obligations under this Partnership Guarantee Agreement, the Trust Preferred
Securities Guarantee, the Trust Common Securities Guarantee or any Investment
Guarantee then, during such period (i) the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to any of its capital stock
(except for dividends or distributions in shares of its common stock and
exchanges of common stock of one class for common stock of another class), (ii)
the Company shall not make any payment or cause any payment to be made that
would result in and shall take such action as shall be necessary to prevent,
the payment of dividends on, any distribution with respect to, any redemption,
purchase or other acquisition of, or any liquidation payment with respect to,
any Comparable Equity Interest, and (iii) the Company shall not make any
guarantee payments with respect to the foregoing.
SECTION 3.2 Ranking
This Partnership Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, (ii) pari passu with the
most senior preferred or preference stock now or hereafter issued from time to
time by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred security of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock. Any similar
guarantee given hereafter by the Company with respect to Partnership Preferred
Securities that is silent as to seniority will rank pari passu with this
Partnership Guarantee Agreement.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination
This Partnership Guarantee Agreement shall terminate and be of no
further force and effect, as to the Partnership Preferred Securities, upon full
payment of the Redemption Price of all Partnership Preferred Securities, and
will terminate completely upon full payment of the amounts payable in
accordance with the Partnership Agreement upon liquidation of the Issuer. This
Partnership Guarantee Agreement will continue to be effective or will
4
<PAGE> 6
be reinstated, as the case may be, if at any time any Holder must, in
accordance with Delaware Revised Uniform Limited Partnership Act, restore
payment of any sums paid under any Partnership Preferred Securities or this
Partnership Guarantee Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns
All guarantees and agreements contained in this Partnership Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
SECTION 5.2 Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee Agreement may only be amended with the prior approval of
the Holders of not less than a Majority in liquidation preference of all the
outstanding Partnership Preferred Securities.
SECTION 5.3 Merger of Guarantor
The Guarantor covenants that it will not merge or consolidate with any
other corporation or other entity or sell or convey all or substantially all of
its assets to any person (other than such a sale or conveyance to a Subsidiary
or any successor thereto (such a sale or conveyance being called an "Asset
Drop-Down")), unless (i) either the Guarantor shall be the continuing
corporation or the successor corporation or other entity or the person which
acquires by sale or conveyance substantially all the assets of the Guarantor
shall expressly assume the obligations of the Guarantor hereunder, according to
their tenor, and the due and punctual performance and observance of all of the
covenants hereof to be performed or observed by the Guarantor, by instrument in
form satisfactory to the General Partner, executed and delivered to the General
Partner by such corporation or other entity, and (ii) the Guarantor or such
successor corporation or other entity, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any such covenant or condition. In the event
of any Asset Drop-Down after the date hereof, any subsequent sale or conveyance
of assets by a Subsidiary to which assets were transferred in such Asset
Drop-Down will be deemed to be a sale or conveyance of assets by the Company
for purposes of this provision.
SECTION 5.4 Notices
Any notice, request or other communication required or permitted to be
given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Treasury Department
Facsimile No: (713) 646-3422
5
<PAGE> 7
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.5 Gender
The masculine, feminine and neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 5.6 Benefit
This Partnership Guarantee Agreement is solely for the benefit of the
Holders and is not separately transferable from the Partnership Preferred
Securities.
SECTION 5.7 Governing Law
THIS PARTNERSHIP GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
6
<PAGE> 8
THIS PARTNERSHIP GUARANTEE AGREEMENT is executed as of the day and
year first above written.
ENRON CORP.
By:
--------------------------
Name:
Title:
7
<PAGE> 1
EXHIBIT 4(g)
ENRON CORP.,
ISSUER,
AND
THE CHASE MANHATTAN BANK, TRUSTEE
----------------------
INDENTURE
DATED AS OF , 1997
--------------
------------------------
____% SUBORDINATED DEBENTURES
DUE [2017]
<PAGE> 2
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- ----------- -------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 701
. . . . . . . . . . . . . . . . . . . . . . . . . 702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . 101, 1004
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 502
. . . . . . . . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 104(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
___________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
ARTICLE ONE
Definitions and other Provisions of General Application
<S> <C> <C>
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . 7
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . 8
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . 8
SECTION 105. Notices, Etc., to Trustee and the Company . . . . . . . 9
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . 10
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . 10
SECTION 108. Effect of Headings and Table of Contents . . . . . . . 10
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . 10
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . 11
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . 11
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . 11
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . 11
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . 11
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . 12
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . 14
SECTION 204. Form of Trustee's Certificate of Authentication . . . . 16
ARTICLE THREE
The Securities
SECTION 301. Title and Terms . . . . . . . . . . . . . . . . . . . . 16
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . 17
SECTION 303. Execution, Authentication, Delivery and Dating . . . . 17
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . 18
SECTION 305. Registration, Registration of Transfer and Exchange . . 18
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . 19
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . 20
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . 21
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . 21
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . 21
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . 22
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . 23
ARTICLE FIVE
Remedies
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . 23
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . 24
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . 25
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 506. Application of Money Collected . . . . . . . . . . . . 26
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . 26
SECTION 508. Unconditional Right of Holders to Receive Principal and
Interest . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . 27
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . 27
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . 27
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . 27
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . 28
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . 28
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . 29
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . 29
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . 29
SECTION 604. Not Responsible for Recitals or Issuance of Securities 30
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . 31
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . 31
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . 31
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . 32
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . 32
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 610. Resignation and Removal; Appointment of Successor . . . 32
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . 33
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 613. Preferential Collection of Claims Against Company . . . 34
ARTICLE SEVEN
Holders' Lists and Reports by Trustee
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 702. Preservation of Information; Communications to Holders . 34
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . 35
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . 35
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . 36
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders . . 36
SECTION 902. Supplemental Indentures with Consent of Holders . . . . 37
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . 37
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . 38
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . 38
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest . . . . . . . . . . 38
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . 38
SECTION 1003. Money for Security Payments to Be Held in Trust . . . 39
SECTION 1004. Reports by the Company . . . . . . . . . . . . . . . . 39
SECTION 1005. Negative Pledge and Exceptions Thereto . . . . . . . . 39
SECTION 1006. Statement as to Compliance; Notice of Certain Events of
Default . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior Indebtedness . . . . 43
SECTION 1102. Payment Over of Proceeds upon Dissolution, etc. . . . 43
SECTION 1103. No Payment When Senior Indebtedness in Default . . . . 44
SECTION 1104. Payment Permitted If No Default . . . . . . . . . . . 45
SECTION 1105. Subrogation to Rights of Holders of Senior Indebtedness 45
SECTION 1106. Provisions Solely to Define Relative Rights . . . . . 45
SECTION 1107. Trustee to Effectuate Subordination . . . . . . . . . 46
SECTION 1108. No Waiver of Subordination Provisions . . . . . . . . 46
SECTION 1109. Notice to Trustee . . . . . . . . . . . . . . . . . . 46
SECTION 1110. Reliance on Judicial Order or Certificate of Liquidating
Agent . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1111. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . . . 47
SECTION 1112. Article Applicable to Paying Agents . . . . . . . . . 48
ARTICLE TWELVE
Redemption of Securities
SECTION 1201. Optional Redemption . . . . . . . . . . . . . . . . . 48
SECTION 1202. Applicability of Article . . . . . . . . . . . . . . . 48
SECTION 1203. Authorization for Redemption; Notice to Trustee . . . 48
SECTION 1204. Selection by Trustee of Securities to Be Redeemed . . 49
SECTION 1205. Notice of Redemption . . . . . . . . . . . . . . . . . 49
SECTION 1206. Deposit of Redemption Price . . . . . . . . . . . . . 50
SECTION 1207. Securities Payable on Redemption Date . . . . . . . . 50
SECTION 1208. Securities Redeemed in Part . . . . . . . . . . . . . 50
</TABLE>
iv
<PAGE> 7
INDENTURE, dated as of ____________, 1997, by and between Enron Corp., a
corporation duly organized and validly existing under the laws of the State of
Delaware (the "Company"), and The Chase Manhattan Bank, a New York banking
corporation (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its ____% Subordinated Debentures due
[2017] (the "Securities") as herein provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
Definitions and other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to
them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Interest" means interest that shall accrue on any interest
on the Securities that is in arrears for more than one quarter or not paid
during an Extension Period, which in either case shall accrue at the rate of
___% per annum compounded quarterly.
<PAGE> 8
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
certification, and delivered to the Trustee.
