<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1996
REGISTRATION NO. 333-09919
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ENRON OIL & GAS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 47-0684736
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1400 SMITH STREET, HOUSTON, TEXAS 77002
TELEPHONE NO. (713) 853-6161
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
BARRY HUNSAKER, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ENRON OIL & GAS COMPANY
1400 SMITH STREET
HOUSTON, TEXAS 77002
(713) 853-6161
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copies to:
<TABLE>
<S> <C>
GARY W. ORLOFF, ESQ. REX R. ROGERS, ESQ.
BRACEWELL & PATTERSON, L.L.P. ASSISTANT GENERAL COUNSEL
SOUTH TOWER PENNZOIL PLACE, SUITE 2900 ENRON CORP.
711 LOUISIANA STREET 1400 SMITH STREET, ROOM 4842
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement as determined in light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities
Common Stock, $.01 par value (2) (2) $150,000,000 $51,725(3)
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee.
(2) Not applicable pursuant to Form S-3 General Instruction II. D under the
Securities Act of 1933.
(3) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO $250,000,000 OF
OTHER SECURITIES REGISTERED ON FORM S-3, REGISTRATION STATEMENT NO. 33-42620,
WHICH WAS DECLARED EFFECTIVE ON SEPTEMBER 27, 1991 (THE "PREVIOUSLY REGISTERED
SECURITIES"). THIS REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT
NO. 1 TO REGISTRATION STATEMENT NO. 33-42620, PURSUANT TO WHICH THE TOTAL AMOUNT
OF UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED ON REGISTRATION STATEMENT
NO. 33-42620, WITHOUT LIMITATION AS TO CLASS OF SECURITIES, MAY BE OFFERED AND
SOLD AS DEBT SECURITIES AND/OR COMMON STOCK TOGETHER WITH THE SECURITIES
REGISTERED HEREUNDER THROUGH THE USE OF THE COMBINED PROSPECTUS INCLUDED HEREIN.
IN THE EVENT SUCH PREVIOUSLY REGISTERED SECURITIES ARE OFFERED AND SOLD PRIOR TO
THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE AMOUNT OF SUCH PREVIOUSLY
REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN THE PROSPECTUS HEREUNDER.
IN ACCORDANCE WITH RULE 429(b), THE AMOUNT OF THE PREVIOUSLY PAID FILING FEE
ASSOCIATED WITH THE PREVIOUSLY REGISTERED SECURITIES WAS $62,500.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PROSPECTUS
ENRON OIL & GAS COMPANY
$400,000,000
DEBT SECURITIES
COMMON STOCK
------------------------
Enron Oil & Gas Company (the "Company") may offer from time to time its
unsecured debt securities consisting of notes, debentures or other evidences of
indebtedness (the "Debt Securities"). The Company and/or Enron Corp. (the
"Selling Stockholder") may also offer and sell from time to time shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"). The
aggregate initial offering price of the Debt Securities and the Common Stock to
be offered by the Company and Common Stock to be offered by the Selling
Stockholder hereby (the "Securities") will not exceed $400,000,000. The
Securities may be offered in amounts, at prices and on terms to be determined in
light of market conditions at the time of sale and, to the extent required, set
forth in a Prospectus Supplement.
The Debt Securities may be offered as separate series. The terms of each
series of Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, maturity,
rate or rates and time or times of payment of any interest, any terms for
optional or mandatory redemption, which may include redemption at the option of
holders upon the occurrence of certain events, or payment of additional amounts
or any sinking fund provisions, and any other specific terms in connection with
the offering and sale of such series (the "Offered Debt Securities") will be set
forth in a Prospectus Supplement.
The Securities may be sold directly by the Company or the Selling
Stockholder to investors, through agents designated from time to time or to or
through underwriters or dealers. See "Plan of Distribution". If any underwriters
are involved in the sale of any Securities in respect of which this Prospectus
is being delivered, the names of such underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement. The Company will not receive any of the proceeds from the sale of
the Common Stock by the Selling Stockholder. Enron Corp. currently owns
approximately 58% of the outstanding Common Stock.