"Business Day" means a day other than a day on which banking
institutions in the City of New York are authorized or required by law to
close.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, a Vice Chairman, its
President or a Vice President and delivered to the Trustee.
"Consolidated Net Tangible Assets" means total assets less (a) total
current liabilities (excluding indebtedness due within 12 months) and (b)
goodwill, patents and trademarks, all as reflected in the Company's audited
consolidated balance sheet preceding the date of a determination under the last
paragraph of Section 1005.
"Corporate Trust Office" means the principal office of the Trustee in
New York, New York, at which at any particular time its corporate trust
business shall be administered and which at the date of this Indenture is 450
West 33rd Street - 15th Floor, New York, New York 10001.
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Section 501.
"Extension Period" has the meaning specified in Section 301.
2
<PAGE> 9
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"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.
"General Partner" means the Company, in its capacity as general partner
of the Partnership.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Interest Payment Date," when used with respect to any installment of
interest on a Security, means the date specified in such Security as the fixed
date on which an installment of interest with respect to the Securities is due
and payable.
"Limited Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership, dated as of _______, 1997, of the Partnership, as
amended, modified or otherwise supplemented from time to time.
"Maturity," when used with respect to any Security, means the date on
which the original of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by (i) the Chairman,
a Vice Chairman, the President, a Vice President, or the Treasurer of the
Company and (ii) the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee; provided, however, that such certificate may be
signed by two of the officers or directors listed in clause (i) above in lieu
of being signed by one of such officers or directors listed in such clause (i)
and one of the officers listed in clause (ii) above. One of the officers
signing an Officer's Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
3
<PAGE> 10
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with;
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with; and
(e) a statement that one of the officers signing such Officers'
Certificate is the principal executive, financial or accounting officer of the
Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except: (i) Securities theretofore canceled by the
Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose
payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and (iii) Securities which have been paid pursuant to
Section 401, or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company.
"Partnership" means Enron Preferred Funding II, L.P., a Delaware limited
partnership, and any successor thereto.
"Partnership Investment Company Event" means that the General Partner
shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, the
Partnership is or will be considered an "investment company" which is required
to be registered under the Investment Company Act of 1940.
"Partnership Preferred Securities" means the limited partner interests
issued pursuant to the Limited Partnership Agreement.
4
<PAGE> 11
"Partnership Special Event" means either a Partnership Investment
Company Event or a Partnership Tax Event.
"Partnership Tax Event" means that the Company, as the general partner
of the Partnership, shall have requested and received an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Tax Action resulting in there being more than an
insubstantial risk that (i) the Partnership is, or will be subject to United
States federal income tax with respect to income accrued or received on the
Affiliate Investment Instruments or the Eligible Debt Securities (each as
defined in the Limited Partnership Agreement), (ii) the Partnership is, or will
be subject to more than a de minimis amount of other taxes, duties or other
governmental charges or (iii) interest payable by one or more of the obligors
with respect to the Affiliate Investment Instruments to the Partnership is not,
or will not be, deductible by the Company for United States federal income tax
purposes.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company, which
shall initially be The Chase Manhattan Bank.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" means the Partnership Preferred Securities and
the Trust Preferred Securities.
"Principal Property" means 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 is not of
material importance to the total business conducted by the Company and its
Subsidiaries. "Principal Property" shall 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.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
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<PAGE> 12
"Regular Record Date" for the interest payable on any Interest Payment
Date means the Business Day next preceding such Interest Payment Date.
"Representative" means an indenture trustee or other trustee, agent or
representative for an issue of Senior Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Office including any Vice President,
Assistant Vice President, Secretary, Assistant Secretary or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge and familiarity with the particular subject.
"Securities" has the meaning specified in the Recitals to this
instrument.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of, premium, if any, interest
on and any other payment due pursuant to any of the following, whether
outstanding at the date hereof or hereafter incurred, created or assumed: (i)
all indebtedness of the Company (other than any obligations to trade creditors)
evidenced by notes, debentures, bonds or other securities sold by the Company
for money borrowed and capitalized lease obligations; (ii) all indebtedness of
others of the kinds described in the preceding clause (i) assumed or guaranteed
in any manner by the Company or in effect guaranteed by the Company; and (iii)
all renewals, extensions or refundings of indebtedness of the kinds described
in either of the preceding clauses (i) or (ii), unless, in the case of any
particular indebtedness, capitalized lease obligation, guarantee, renewal,
extension or refunding, the instrument creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such indebtedness,
renewal, extension or refunding is subordinated to or is pari passu with the
Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal, together with any accrued and unpaid
interest (including Additional Interest), of such Security or such installment
of interest is due and payable.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
6
<PAGE> 13
"Tax Action" means that there has been (a) an amendment to, change in or
announced proposed change in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) a judicial decision interpreting, applying, or clarifying such
laws or regulations, (c) an administrative pronouncement or action that
represents an official position (including a clarification of an official
position) of the governmental authority or regulatory body making such
administrative pronouncement or taking such action, or (d) a threatened
challenge asserted in connection with an audit of the Company or any of its
Subsidiaries, the Partnership, or the Trust, or a threatened challenge asserted
in writing in connection with any other taxpayer that has raised capital
through the issuance of securities that are substantially similar to the
Securities, the Partnership Preferred Securities, or the Trust Preferred
Securities, which amendment or change is adopted or which decision or
pronouncement is announced or which action, clarification or challenge occurs
on or after the date of this Indenture.
"Trust" means Enron Capital Trust II, a Delaware business trust, and any
successor thereto.
"Trust Agreement" means the Amended and Restated Declaration of Trust of
the Trust dated _____________, 1997 among Enron Corp., as Sponsor, and the
trustees named therein.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that
in the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Preferred Securities" means the ___% Trust Originated Preferred
Securities, liquidation amount $25 per Trust Preferred Security, issued
pursuant to the Trust Agreement.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
7
<PAGE> 14
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form any instrument.
SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
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<PAGE> 15
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining
the Holders entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action, or to vote on any action,
authorized or permitted to be given or taken by Holders. If not set by the
Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 701) prior to such first solicitation or vote, as the case
may be. With regard to any record date, only the Holders on such date (or
their duly designated proxies) shall be entitled to give or take, or vote on,
the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Security.
SECTION 105. Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Global Trust
Services, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage
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<PAGE> 16
prepaid, to the Company addressed to it at the address of its principal office
specified below or at any other address previously furnished in writing to the
Trustee by the Company.
If to the Company to:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Treasurer
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in a
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
The Company will have the right at all times to assign any of its rights
or obligations under this Indenture to a direct or indirect wholly-owned
Subsidiary, provided that, in the event of any such
10
<PAGE> 17
assignment, the Company will remain liable for all such obligations. Subject
to the foregoing, this Indenture is binding upon and inures to the benefit of
the parties hereto and their respective successors and assigns. This Indenture
may not otherwise be assigned by the parties hereto.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness, the holders of Preferred
Securities (to the extent provided herein) and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal of the Securities shall be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment of interest or principal of the Securities, as the case may
be, shall be made on the immediately preceding Business Day (and without any
reduction in interest or principal in respect of such early payment).
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificates of authentication shall be
in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
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The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these or other methods, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. Form of Face of Security.
ENRON CORP.
____% Subordinated Debenture,
Due [2017]
No. $
----------------- --------
Enron Corp., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ________________, or registered assigns,
the principal sum of ________ DOLLARS ($________) on ____________, [2017] and
to pay interest on said principal sum from __________, 1997 or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing __________, 1997, at the rate of ___% per
annum plus Additional Interest, if any, until the principal hereof shall have
become due and payable, and on any overdue principal. The amount of interest
payable for any period will be computed on the basis of twelve 30-day months
and a 360-day year. In the event that any date on which interest is payable on
this Security is not a Business Day, then a payment of the interest payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date the payment was
originally payable. A "Business Day" shall mean any day other than a day on
which banking institutions in the City of New York are authorized or required
by law to remain closed. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities, as defined in the Indenture) is registered at the
close of business on the Regular Record Date for such interest installment,
which shall be the close of business on the Business Day next preceding such
Interest Payment Date. Any such interest installment not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice of which shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
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The Company shall have the right at any time during the term of this
Security, from time to time, to extend the interest payment period of such
Security for up to six consecutive quarters (an "Extension Period"), during
which periods interest will compound quarterly and the Company shall have the
right to make partial payments of interest on any Interest Payment Date, and at
the end of which Extension Period the Company shall pay all interest then
accrued and unpaid (together with Additional Interest thereon to the extent
that payment of such interest is permitted by applicable law). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof shall not exceed six consecutive
quarters or extend beyond the Maturity of this Security. Upon the termination
of any such Extension Period and upon the payment of all accrued and unpaid
interest and any Additional Interest then due, the Company may select a new
Extension Period, subject to the foregoing requirements. No interest shall be
due and payable during an Extension Period except at the end thereof. The
Company shall give the Holder of this Security and the Trustee written notice
of its selection of an Extension Period at least one Business Day prior to the
earlier of (i) the Interest Payment Date or (ii) the date Enron Capital Trust
II is required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Trust Preferred
Securities of the record date or the date such distributions are payable, but
in any event not less than one Business Day prior to such record date.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in New York,
New York, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security
Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture of each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth herein.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE> 20
IN WITNESS WHEREOF, Enron Corp. has caused this instrument to be duly
executed under its corporate seal.
Dated: ___________-
ENRON CORP.
By: _________________________________
Name:
Title:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company, designated as its ___% Subordinated Debentures Due [2017] (herein
called the "Securities"), limited in aggregate principal amount to
$______________ issued under an Indenture, dated as of _______,1997 (herein
called the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
At any time on or after ________, 2002, the Company shall have the
right, subject to the terms and conditions of Article Twelve of the Indenture,
to redeem this Security at the option of the Company, without premium or
penalty, in whole or in part, at a Redemption Price equal to 100% of the
principal amount to be redeemed plus accrued but unpaid interest, including any
Additional Interest, if any, to the Redemption Date. If a Partnership Special
Event shall occur and be continuing, the Company shall have the right, subject
to the terms and conditions of Article Twelve of the Indenture, to redeem this
Security, without premium or penalty, in whole but not in part, at a Redemption
Price equal to 100% of the principal amount thereof plus accrued but unpaid
interest, including any Additional Interest, if any, to the Redemption Date.
Any redemption pursuant to this paragraph will be made upon not less than 30
nor more than 60 days' notice, at the Redemption Price. If the Securities are
only partially redeemed by the Company, the Securities will be redeemed pro
rata, by lot or in such other manner as the Trustee shall deem appropriate and
fair in its discretion and that may provide for the selection of a portion or
portions (equal to twenty-five U.S. dollars ($25) or any integral multiple
thereof) of the principal amount of any Security.
In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
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<PAGE> 21
If an Event of Default with respect to the Securities shall occur and be
continuing, the principal of the Securities may be declared due and payable in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions for satisfaction and discharge at any
time of the entire indebtedness of this Security upon compliance by the Company
with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of Holders of not less than a majority in principal
amount of the Outstanding Securities, to modify the Indenture in a manner
affecting the rights of the Holders of the Securities; provided that no such
modification may, without the consent of the Holder of each Outstanding
Security, (i) extend the fixed maturity of the Securities, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof, or
(ii) reduce the percentage of principal amount of the Securities, the Holders
of which are required to consent to any such modification of the Indenture.
The Indenture also contains provisions permitting Holders of specified
percentages in principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all Securities, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees. No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this security for registration of transfer,
the Company, the Trustee and any of their respective agents may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security shall be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
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<PAGE> 22
The Securities are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
[NAME OF TRUSTEE], as Trustee
By:
---------------------------------
Authorized Signatory
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to $__________________, except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other securities pursuant to Section 303, 304,
305, 306 or 1208.
The Securities shall be known and designated as the "____% Subordinated
Debentures Due [2017]" of the Company. Their Stated Maturity shall be
_____________, [2017], and they shall bear interest at the rate of ____% per
annum, from ________, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
quarterly (subject to deferral as set forth herein), in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing __________, 1997
until the principal thereof is paid or made available for payment. Interest
will compound quarterly and will accrue at the rate of ____% per annum on any
interest installment in arrears for more than one quarter or during an
extension of an interest payment period as set forth below in this Section 301.
In the event that any date on which interest is payable on the Securities is
not a Business Day, then a payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (except that, if such
Business Day is in the next succeeding calendar year, such Interest Payment
Date shall be the immediately preceding Business Day) (and without any interest
or other payment in respect of any such delay).
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<PAGE> 23
The Company shall have the right, at any time during the term of the
Securities, from time to time to extend the interest payment period for up to
six consecutive quarters (the "Extension Period") during which period interest
will compound quarterly and the Company shall have the right to make partial
payments of interest on any Interest Payment Date, and at the end of which
Extension Period the Company shall pay all interest then accrued and unpaid
thereon (together with Additional Interest at the rate specified for the
Securities to the extent permitted by applicable law). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof shall not exceed six consecutive
quarters or extend beyond the Maturity of the Securities. Upon the termination
of any Extension Period and upon the payment of all accrued and unpaid interest
and any Additional Interest then due, the Company may select a new Extension
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company
shall give the Trust, the Partnership and the Trustee notice of its selection
of such Extension Period subject to the above requirements at least one
Business Day prior to the earlier of (i) the Interest Payment Date or (ii) the
date the Trust is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization or to holders of the Trust
Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than one Business Day prior to such record
date.
The principal of and interest on the Securities shall be payable at the
office or agency of the Company in the United States maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated by the
Person entitled thereto as specified in the Security Register.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Eleven.
The Securities shall be redeemable as provided in Article Twelve.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form, without
coupons, and only in denominations of $25 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman, one of its Vice Chairman, its President or one of its Vice
Presidents. The signature of any of these officers on the securities may be
manual or facsimile.
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<PAGE> 24
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities
of authorized denominations. Until so exchanged the temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
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<PAGE> 25
Upon surrender for registration of transfer of any Security at an office
or agency of the Company designated pursuant to Section 1002 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or excess of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304 or 1208 not involving any transfer.
If the Securities are to be redeemed in part, the Company will not be
required to issue, register the transfer of or exchange any Securities during a
period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of any such Securities that may be selected for
redemption and ending at the close of business on the day of such mailing,
except the unredeemed portion of any such Securities being redeemed in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any security and
(ii) such security or indemnity as may be required by them to save each of them
and any of the officers, directors, employees or agents of either of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Security has been acquired by a bona fide purchaser, the Company shall
execute and the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
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<PAGE> 26
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) the Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of
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<PAGE> 27
such Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and, if so listed, upon such notice as
may be required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue (including in each such case Additional Interest),
which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of any of them shall treat the Person in
whose name such Security is registered as the owner of such Security for the
purpose of receiving payment of principal of and (subject to Section 307)
interest (including Additional Interest) on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of them shall be affected by notice to the
contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be disposed of as directed by a
Company Order.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
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<PAGE> 28
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for and any amounts owed to the Trustee hereunder), and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company
and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for
the purpose and amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal and interest (including Additional
Interest) to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with. Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 607 and,
if money shall have been deposited with the Trustee pursuant to subclause (B)
of Clause (1) of this Section,
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the obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee. The Trustee
shall not invest money deposited with it pending distribution of such amounts.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events that has occurred and is continuing (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) failure for 90 days to pay any interest on the Securities, including
any Additional Interest in respect thereof, when due (subject to the deferral
of any due date in the case of an Extension Period); or
(2) failure to pay any principal on the Securities when due whether at
Stated Maturity, upon redemption or otherwise; or
(3) failure to observe or perform in any material respect any other
covenant herein for 90 days after written notice of such failure (specified as
a "Notice of Default"), requiring the Company to remedy the same shall have
been given to the Company by the Trustee or the holders of at least 25% in
principal amount of the Outstanding Securities; or
(4) a court or governmental agency having jurisdiction shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or for
all or substantially all of its property or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain unstayed and
in effect for a period of 90 consecutive days; or
(5) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under any
such law, or consent to the appointment or taking possession
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by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Company or for all or substantially all of its
property or make any general assignment for the benefit of creditors; or the
Company shall admit in writing its inability to pay its debts generally as they
become due.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have the right to declare the
principal of and the interest on all the Securities (including any Additional
Interest) and any other amounts payable hereunder to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders) and to enforce any and all other rights of Holders of Securities as
creditors with respect to the Securities. Upon any such declaration such
principal and all accrued interest shall become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay,
(A) all overdue interest (including any Additional Interest) on
all Securities,
(B) the principal of any Securities which have became due
otherwise than by such declaration of acceleration and interest thereon
at the rate borne by the Securities, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Additional Interest) on any Security when such interest becomes due and payable
and such default continues for a period of 90 days (subject to the deferral of
any due and payable interest in the case of an Extension Period), or
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(2) default is made in the payment of the principal of any Security at
the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Interest), at
the rate borne by the Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company, its property
or its creditors, the Trustee shall be entitled and empowered, by intervention
in such proceeding or otherwise, to take any and all actions authorized under
the Trust Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be authorized
to collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
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SECTION 506. Application of Money Collected.