The Common Stock is listed on the New York Stock Exchange under the symbol
"EOG". On September 9, 1996, the last reported sale price of Common Stock on the
New York Stock Exchange Composite Tape was $26.00 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1996
<PAGE> 3
AVAILABLE INFORMATION
The Company 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 Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the following Regional Offices of
the Commission: Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; 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., Room 1024, Washington, D.C. 20549, at prescribed rates, or from
the site maintained by the Commission on the Internet World Wide Web at
http://www.sec.gov. The Company's Common Stock is listed on the New York Stock
Exchange, Inc. ("NYSE"), and reports, proxy statements and other information
concerning the Company can be inspected and copied at the offices of the NYSE at
20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of Registration Statements on Form S-3
(collectively, together with all amendments and exhibits thereto, the
"Registration Statements") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in such Registration Statements, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Reference is made to such Registration Statements and to the exhibits relating
thereto for further information with respect to the Company and the Securities
offered hereby. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statements or otherwise filed
with the Commission or incorporated by reference herein are not necessarily
complete, and in each instance reference is made to the copy of such document so
filed for a more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and
June 30, 1996, and the description of the Common Stock contained in the
Registration Statement on Form 8-A declared effective on October 3, 1989, are
incorporated herein by reference.
Each document filed by the Company 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 pursuant hereto shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such document. Any statement contained herein or in a document
all or a portion of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
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.
The Company 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). Requests
should be directed to Secretary, Enron Oil & Gas Company, at its principal
executive offices, 1400 Smith Street, Houston, Texas 77002 (telephone:
713-853-6161).
---------------------
IN CONNECTION WITH THIS OFFERING, UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE 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.
2
<PAGE> 4
BUSINESS OF THE COMPANY
GENERAL
The Company, a Delaware corporation organized in 1985, is engaged in the
exploration for, and the 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 and India and, to a lesser extent, selected other
international areas. At December 31, 1995, the Company's estimated net proved
natural gas reserves were 3,343 billion cubic feet ("Bcf"), including 1,180 Bcf
of proved undeveloped methane reserves in the Big Piney deep Paleozoic
formations and amounts related to a volumetric production payment, and the
Company's estimated net proved crude oil, condensate and natural gas liquids
reserves were 50 million barrels. At such date, approximately 78% of the
Company's reserves (on a natural gas equivalent basis) was located in the United
States, 10% in Canada, 8% in Trinidad and 4% in India.
Unless the context requires otherwise, as used in this Prospectus the
"Company" shall mean Enron Oil & Gas Company and its subsidiaries.
EXPLORATION AND PRODUCTION
NORTH AMERICAN OPERATIONS
The Company's seven principal United States producing areas are the Big
Piney area in northwest Wyoming, South Texas area, East Texas area, Offshore
Gulf of Mexico area, Canyon Trend area in West Texas, Pitchfork Ranch area in
southeast New Mexico and Vernal area in northeast Utah. Properties in these
areas are substantially all operated by the Company, and comprised approximately
67% of the Company's United States reserves (on a natural gas equivalent basis)
and 90% of the Company's maximum United States net natural gas deliverability as
of December 31, 1995.
The Company's other United States natural gas and crude oil producing
properties are located primarily in other areas of Texas, Utah, New Mexico,
Oklahoma, California and Kansas.
At December 31, 1995, 95% of the Company's proved United States reserves
(on a natural gas equivalent basis) was natural gas and 5% was crude oil,
condensate and natural gas liquids. A substantial portion of the Company's
United States natural gas reserves is in long-lived fields with well-established
production histories. The Company believes that opportunities exist to increase
production in many of these fields through continued infill and other
development drilling.
The Company also has natural gas and crude oil producing properties located
in Western Canada, primarily in the provinces of Alberta, Saskatchewan and
Manitoba.
OUTSIDE NORTH AMERICA OPERATIONS
The Company has operations offshore Trinidad and India, was recently
awarded by Venezuela the rights to pursue development of reserves on the Gulf of
Paria East Block offshore the eastern state of Sucre, and is conducting
exploration in selected other international areas. Properties offshore Trinidad
and India comprised 100% of the Company's proved reserves and production outside
of North America at year end 1995.