Subject to Article Eleven, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal or interest (including any Additional Interest), upon presentation
of the Securities and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal
of and interest (including any Additional Interest) on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Company.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee such indemnity as
is satisfactory to it against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities; it being understood and
intended that no one or more Holders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders, or to obtain or
to seek to obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner herein provided and for
the equal and ratable benefit of all the Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and (subject to Section 307) interest (including
any Additional Interest) on such Security on the respective Stated Maturities
(subject to the deferral of any due date in the case of an Extension Period)
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right 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, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture; and
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(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
Subject to Section 902, the Holders of not less than a majority in
principal amount of the Outstanding Securities may on behalf of the Holders of
all the Securities waive any past default hereunder and its consequences,
except a default
(1) in the payment of the principal of or interest (including any
Additional Interest) on any Security (unless such default has been cured and a
sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration have been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such court
to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company
or the Trustee or in any suit for the enforcement of the right to receive the
principal of and interest (including any Additional Interest) on any Security.
SECTION 515. Acknowledgment.
The Company acknowledges that so long as the Partnership is a Holder, a
holder of record of Preferred Securities may to the fullest extent permitted by
law on behalf of the Partnership, when and as provided in the Limited
Partnership Agreement, directly institute a legal proceeding against the
Company under this Indenture, without first instituting any legal proceeding
against the Property Trustee (as such term is defined in the Limited
Partnership Agreement) or any other party.
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ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder
actually known to a Responsible Officer of the Trustee as and to the extent
provided by the Trust Indenture Act; provided, however, that in the case of any
default of the character specified in Section 501(3), no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, conclusively rely upon an Officers' Certificate;
(d) the Trustee may, at the Company's expense, consult with counsel of
its choice, and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and
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protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture;
(i) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or indemnity satisfactory to it against any loss, liability or expense is
not reasonably assured to it;
(j) the Trustee shall have no duty to monitor the performance of the
Company or its compliance with the covenants contained herein, nor shall it
have any liability in connection with the malfeasance or nonfeasance by the
Company; and
(k) any Paying Agent, Authenticating Agent or Security Registrar
appointed hereunder shall be entitled to all the rights, protections,
immunities and indemnities afforded to the Trustee hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or
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sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar, or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, or such other agent. Money held
by the Trustee in trust hereunder shall not be invested by the Trustee pending
distribution thereof to the holders of the Securities.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such reasonable compensation
as the Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable fees, charges, expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture or arising out of or in connection with the
acceptance or administration of this Trust (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee and its officers, directors, employees and
agents for, and to hold them harmless against, any and all loss, damage, claim,
liability or expense, including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder.
The provisions of this Section shall survive the termination of this
Indenture or the resignation or removal of the Trustee.
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SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 and has its Corporate
Trust Office in New York, New York, if such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (i) the Company by a Board Resolution may
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remove the Trustee, or (ii) subject to Section 514, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in
the manner provided in Section 106. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
(g) No retiring Trustee hereunder shall be liable for the acts or
omissions of any successor Trustee.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; provided that, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its fees, charges and expenses, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder. Upon request
of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which
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the Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company,
the Trustee shall be subject to the provisions of the Trust Indenture Act
regarding the collection of claims against the Company (or any such other
obligor).
SECTION 614. Character of Expenses.
When the Trustee incurs expenses or renders services in connection with
an Event of Default, or any bankruptcy or insolvency in respect of the Company,
such expenses (including the fees and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any bankruptcy law or law relating to creditors' rights
generally.
ARTICLE SEVEN
Holders' Lists and Reports by Trustee
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than the last day of June and December in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of all Holders as of a date not more than 15 days prior to
the delivery thereof who were not Holders at the date of the Company had
previously provided such list (or, in the case of the initial provision of such
list, at the date of issuance of the Securities), and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in
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Section 701 and the names and addresses of Holders received by the Trustee in
its capacity as Security Registrar. The Trustee may destroy any list furnished
to it as provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of any of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, and with the Company. The Company will notify the
Trustee when the Securities are listed on any stock exchange.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company covenants that it will not merge or consolidate with any
other corporation or other entity or sell or convey all or substantially all of
its assets to any person (other than such a sale or conveyance to a Subsidiary
or any successor thereto (such a sale or conveyance being called an "Asset
Drop-Down")), unless (i) either the Company shall be the continuing corporation
or the successor corporation or other entity or the person which acquires by
sale or conveyance substantially all the assets of the Company shall expressly
assume the due and punctual payment of the principal of, premium, if any, and
interest, if any, on all the Securities, according to their tenor, and the due
and punctual performance and observance of all of the covenants and conditions
of this Indenture to be performed or observed by the Company, by supplemental
indenture in form satisfactory to the Trustee, executed and delivered to the
Trustee by such corporation or other entity, and (ii) the Company or such
successor corporation or other entity, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any such covenant or condition. In the event
of any Asset Drop-Down after the date of this Indenture, any subsequent sale or
conveyance of assets by a Subsidiary to which assets were transferred in such
Asset Drop-Down (a "Drop-Down Subsidiary") will be deemed to be a sale or
conveyance of assets by the Company for purposes of this Section 801.
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SECTION 802. Successor Substituted.
In case of any such consolidation, merger, sale or conveyance, and
following such an assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein. Such successor corporation may cause to
be signed, and may issue either in its own name or in the name of the Company
prior to such succession any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication, and any Securities
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All of the Securities so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Securities theretofore or thereafter issued in accordance with the terms
of this Indenture as though all of such Securities had been issued at the date
of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by
way of lease) the Company or any successor corporation which shall theretofore
have become such in the manner described in this Article shall be released and
discharged from all obligations and covenants under this Indenture.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein and in
the Securities;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein or in the Securities
conferred upon the Company;
(3) to cure any ambiguity or to correct any provision herein which may
be defective or inconsistent with any other provision herein;
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(4) to comply with the requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act,
as contemplated by Section 905 or otherwise;
(5) to evidence and provide the acceptance of the appointment of a
successor Trustee hereunder; or
(6) to make any other change that does not adversely affect the rights
of any Holder.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest (including any Additional Interest) on, any Security, or reduce the
principal amount thereof or the rate of interest thereon, or change the place
of payment where, or the coin or currency in which, any Security or 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), or modify the provisions of this
Indenture with respect to the subordination of the Securities in a manner
adverse to the Holders,
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders in required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 513, except
to increase any such percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder
of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying
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upon an Officer's Certificate stating that all conditions precedent to the
execution of such supplemental indenture have been fulfilled and an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and interest
on the Securities in accordance with the terms of the Securities and this
Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in New York, New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies in the United States where the Securities may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in New York, New York for such purposes. The Company will give
prompt written
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notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or at the option of the Company before each due date of the principal of or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on a Company Request,
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
SECTION 1004. Reports by the Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission. Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 1005. Negative Pledge and Exceptions Thereto.