MARKETING
Wellhead Marketing. The Company's North America wellhead natural gas
production is currently being sold on the spot market and under long-term
natural gas contracts at market responsive prices. In many instances, the
long-term contract prices closely approximate the prices received for natural
gas being sold on the spot market. Wellhead natural gas volumes from Trinidad
are sold at prices that are based on a fixed price schedule with annual
escalations. Natural gas volumes in India will be sold to the Gas Authority of
India, Ltd. under a take-or-pay contract at a price linked to a basket of world
market fuel oil quotations with floor and ceiling limits. Approximately 30% of
the Company's wellhead natural gas production is currently being sold to
pipeline and marketing subsidiaries of Enron Corp. The Company believes that the
terms of its transactions
3
<PAGE> 5
and agreements with Enron Corp. and/or its affiliates are and intends that
future such transactions and agreements will be at least as favorable to the
Company as could be obtained from third parties.
Substantially all of the Company's wellhead crude oil and condensate is
sold under various terms and arrangements at market responsive prices.
Other Marketing. Enron Oil & Gas Marketing, Inc. ("EOGM"), a wholly-owned
subsidiary of the Company, is a marketing company engaging in various marketing
activities. Both the Company and EOGM contract to provide, under short-term and
long-term agreements, natural gas to various purchasers and then aggregate the
necessary supplies for the sales with purchases from various sources including
third-party producers, marketing companies, pipelines or from the Company's own
production. In addition, EOGM has purchased and constructed several small
gathering systems in order to facilitate its entry into the gathering business
on a limited basis. Both the Company and EOGM utilize other short-term and
long-term hedging and trading mechanisms including sales and purchases utilizing
NYMEX-related commodity market transactions. These marketing activities have
provided an effective balance in managing a portion of the Company's exposure to
commodity price risks for both natural gas and crude oil and condensate wellhead
prices.
USE OF PROCEEDS
The Company intends to apply any net proceeds it receives from the sale of
the Securities to its general funds to be used for general corporate purposes,
including in certain circumstances to retire outstanding indebtedness. Any
specific allocations of the proceeds to a particular purpose that has been made
at the date of any Prospectus Supplement will be described therein. The Company
will not receive any of the proceeds of the sale of Common Stock by the Selling
Stockholder.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
------------- ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges..................... 10.31 10.64 11.12 7.95 3.95 2.21
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus interest, net of amounts capitalized.
Fixed charges consist of interest on debt including amounts capitalized,
amortization of debt discount and issuance expense and that portion of rental
expense determined to be representative of interest.
4
<PAGE> 6
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate (the "Offered Debt Securities"). The particular
terms of the Offered Debt Securities and the extent, if any, to which such
general provisions may apply to the Offered Debt Securities are described in the
Prospectus Supplement relating to such Offered Securities.
The Debt Securities will be unsecured obligations of the Company issued
under an Indenture (the "Indenture") between the Company and Texas Commerce Bank
National Association, as Trustee (the "Trustee"), dated as of September 1, 1991.
The following statements are summaries of certain provisions contained in the
Indenture, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. They do not purport to be complete
statements of all the terms and provisions of the Indenture, and reference is
hereby made to the Indenture for full and complete statements of such terms and
provisions, including the definitions of certain terms used herein. Wherever
reference is made in the following statements to a particular section of the
Indenture, such section shall be deemed to be incorporated in such statements as
a part thereof, and such statements are qualified in their entirety by such
reference. The italicized references below are to the section numbers in the
Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of unsecured
debentures, notes or other evidences of indebtedness of the Company which may be
issued thereunder from time to time in one or more series by the Company, and
the Company may in the future issue additional securities (in addition to the
Debt Securities) under the Indenture. Reference is made to the Prospectus
Supplement for the following terms of the Offered Debt Securities: (i) the title
of the Offered Debt Securities; (ii) any limit upon the aggregate principal
amount of the Offered Debt Securities; (iii) the date or dates on which the
principal of the Offered Debt Securities is payable; (iv) the rate or rates
(which may be fixed or variable), or the method by which such rate or rates
shall be determined, at which the Offered Debt Securities shall bear interest,
if any, the date or dates from which such interest shall accrue, or the method
by which such date or dates shall be determined, the interest payment dates on
which such interest shall be payable and the regular record date for the
interest payable on any interest payment date; (v) the place or places where the
principal of (and premium, if any) and interest on Offered Debt Securities shall
be payable; (vi) the period or periods within which, the price or prices at
which and the terms and conditions upon which Offered Debt Securities may be
redeemed, in whole or in part, at the option of the Company, if the Company is
to have that option; (vii) the obligation, if any, and the option, if any, of
the Company to redeem, purchase or repay Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Offered Debt Securities shall be redeemed, purchased
or repaid in whole or in part, pursuant to such obligation or option; (viii)
whether the Offered Debt Securities are to be issued in whole or in part in the
form of one or more permanent global securities and, if so, the identity of the
depositary for such permanent global securities; (ix) any trustees, paying
agents, transfer agents or registrars with respect to Offered Debt Securities;
and (x) any other term of the Offered Debt Securities (which term shall not be
inconsistent with the provisions of the Indenture. (Section 301.)