So long as any of the Securities are outstanding, the Company will not
pledge, mortgage or hypothecate, or permit to exist, and will not cause, suffer
or permit any Subsidiary to pledge, mortgage or hypothecate, or permit to
exist, except in favor of the Company or any Subsidiary, any mortgage, pledge
or other lien upon, any Principal Property at any time owned by it, to secure
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any indebtedness, without making effective provisions whereby the Securities
shall be equally and ratably secured with any and all such indebtedness and
with any other indebtedness similarly entitled to be equally and ratably
secured; provided, however, that this restriction shall not apply to or prevent
the creation or existence of:
(a) undetermined or inchoate liens and charges incidental to
construction, maintenance, development or operation;
(b) the lien of taxes and assessments for the then current
year;
(c) the lien of taxes and assessments not at the time
delinquent;
(d) the lien of specified taxes and assessments which are
delinquent but the validity of which is being contested at the time by
the Company or such Subsidiary in good faith;
(e) the lien reserved in leases for rent and for compliance
with the terms of the lease in the case of leasehold estates;
(f) any obligations or duties, affecting the property of the
Company or such Subsidiary, to any municipality or public authority with
respect to any franchise, grant, license, permit or similar arrangement;
(g) the liens of any judgments or attachments in an aggregate
amount not in excess of $10,000,000, or the lien of any judgment or
attachment the execution or enforcement of which has been stayed or
which has been appealed and secured, if necessary, by the filing of an
appeal bond;
(h) any mortgage, pledge, lien or encumbrance on any property
held or used by the Company or a Subsidiary in connection with the
exploration for, development of or production of oil, gas, natural gas
(including liquified gas or 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, the Company'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;
(i) any mortgage, pledge, lien or encumbrance on oil, gas,
natural gas (including liquified gas and storage gas), and 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 the Company or
a Subsidiary;
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(j) mortgages, pledges, liens or encumbrances upon any
property heretofore or hereafter acquired, 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 the Company or a Subsidiary,
provided that every such mortgage, pledge, lien or encumbrance shall
apply only to the property so acquired and fixed improvements thereon;
(k) any extension, renewal or refunding, in whole or in part,
of any mortgage, pledge, lien or encumbrance permitted by subparagraph
(j) above, if limited to the same property or any portion thereof
subject to, and securing not more than the amount secured by, the
mortgage, pledge, lien or encumbrance extended, renewed or refunded;
(l) mortgages, pledges, liens or encumbrances upon any
property heretofore or hereafter acquired by any corporation that is or
becomes a Subsidiary after the date hereof ("Acquired Entity"), provided
that every such mortgage, pledge, lien or encumbrance (1) shall either
(A) exist prior to the time the Acquired Entity becomes a Subsidiary or
(B) be created at the time the Acquired Entity becomes a Subsidiary or
within one year thereafter to secure all or a portion of the acquisition
price thereof and (2) shall only apply to those properties owned by the
Acquired Entity at the time it becomes a Subsidiary or thereafter
acquired by it from sources other than the Company or any other
Subsidiary;
(m) the pledge of current assets, in the ordinary course of
business, to secure current liabilities;
(n) mechanics' or materialmen's liens, any liens or charges
arising by reason of pledges or deposits to secure payment of workmen's
compensation or other insurance, good faith deposits in connection with
tenders, leases of real estate, bids or contracts (other than contracts
for the payment of money), deposits to secure duties or public or
statutory obligations, deposits to secure, or in lieu of, surety, stay
or appeal bonds, and deposits as security for the payment of taxes or
assessments or similar charges;
(o) any lien arising by reason of deposits with, or the giving
of any form of security to, any governmental agency or any body created
or approved by law or governmental regulation for any purpose at any
time in connection with the financing of the acquisition or construction
of property to be used in the business of the Company or a Subsidiary or
as required by law or governmental regulation as a condition to the
transaction of any business or the exercise of any privilege or license,
or to enable the Company or a Subsidiary to maintain self-insurance or
to participate in any funds established to cover any insurance risks or
in connection with workmen's compensation, unemployment insurance, old
age pensions or other social security, or to share in the privileges or
benefits required for companies participating in such arrangements;
(p) any lien to secure indebtedness other than Funded Debt;
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(q) any mortgage, pledge, lien or encumbrance of or upon any
office equipment, data processing equipment (including, without
limitation, computer and computer peripheral equipment), or
transportation equipment (including, without limitation, motor vehicles,
tractors, trailers, marine vessels, barges, towboats, rolling stock and
aircraft);
(r) any mortgage, pledge, lien or encumbrance created or
assumed by the Company 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
1954, as amended, for the purpose of financing, in whole or in part, the
acquisition or construction of property to be used by the Company or a
Subsidiary; or
(s) the pledge or assignment of accounts receivable, or the
pledge or assignment of conditional sales contracts or chattel mortgages
and evidences of indebtedness secured thereby, received in connection
with the sale by the Company or such Subsidiary or others of goods or
merchandise to customers of the Company or such Subsidiary.
In case the Company or any Subsidiary shall propose to pledge, mortgage
or hypothecate any Principal Property at any time owned by it to secure any
indebtedness, other than as permitted by subdivisions (a) to (s), inclusive, of
this Section 1005, the Company will prior thereto give written notice thereof
to the Trustee, and the Company will, or will cause such Subsidiary to, prior
to or simultaneously with such pledge, mortgage or hypothecation, enter into a
supplemental with the Trustee (or to the extent legally necessary to another
trustee or additional or separate trustee) that secures all the Securities
equally and ratably with such indebtedness.
Notwithstanding the foregoing provisions of this Section 1005, the
Company or a Subsidiary may issue, assume or guarantee indebtedness secured by
mortgage which would otherwise be subject to the foregoing restrictions in an
aggregate amount which, together with all other indebtedness of the Company 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 indebtedness permitted to be secured under clauses
(a) through (s) above), does not at the time exceed 10% of the Consolidated Net
Tangible Assets of the Company, as shown on the audited consolidated financial
statements of the Company as of the end of the fiscal year preceding the date
of determination.
SECTION 1006. Statement as to Compliance; Notice of Certain Events of Default.
The Company will, within 120 days after the close of each fiscal year,
commencing with the first fiscal year following the issuance of Securities
under this Indenture, file with the Trustee a certificate of the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company covering the period from the date of issuance of such
Securities to the end of the fiscal year in which such Securities were issued,
in the case of the first such certificate, andcovering the preceding fiscal
year in the case of each subsequent certificate, and stating whether or
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not, to the knowledge of the signer, the Company has complied with all
conditions and covenants on its part contained in this Indenture, and, if the
signer has obtained knowledge of any default by the Company in the performance,
observance or fulfillment of any such condition or covenant, specifying each
such default and the nature thereof. For the purpose of this Section 1007,
compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, notwithstanding
anything to the contrary contained herein, to the extent and in the manner
hereinafter set forth in this Article, the indebtedness represented by the
Securities and the payment of the principal of and premium, if any, and
interest on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Indebtedness (including any interest
accruing after the occurrence of an Event of Default under Section 501(4) or
(5)).
SECTION 1102. Payment Over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the
benefit of creditors or any other marshalling of assets and liabilities of the
Company, then and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or cash equivalents of all amounts due or to become due
on or in respect of all Senior Indebtedness, or provision shall be made for
such payment in cash or cash equivalents, before the Holders of the Securities
are entitled to receive any payment on account of principal of (or premium, if
any) or interest on the Securities; and
(2) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but for the provisions of
this Article Eleven, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of
the Company being subordinated to the payment of the Securities (except for any
such payment or distribution of securities which (i) are unsecured, (ii) have
an average life and final maturity no shorter than the average life and final
maturity of the Securities and (iii) are subordinated, to at least the same
extent as the Securities, to the payment of all Senior Indebtedness then
outstanding), shall be paid by the liquidating trustee or agent or other person
making such payment or distribution,
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whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or their
Representative or Representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and premium, if any, and
interest on, and other amounts due on or in connection with, the Senior
Indebtedness to the extent necessary to make payment in full in cash or cash
equivalents of all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any such
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full or payment thereof
provided for, then and in such event such payment or distribution shall be paid
over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash or cash equivalents, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another corporation upon the terms and
conditions set forth in Article Eight shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the Company for the
purposes of this Section if the corporation formed by such consolidation or
into which the Company is merged or the corporation which acquires by
conveyance, transfer or lease such properties and assets substantially as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions set forth in Article
Eight.
SECTION 1103. No Payment When Senior Indebtedness in Default.
No payment of principal (including redemption payments), premium, if
any, or interest on the Securities may be made (i) if any Senior Indebtedness
is not paid when due, (ii) if any applicable grace period with respect to such
payment default on Senior Indebtedness has ended and such default has not been
cured or waived or ceased to exist, or (iii) if the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, then and in such event such payment shall
be received and held in trust for the holders of Senior Indebtedness and shall
be paid over or delivered to the Representative of Senior Indebtedness then
outstanding to the extent necessary to pay in full in cash or cash equivalents
all Senior Indebtedness.
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The provisions of this Section shall not apply to any payment with
respect to which Section 1102 would be applicable.
SECTION 1104. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1102 or under the conditions
described in Section 1103, from making payments at any time of principal of
(and premium, if any) or interest on the Securities.
SECTION 1105. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated (equally and ratably with the holders of
all indebtedness of the Company which by its express terms is subordinated to
Senior Indebtedness of the Company to the same extent as the Securities are
subordinated and which is entitled to like rights of subrogation) to the rights
of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
SECTION 1106. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of (and premium, if any) and interest
on the Securities as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Securities and creditors of the Company other
than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the express
limitations set forth in Article Five and to the rights, if any, under this
Article of the holders of Senior Indebtedness (1) in any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Company
referred to in Section 1102, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise
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payable or deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1103, to prevent any payment prohibited by such
Section.
SECTION 1107. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1108. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (c) release any Person liable in any manner for
the collection of Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 1109. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by
the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payments to or by the Trustee in respect of the Securities,
unless and until the Trustee shall have received written notice thereof at the
Corporate Trust Office of the Trustee from the Company or a holder of Senior
Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 603, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 1109 at least three Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for
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<PAGE> 53
which such money was received and shall not be affected by any notice to the
contrary which may be received by it within three Business Days prior to such
date. Nothing in this Section 1109 shall limit the right of the holders of
Senior Indebtedness to recover payments as contemplated by Section 1102 and
1103.
Subject to the provisions of Section 603, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee, fiduciary or agent
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor). In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 1110. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 603, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1111. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
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SECTION 1112. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that (i) Section 1111 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent and (ii) any notice
required by this Article Eleven to be given by the holders of, or a
Representative for, Senior Indebtedness need only be given to the Trustee and
not to any Paying Agent.
ARTICLE TWELVE
Redemption of Securities
SECTION 1201. Optional Redemption.
(a) At any time on or after _______, 2002, the Company shall have the
right to redeem the Securities, in whole or in part, from time to time, at a
Redemption Price equal to 100% of the principal amount of Securities to be
redeemed plus accrued but unpaid interest, including any Additional Interest,
if any, to the Redemption Date.
(b) If, at any time, a Partnership Tax Event or a Partnership Investment
Company Event (each a "Partnership Special Event") shall occur and be
continuing, the Company may, within 90 days following the occurrence of such
Partnership Special Event, elect to redeem the Securities in whole (but not in
part), upon not less than 30 or more than 60 days' notice at the Redemption
Price, provided that, if at the time there is available to the Company or the
Partnership the opportunity to eliminate, within such 90-day period, the
Partnership Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable such
measure that in the sole judgment of the Company has or will cause no adverse
effect on the Partnership, the Trust or the Company, the Company will pursue
such measure in lieu of redemption.
SECTION 1202. Applicability of Article.
Redemption of Securities, at the election of the Company as permitted by
Section 1201, shall be made in accordance with such provision and this Article.
SECTION 1203. Authorization for Redemption; Notice to Trustee.
The election of the Company to redeem Securities pursuant to Section
1201 shall be evidenced by a Board Resolution. In case of any redemption, the
Company shall, at least 30 days and no more than 60 days prior to the
Redemption Date fixed by the Company, notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed and provide a
copy of the notice of redemption given to Holders of Securities to be redeemed
pursuant to Section 1204.
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SECTION 1204. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Securities not previously called for
redemption, by such method (including pro rata or by lot) as the Trustee shall
deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to $25 or any integral multiple thereof) of the
principal amount of the Securities.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to
be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1205. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall identify the Securities to be redeemed
and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become due and
payable upon each such security to be redeemed and that interest thereon will
cease to accrue on and after said date, and
(4) the place or places where such securities are to be surrendered for
payment of the Redemption Price.
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Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1206. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1207. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1208. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a place of payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. The Company may not redeem fewer than all the
Outstanding Securities unless all accrued and unpaid interest (including
Additional Interest) has been paid on such Securities.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ENRON CORP., as Issuer
By:
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------------------
Name:
Title:
51
<PAGE> 1
EXHIBIT 4(h)
================================================================================
AFFILIATE DEBENTURE GUARANTEE AGREEMENT
ENRON CORP.
DATED AS OF _______, 1997
================================================================================
<PAGE> 2
AFFILIATE DEBENTURE GUARANTEE AGREEMENT
AFFILIATE DEBENTURE GUARANTEE AGREEMENT (this "Investment Guarantee"),
dated as of ____________, 1997, is executed and delivered by Enron Corp., a
Delaware corporation (the "Guarantor"), and The Chase Manhattan Bank, a New
York banking corporation, as trustee (the "Investment Guarantee Trustee"), for
the benefit of the Holder (as defined herein) of the Affiliate Debenture (as
defined herein) of [Name of Issuer], a [__________] corporation (the "Issuer").
WHEREAS, pursuant to an Indenture (the "Affiliate Indenture"), dated
as of ____________, 1997, between the Issuer and The Chase Manhattan Bank, as
indenture trustee (in such capacity, the "Indenture Trustee"), the Issuer is
issuing to the Holder on the date hereof its ___% Debenture Due [2017] (the
"Affiliate Debenture");
WHEREAS, as incentive for the Holder to purchase the Affiliate
Debenture, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Investment Guarantee, to make Guarantee Payments
(as defined herein) to the Holder of the Affiliate Debenture on the terms and
conditions set forth herein and;
NOW, THEREFORE, in consideration of the purchase by the Holder of the
Affiliate Debenture, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Investment Guarantee
for the benefit of the Holder.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Investment Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Investment Guarantee but not
defined in the Preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) capitalized terms used in this Investment Guarantee but not
otherwise defined herein shall have the meanings assigned to them in the
Affiliate Indenture;
(c) a term defined anywhere in this Investment Guarantee has the
same meaning throughout;
(d) all references to "the Investment Guarantee" or "this
Investment Guarantee" are to this Investment Guarantee as modified,
supplemented or amended from time to time;
(e) all references in this Investment Guarantee to Articles and
Sections are to Articles and Sections of this Investment Guarantee, unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Investment Guarantee, unless otherwise defined in this
Investment Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
<PAGE> 3
"Business Day" means a day other than a day on which banking
institutions in the City of New York are authorized or required by law to
close.
"Corporate Trust Office" means the office of the Investment Guarantee
Trustee at which the corporate trust business of the Investment Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at 450 West 33rd
Street, 15th Floor, New York, New York 10001.
"Covered Person" means the Holder or any beneficial owner of the
Affiliate Debenture.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Investment Guarantee.
"Guarantee Payments" means, with respect to the Affiliate Debenture,
to the extent not paid or made by the Issuer, the due and punctual payment of
the principal of, premium, if any, and interest on the Affiliate Debenture,
when and as the same shall become due and payable, whether at maturity or upon
declaration of acceleration or otherwise, according to the terms of the
Affiliate Debenture and of the Affiliate Indenture.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer of the Affiliate Debenture. The initial Holder of the Affiliate
Debenture is the Partnership.
"Indemnified Person" means the Investment Guarantee Trustee, any
Affiliate of the Investment Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Investment Guarantee Trustee.
"Majority in liquidation amount of the Affiliate Debenture" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of the
Affiliate Debenture, voting separately as a class, of more than 50% of the
outstanding principal amount of the Affiliate Debenture plus accrued and unpaid
interest to the date upon which the voting percentages are determined.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Investment Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition of covenant has been complied with.
"Partnership" means Enron Preferred Funding II, L.P.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of ________, 1997, among Enron
Corp., a Delaware corporation, as general partner, Organizational Partner,
Inc., a Delaware corporation, as initial limited partner and such other persons
who become limited partners as provided therein.