The Company will maintain in each place specified by the Company for
payment of any series of Offered Debt Securities an office or agency where
Offered Debt Securities of that series may be presented or surrendered for
payment, where Offered Debt Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Offered Debt Securities of that series and the
Indenture may be served.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or integral multiples thereof.
(Section 302.) No service charge will be made for any transfer or exchange of
such Offered Debt
5
<PAGE> 7
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in relation thereto. (Section 305.)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
principal amount. Special federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Securities" means any security which provides for an amount less than
the principal amount thereof to be due and payable upon a Event of Default and
the continuation thereof. (Section 101.)
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Debt Securities would not necessarily afford
holders of the Debt Securities protection in the event of a highly leveraged or
other transaction involving the Company that may adversely affect holders.
PERMANENT GLOBAL DEBT SECURITIES
If any Offered Debt Securities are issuable in permanent global form, the
applicable Prospectus Supplement will describe the circumstances, if any, under
which beneficial owners of interests in any such permanent global Debt Security
may exchange such interests for Debt Securities of such series and of like tenor
and principal amount in any authorized form and denomination. (Section 305.)
Principal of and any premium and interest on a permanent global Debt Security
will be payable in the manner described in the applicable Prospectus Supplement.
LIMITATIONS ON LIENS
The Indenture provides that so long as any of the securities issued under
the Indenture (including the Debt Securities) are outstanding, the Company will
not, and will not permit any Subsidiary to, create or suffer to exist, except in
favor of the Company or any Subsidiary, any Lien upon any Principal Property at
any time owned by it, to secure any Funded Debt of the Company or any
Subsidiary, unless effective provision is made whereby outstanding securities
issued under the Indenture (including the Debt Securities) will be equally and
ratably secured with any and all such Funded Debt and with any other
indebtedness similarly entitled to be equally and ratably secured. This
restriction does not apply to prevent the creation or existence of any: (a)
Acquisition Lien or Permitted Encumbrance; or (b) Lien 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 1986, as amended, for the purpose of
financing, in whole or in part, the acquisition or construction of property or
assets to be used by the Company or a Subsidiary. In case the Company or any
Subsidiary shall propose to create or permit to exist a Lien on any Principal
Property at any time owned by it to secure any Funded Debt of the Company or any
Subsidiary, other than Funded Debt permitted to be secured under clauses (a) or
(b) above, 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 creation or permission to exist, by supplemental
indenture executed to the Trustee (or to the extent legally necessary to another
trustee or additional or separate trustee), in form satisfactory to the Trustee,
effectively secure all the securities issued under the Indenture equally and
ratably with such Funded Debt and any other indebtedness entitled to be equally
and ratably secured.
Notwithstanding the foregoing, the Company or a Subsidiary may issue,
assume or guarantee Funded Debt secured by a Lien which would otherwise be
subject to the foregoing restrictions in an aggregate amount which, together
with all other Funded Debt of the Company or a Subsidiary secured by a Lien
which (if originally issued, assumed or guaranteed at such time) would otherwise
be subject to the foregoing restrictions (not including Funded Debt permitted to
be secured under the foregoing exception), 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 1007.)