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<PAGE> 4
"Partnership Preferred Securities" means those securities representing
limited partnership interests in the Partnership.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" means, with respect to the Investment Guarantee
Trustee, any officer within the Corporate Trust Office of the Investment
Guarantee Trustee, including any vice president, any assistant vice president,
any secretary, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Investment Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Investment Guarantee Trustee" means a successor Investment
Guarantee Trustee possessing the qualifications to act as Investment Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Investment Guarantee Trustee" means The Chase Manhattan Bank, a New
York banking corporation, until a Successor Investment Guarantee Trustee has
been appointed and has accepted such appointment pursuant to the terms of this
Investment Guarantee and thereafter means each such Successor Investment
Guarantee Trustee.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Investment Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Investment Guarantee
and shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Investment
Guarantee limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Investment Guarantee Trustee
with a list, in such form as the Investment Guarantee Trustee may reasonably
require, of the names and addresses of the Holder(s) of the Affiliate Debenture
("List of Holders") as of such date, (i) within one (1) Business Day after
January 1 and June 30 of each year, and (ii) at any other time within 30 days
of receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the
Investment Guarantee Trustee provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Investment
Guarantee Trustee by the Guarantor. The Investment Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Investment Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
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<PAGE> 5
SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Investment Guarantee
Trustee shall provide to the Holders of the Affiliate Debenture such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The
Investment Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Trust Preferred Guarantee Trustee
The Guarantor shall provide to the Investment Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Investment Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Investment Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the
form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of the Affiliate
Debenture may, by vote, on behalf of the Holders of the Affiliate Debenture,
waive any past Event of Default and its consequences. Upon such waiver, any
such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Investment Guarantee, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Investment Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Affiliate Debenture, notices of all Events of
Default actually known to a Responsible Officer of the Investment Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, the Investment Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Investment Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Affiliate Debenture.
(b) The Investment Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Investment Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the
Investment Guarantee Trustee charged with the administration of the Affiliate
Debenture shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Affiliate Debenture shall be deemed to be specifically described
in this Investment Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
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<PAGE> 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF INVESTMENT
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Investment Guarantee Trustee
(a) This Investment Guarantee shall be held by the Investment
Guarantee Trustee for the benefit of the Holders of the Affiliate Debenture,
and the Investment Guarantee Trustee shall not transfer this Investment
Guarantee to any Person except a Holder of the Affiliate Debenture exercising
his or her rights pursuant to Section 5.4(b) or to a Successor Investment
Guarantee Trustee on acceptance by such Successor Investment Guarantee Trustee
of its appointment to act as Successor Investment Guarantee Trustee. The
right, title and interest of the Investment Guarantee Trustee shall
automatically vest in any Successor Investment Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Investment Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible officer
of the Investment Guarantee Trustee has occurred and is continuing, the
Investment Guarantee Trustee shall enforce this Investment Guarantee for the
benefit of the Holders of the Affiliate Debenture.
(c) The Investment Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Investment Guarantee, and no implied covenants shall be read into
this Investment Guarantee against the Investment Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) and is actually known to a Responsible Officer of the Investment
Guarantee Trustee, the Investment Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Investment Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Investment Guarantee shall be construed
to relieve the Investment Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Investment
Guarantee Trustee shall be determined solely by the express
provisions of this Investment Guarantee, and the Investment
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Investment Guarantee, and no implied
covenants or obligations shall be read into this Investment
Guarantee against the Investment Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Investment Guarantee Trustee, the Investment Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Investment Guarantee Trustee and conforming to the
requirements of this Investment Guarantee; but in the case of
any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Investment
Guarantee Trustee, the Investment Guarantee Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Investment Guarantee;
(ii) the Investment Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible officer
of the Investment Guarantee Trustee, unless it shall be proved that
the
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<PAGE> 7
Investment Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Investment Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of the Affiliate
Debenture relating to the time, method and place of conducting any
proceeding for any remedy available to the Investment Guarantee
Trustee, or exercising any trust or power conferred upon the
Investment Guarantee Trustee under this Investment Guarantee; and
(iv) no provision of this Investment Guarantee shall
require the Investment Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Investment Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Investment Guarantee or indemnity, reasonably satisfactory to the
Investment Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Investment Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Investment Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Investment Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Investment
Guarantee, the Investment Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Investment Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively rely upon
an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor.
(iv) The Investment Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any instrument (or
any rerecording, refiling or reregistration thereof).
(v) The Investment Guarantee Trustee may, at the expense
of the Guarantor, consult with counsel of its selection, and the
advice or opinion of such counsel with respect to legal matters shall
be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel
to the Guarantor or any of its Affiliates and may include any of its
employees. The Investment Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Investment Guarantee from any court of competent jurisdiction.
(vi) The Investment Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Investment Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Investment Guarantee
Trustee such security and indemnity, reasonably satisfactory to the
Investment Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Investment
Guarantee Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Investment Guarantee Trustee; provided
6
<PAGE> 8
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Investment Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Investment Guarantee.
(vii) The Investment Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Investment Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Investment Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Investment Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Investment Guarantee Trustee
or its agents hereunder shall bind the Holders of the Affiliate
Debenture, and the signature of the Investment Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Investment Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Investment
Guarantee, both of which shall be conclusively evidenced by the
Investment Guarantee Trustee or its agent taking such action.
(x) Whenever in the administration of this Investment
Guarantee the Investment Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Investment Guarantee Trustee
(i) may request instructions from the Holders of a Majority in
liquidation amount of the Affiliate Debenture, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(xi) The Investment Guarantee Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Investment
Guarantee.
(b) No provision of this Investment Guarantee shall be deemed to
impose any duty or obligation on the Investment Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Investment Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available
to the Investment Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of
Investment Guarantee
The recitals contained in this Investment Guarantee shall be taken as
the statements of the Guarantor, and the Investment Guarantee Trustee does not
assume any responsibility for their correctness. The Investment Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Investment Guarantee.
ARTICLE IV
INVESTMENT GUARANTEE TRUSTEE
SECTION 4.1 Investment Guarantee Trustee; Eligibility
(a) There shall at all times be a Investment Guarantee Trustee
which shall:
7
<PAGE> 9
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Investment Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Investment Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Investment Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Investment Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Investment
Guarantee Trustee
(a) Subject to Section 4.2(b), the Investment Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Investment Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Investment Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Investment Guarantee Trustee and delivered to the
Guarantor.
(c) The Investment Guarantee Trustee appointed to office shall
hold office until a Successor Investment Guarantee Trustee shall have been
appointed or until its removal or resignation. The Investment Guarantee
Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Investment Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take effect
until a Successor Investment Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Investment Guarantee Trustee and delivered to the Guarantor and the resigning
Investment Guarantee Trustee.
(d) If no Successor Investment Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of removal or resignation, the Investment
Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Investment Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Investment Guarantee Trustee.
(e) No Investment Guarantee Trustee shall be liable for the acts
or omissions to act of any Successor Investment Guarantee Trustee.
(f) Upon termination of this Investment Guarantee or removal or
resignation of the Investment Guarantee Trustee pursuant to this Section 4.2
and before the appointment of any Successor Investment Guarantee Trustee, the
Guarantor shall pay to the Investment Guarantee Trustee all amounts to which it
is entitled to the date of such termination, removal or resignation.
8
<PAGE> 10
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), if, as and when due, regardless of any defense, right of
setoff or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Investment
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Investment Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Affiliate Debenture to
be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the interest, principal or premiums, if any, or any other sums
payable under the terms of the Affiliate Debenture or the extension of time for
the performance of any other obligation under, arising out of, or in connection
with, the Affiliate Debenture (other than an extension of time for payment of
interest during an Extension Period (as defined in the Affiliate Indenture));
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Affiliate
Debenture, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Affiliate
Debenture;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
9
<PAGE> 11
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Affiliate Debenture have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Investment
Guarantee Trustee in respect of this Investment Guarantee or exercising any
trust or power conferred upon the Investment Guarantee Trustee under this
Investment Guarantee.
(b) If the Investment Guarantee Trustee fails to enforce its
rights under the Investment Guarantee after a Holder of the Affiliate Debenture
has made a written request, such Holder of the Affiliate Debenture may
institute a legal proceeding directly against the Guarantor to enforce the
Investment Guarantee Trustee's rights under this Investment Guarantee, without
first instituting a legal proceeding against the Issuer, the Investment
Guarantee Trustee or any other Person. Notwithstanding the foregoing, if the
Guarantor has failed to make a Guarantee Payment, a Holder of the Affiliate
Debenture may directly institute a proceeding in such Holder's own name against
the Guarantor for enforcement of the Investment Guarantee for such payment.
The Guarantor waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Investment Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Affiliate Debenture against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Investment Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Investment
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Investment Guarantee. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Affiliate
Debenture, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Investment
Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.1 Ranking
This Investment Guarantee will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including, without limitation, the
fees, charges, expenses and indemnities due to the Property Trustee or the
Delaware Trustee in respect of the Declaration of Trust, the Trust Preferred
Securities Guarantee and the Affiliate Debenture Guarantee Agreement, (ii) pari
passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred security of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
10
<PAGE> 12
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Investment Guarantee shall terminate upon the repayment in full
(whether at maturity, upon redemption or otherwise) of all of the principal of,
interest on (including all accrued and unpaid interest thereon) and any other
amounts payable in respect of the Affiliate Debenture. Notwithstanding the
foregoing, this Investment Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of the Affiliate
Debenture must restore payment of any sums paid under the Affiliate Debenture
or under this Investment Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Investment Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Investment Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which principal, interest or other payments to Holders of
the Affiliate Debenture might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Investment Guarantee or the resignation or removal of the Investment
Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Investment Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Affiliate
Debenture then outstanding.
11
<PAGE> 13
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Investment Guarantee may only be amended with the prior approval of the Holders
of at least a Majority in liquidation amount of the Affiliate Debenture.
SECTION 9.3 Merger of the Guarantor
The Guarantor covenants that it will not merge or consolidate with any
other corporation or other entity or sell or convey all or substantially all of
its assets to any person (other than such a sale or conveyance to a Subsidiary
or any successor thereto (such a sale or conveyance being called an "Asset
Drop-Down")), unless (i) either the Guarantor shall be the continuing
corporation or the successor corporation or other entity or the person which
acquires by sale or conveyance substantially all the assets of the Guarantor
shall expressly assume the obligations of the Guarantor hereunder, according to
their tenor, and the due and punctual performance and observance of all of the
covenants hereof to be performed or observed by the Guarantor, by instrument in
form satisfactory to the Investment Guarantee Trustee, executed and delivered
to the Investment Guarantee Trustee by such corporation or other entity, and
(ii) the Guarantor or such successor corporation or other entity, as the case
may be, shall not, immediately after such merger or consolidation, or such sale
or conveyance, be in default in the performance of any such covenant or
condition. In the event of any Asset Drop-Down after the date hereof, any
subsequent sale or conveyance of assets by a Subsidiary to which assets were
transferred in such Asset Drop-Down will be deemed to be a sale or conveyance
of assets by the Company for purposes of this provision.
SECTION 9.4 Notices
All notices provided for in this Investment Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Investment Guarantee Trustee, at the
Investment Guarantee Trustee's mailing address set forth below (or such other
address as the Investment Guarantee Trustee may give notice of to the Holders
of the Affiliate Debenture):
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor New York, New York
10001 Attention: Global Trust Services Telecopy:
(212) 946-8158, 8159 or 8160
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Affiliate Debenture):
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Treasury Department Telecopy: (713)
646-3422
(c) If given to any Holder of Affiliate Debenture, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
12
<PAGE> 14
SECTION 9.5 Benefit
This Investment Guarantee is solely for the benefit of the Holders of
the Affiliate Debenture and, subject to Section 3.1(a), is not separately
transferable from the Affiliate Debenture.
SECTION 9.6 Governing Law
THIS INVESTMENT GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
13
<PAGE> 15
This Investment Guarantee is executed as of the day and year first
above written.
ENRON CORP., as Guarantor
By:
-------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Investment Guarantee Trustee
By:
-------------------------------------------
Name:
Title:
14
<PAGE> 1
Exhibit 12
ENRON CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended December 31,
------------------------------------------------------------------------------
9/30/96 1995 1994 1993 1992 1991
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings available for fixed charges
Net income $ 452,365 $519,694 $453,410 $332,522 $ 328,800 $232,146
Less:
Undistributed earnings and
losses of less than 50% owned
affiliates (8,362) (13,505) (9,453) (20,232) (32,526) (8,890)
Capitalized interest of
nonregulated companies (6,922) (8,315) (9,007) (25,434) (66,401) (36,537)
Add:
Fixed charges (1) 322,075 435,681 487,258 471,278 452,014 454,607
Minority interest 42,477 27,260 29,600 27,605 17,632 7,210
Income tax expense 224,480 310,264 190,081 148,104 88,630 105,859
------------------------------------------------------------------------------
Total $1,026,113 1,271,079 1,141,889 $933,843 $ 788,149 $754,395
==============================================================================
Fixed Charges
Interest expense (1) $ 291,710 $385,995 $444,768 $436,211 $ 430,406 $425,945
Rental expense representative of
interest factor 30,365 49,686 42,490 35,067 21,608 28,662
------------------------------------------------------------------------------
Total $ 322,075 $435,681 $487,258 $471,278 $ 452,014 $454,607
==============================================================================
Ratio of earnings to fixed charges 3.19 2.92 2.34 1.98 1.74 1.66
==============================================================================
</TABLE>
(1) Amounts exclude costs incurred on sales of accounts receivables.
<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 reports dated February 16,
1996, included in Enron Corp.'s Current Report on Form 8-K dated March 8, 1996
and Annual Report on Form 10-K for the year ended December 31, 1995, and to all
references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
December 23, 1996
<PAGE> 1
EXHIBIT 23(b)
[DeGOLYER AND MacNAUGHTON LETTERHEAD]
December 20, 1996
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Enron Preferred Funding II, L.P.
1400 Smith Street
Houston, Texas 77002
Enron Capital Trust II
1400 Smith Street
Houston, Texas 77002
Gentlemen:
In connection with the Registration Statement on Form S-3 (the Registration
Statement), to be filed with the Securities and Exchange Commission on or about
December 23, 1996, by Enron Corp., Enron Preferred Funding II, L.P., and Enron
Capital Trust II, DeGolyer and MacNaughton hereby consents to the incorporation
in said Registration Statement of the references to our firm and to the opinions
delivered to Enron Oil & Gas Company (the Company) regarding our comparison of
estimates prepared by us with those furnished to us by the Company of the proved
oil, condensate, natural gas liquids, and natural gas reserves of certain
selected properties owned by the Company. The opinions are contained in our
letter reports dated January 27, 1994, January 13, 1995, and January 22, 1996,
for estimates, as of January 1, 1994, January 1, 1995, and December 31, 1995,
respectively. The opinions are referred to in the section "Oil and Gas
Exploration and Production Properties and Reserves-Reserve Information" in Enron
Corp.'s Annual Report on Form 10-K for the year ended December 31, 1995, and in
Note 18 to the Enron Corp. consolidated financial statements included in Enron
Corp.'s Form 10-K for the year ended December 31, 1995. DeGolyer and
MacNaughton also consents to the incorporation by reference in the Registration
Statement of its letter report, dated January 22, 1996, addressed to the
Company, which is included as Exhibit 24.03 to Enron Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1995, and to the
<PAGE> 2
reference to it in the section "Experts" in the Prospectus that is a part of
the Registration Statement.
Very truly yours,
DeGOLYER and MacNAUGHTON
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ ROBERT A. BELFER
--------------------
Robert A. Belfer
Director
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ NORMAN P. BLAKE, JR.
------------------------
Norman P. Blake, Jr.
Director
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ RONNIE C. CHAN
------------------
Ronnie C. Chan
Director
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ JOHN H. DUNCAN
------------------
John H. Duncan
Director
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ JOE H. FOY
--------------
Joe H. Foy
Director
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), her true and lawful attorney-in-fact and agent, for her and
on her behalf and in her name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set her hand this 23rd
day of December, 1996.
/s/ WENDY L. GRAMM
------------------
Wendy L. Gramm
Director
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ ROBERT K. JAEDICKE
----------------------
Robert K. Jaedicke
Director
<PAGE> 8
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ KENNETH L. LAY
------------------
Kenneth L. Lay
Director
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ CHARLES A. LeMAISTRE
------------------------
Charles A. LeMaistre
Director
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd day
of December, 1996.
/s/ JOHN A. URQUHART
--------------------
John A. Urquhart
Director
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ JOHN WAKEHAM
----------------
John Wakeham
Director
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ CHARLS S. WALKER
--------------------
Charls S. Walker
Director
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration of Trust Originated Preferred Securities and certain other
Securities related thereto by Enron Corp., a Delaware corporation (the
"Company"), Enron Preferred Funding II, L.P., a Delaware limited partnership,
and Enron Capital Trust II, a Delaware trust, the undersigned officer or
director of the Company hereby constitutes and appoints Kenneth L. Lay, William
D. Gathmann and Peggy B. Menchaca, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file a registration statement on Form S-3 relating to such
securities to be filed with the Securities and Exchange Commission, together
with all amendments thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of December, 1996.
/s/ HERBERT S. WINOKUR, JR.
---------------------------
Herbert S. Winokur, Jr.
Director