6
<PAGE> 8
The holder of more than 50% in principal amount of the outstanding
securities issued under the Indenture (including the Debt Securities) may waive
compliance by the Company with the covenant contained in Section 1007 of the
Indenture (and certain other covenants of the Company). (Section 1009.)
The Indenture defines the term "Subsidiary" to mean a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries, or by the Company and one
or more other Subsidiaries. The term "Principal Property" is defined to mean any
property interest in oil and gas reserves located in the United States or
offshore the United States and owned by the Company or any Subsidiary and which
is capable of producing crude oil, condensate, natural gas, natural gas liquids
or other similar hydrocarbon substances in paying quantities, the net book value
of which property interest exceeds two (2) percent of Consolidated Net Tangible
Assets, except any such property interest or interests 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 as a whole. Without limitation,
the term "Principal Property" shall not include (i) accounts receivable and
other obligations of any obligor under a contract for the sale, exploration,
production, drilling, development, processing or transportation of crude oil,
condensate, natural gas, natural gas liquids or other similar hydrocarbon
substances by the Company or any of its Subsidiaries, and all related rights of
the Company or any of its Subsidiaries, and all guarantees, insurance, letters
of credit and other agreements or arrangements of whatever character supporting
or securing payment of such receivables or obligations, or (ii) the production
or any proceeds from production of crude oil, condensate, natural gas, natural
gas liquids or other similar hydrocarbon substances. (Section 101.)
The term "indebtedness," as applied to the Company or any Subsidiaries, is
defined to mean bonds, debentures, notes and other instruments representing
obligations created or assumed by any such corporation for the repayment of
money borrowed (other than unamortized debt discount or premium). All
indebtedness secured by a Lien upon property owned by the Company or any
Subsidiary and upon which indebtedness any such corporation customarily pays
interest, although any such corporation has not assumed or become liable for the
payment of such indebtedness, is also deemed to be indebtedness of any such
corporation. All indebtedness for money borrowed incurred by other persons which
is directly guaranteed as to payment of principal by the Company or any
Subsidiary is for all purposes of the Indenture deemed to be indebtedness of any
such corporation, but no other contingent obligation of any such corporation in
respect of indebtedness incurred by other persons is for any purpose deemed
indebtedness of such corporation. Indebtedness of the Company or any Subsidiary
does not include (i) any amount representing capitalized lease obligations; (ii)
indirect guarantees or other contingent obligations in connection with the
indebtedness of others, including agreements, contingent or otherwise, with such
persons or with third persons, with respect to, or to permit or ensure the
payment of, obligations of such other persons, including, without limitation,
agreements to purchase or repurchase obligations of such other persons, to
advance or supply funds to or to invest in such other persons, or agreements to
pay for property, products or services of such other persons (whether or not
conferred, delivered or rendered), and any demand charge, throughput,
take-or-pay, keep-well, make-whole, cash deficiency, maintenance of working
capital or earnings or similar agreements; and (iii) any guarantees with respect
to lease or other similar periodic payments to be made by other persons.
(Section 101.)
The term "Funded Debt" as applied to the Company or any Subsidiary is
defined to mean all indebtedness incurred, created, assumed or guaranteed by the
Company or any Subsidiary, or upon which such corporation 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.
(Section 101.)
"Lien" is defined to mean any mortgage, pledge, lien, security interest or
similar charge or encumbrance. (Section 101.) "Acquisition Lien" is defined to
mean any (i) Lien upon any property acquired before or after the date of the
Indenture, created at the time of acquisition or within one year thereafter to
secure all or a portion of the purchase price thereof, or existing thereon at
the date of acquisition, whether or not assumed by the Company or any
Subsidiary, provided that any such Lien applies only to the property so acquired
and fixed improvements thereon, (ii) Lien upon any property acquired before or
after the date of the Indenture by any corporation that is or becomes a
Subsidiary after the date of the Indenture ("Acquired Entity"), provided that
any such Lien (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
7
<PAGE> 9
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, and (iii) any extension, renewal or refunding, in whole or in part,
of any Lien permitted by clause (i) or (ii) above, if limited to the same
property or any portion thereof subject to, and securing not more than the
amount secured by, the Lien extended, renewed or refunded. (Section 101.)
"Permitted Encumbrance" is defined to mean any (a) Lien reserved in any
oil, gas or other mineral lease for rent, royalty or delay rental under such
lease and for compliance with the terms of such lease; (b) Lien for any
judgments or attachments in an aggregate amount not in excess of $10,000,000, or
Lien for 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; (c) sale or other transfer of crude oil, condensate, natural
gas, natural gas liquids or other similar hydrocarbon substances in place, or
the future production thereof, for a period of time until, or in an amount such
that, the transferee will realize therefrom a specified amount (however
determined) of money or a specified amount of such crude oil, condensate,
natural gas, natural gas liquids or other similar hydrocarbon substances or the
sale or other transfer of any other interest in property of the character
commonly referred to as a "production payment," "overriding royalty," "net
profits interest," "royalty" or similar burden on any oil and gas property or
mineral interest owned by the Company or any Subsidiary; (d) Lien consisting of
or reserved in any (i) grant or conveyance in the nature of a farm-out or
conditional assignment to the Company or any Subsidiary entered into in the
ordinary course of business to secure any undertaking of the Company or any
Subsidiary in such grant or conveyance, (ii) interest of an assignee in any
proved undeveloped lease or proved undeveloped portion of any producing property
transferred to such assignee for the purpose of the development of such lease or
property, (iii) unitization or pooling agreement or declaration, (iv) contract
for the sale, purchase, exchange or processing of production, or (v) operating
agreement, area of mutual interest agreement and other agreement which is
customary in the oil and gas business and which agreement does not materially
detract from the value, or materially impair the use of, the properties affected
thereby; (e) Lien arising out of any forward contract, futures contract, swap
agreement or other commodities contract entered into by the Company or any
Subsidiary; (f) Lien on any oil and gas property of the Company or any
Subsidiary thereof, or on production therefrom, to secure any liability of the
Company or such Subsidiary for all or part of the Development Cost for such
property under any joint operating, drilling or similar agreement for
exploration, drilling or development of such property, or any renewal or
extension of such Lien; or (g) certain other Liens as described in the
Indenture. (Section 101.)
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture provides that, with the consent of
the holders of more than 50% in principal amount of all outstanding securities
issued under the Indenture (the "Indenture Securities") (including, where
applicable, the Debt Securities) affected thereby, the Company and the Trustee
may enter into a supplemental indenture for the purpose of adding to, changing
or eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the holders of Indenture Securities. Notwithstanding the
foregoing, the consent of the holder of each outstanding Indenture Security
affected thereby will be required to: (a) change the Stated Maturity of the
principal of, or any installment of principal of or interest on, any Indenture
Security, or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or change any Place of
Payment where, or change the coin or currency in which, any Indenture Security
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date); (b) reduce the percentage in principal amount of the outstanding
Indenture Securities of any series, the consent of whose holders is required for
any supplemental indenture or for any waiver provided for in the Indenture; or
(c) with certain exceptions, modify any of the provisions of the section of the
Indenture which concern waiver of past defaults, waiver of certain covenants or
consent to supplemental indentures, except to increase the percentage of
principal amount of Indenture Securities of any series, the holders of which are
required to effect such waiver or consent or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each outstanding Indenture Security affected thereby. The
Indenture provides that a supplemental indenture which changes or eliminates any
covenant or other provision of the Indenture which has expressly been
8
<PAGE> 10
included solely for the benefit of one or more particular series of Indenture
Securities, or which modifies the rights of the holders of Indenture Securities
of such series with respect to such covenant or other provision shall be deemed
not to affect the rights under the Indenture of the holder of Indenture
Securities of any other series. (Section 902.)
EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT
Under the Indenture, the term "Event of Default" with respect to any series
of Indenture Securities, means any one of the following events which shall have
occurred and is continuing: (a) default in the payment of any interest upon any
Indenture Security of that series when it becomes due and payable or default in
the payment of any mandatory sinking fund payment provided for by the terms of
any series of Indenture Securities, and continuance of such default for a period
of 30 days; (b) default in the payment of the principal of (or premium, if any,
on) any Indenture Security of that series at its Maturity; (c) default in the
performance, or breach, of any covenant or warranty of the Company in the
Indenture (other than a covenant or warranty a default in whose performance or
whose breach is otherwise specifically dealt with in the Indenture or which has
been expressly included in the Indenture solely for the benefit of one or more
series of Indenture Securities other than that series), and continuance of such
default or breach for 60 days after there has been given to the Company by the
Trustee, or to the Company and the Trustee by the holders of at least 25% in
principal amount of all outstanding Indenture Securities, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" under the Indenture; or (d) certain
events involving the Company in bankruptcy, receivership or other insolvency
proceedings or an assignment for the benefit of creditors (Section 501.)
If an Event of Default described in clause (a) or (b) in the foregoing
paragraph has occurred and is continuing with respect to Indenture Securities of
any series, the Indenture provides that the Trustee or the holders of not less
than 25% in principal amount of the outstanding Indenture Securities of that
series may declare the principal amount of all of the Indenture Securities of
that series to be due and payable immediately, and upon any such declaration
such principal amount shall become immediately due and payable. If an Event of
Default described in clause (c) or (d) of the foregoing paragraph occurs and is
continuing, the Trustee or the holders of not less that 25% in principal amount
of all of the Indenture Securities then outstanding may declare the principal
amount of all of the Indenture Securities to be due and payable immediately, and
upon any such declaration such principal amount shall become immediately due and
payable. (Section 502.)
A default under other indebtedness of the Company is not an Event of
Default under the Indenture, and an Event of Default under one series of
Indenture Securities will not necessarily be an Event of Default under another
series.
At any time after such a declaration of acceleration with respect to
Indenture Securities of any series (or of all series, as the case may be) has
been made and before judgment or decree for payment of the money due has been
obtained by the Trustee, the holders of a majority in principal amount of the
outstanding Indenture Securities of that series (or of all series, as the case
may be) may rescind and annul such declaration and its consequences, if subject
to certain conditions, all Events of Default with respect to Indenture
Securities of that series (or of all series, as the case may be), other than the
non-payment of the principal of the Indenture Securities due solely by such
declaration of acceleration, have been cured or waived and all payments due
(other than by acceleration) have been paid or deposited with the Trustee.
(Section 502.) With certain exceptions, the holders of not less than a majority
in principal amount of the outstanding Indenture Securities of any series, on
behalf of the holders of all the Indenture Securities of such series, may waive
any past default described in clause (a) or (b) of the first paragraph of this
heading "Events of Default and Rights Upon Default" (or, in the case of a
default described in clause (c) or (d) of such paragraph, the holders of a
majority in principal amount of all outstanding Indenture Securities may waive
any such past default), and its consequences, except a default (a) in the
payment of the principal of (or premium, if any) or interest on any Indenture
Security, or (b) in respect to a covenant or provision of the Indenture which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Indenture Security of such series affected. (Section
513.)
9
<PAGE> 11
The holders of not less than a majority in principal amount of the
Indenture Securities of any series at the time outstanding are empowered under
the terms of the Indenture, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. (Section
512.)
The Indenture further provides that no holder of an Indenture Security of
any series may enforce the Indenture except in the case of failure by the
Trustee to act for 60 days after notice of a continuing Event of Default with
respect to the Indenture Securities of that series and after request by the
holders of not less than 25% in principal amount of the outstanding Indenture
Securities of such series and the offer to the Trustee of reasonable indemnity,
but this provision will not prevent a holder of any Indenture Security from
enforcing the payment of the principal of, and interest on, such holder's
Indenture Security. (Section 507 and 508.)
The Indenture requires that the Company deliver to the Trustee, within 120
days after the end of each fiscal year, an Officers' Certificate, stating
whether to the best knowledge of the signers thereof the Company is in default
in the performance and observance of certain of the terms of the Indenture, and
if so, specifying each such default and the nature and status thereof of which
the signers may have knowledge. (Section 1008.)
DISCHARGE OF INDENTURE
With certain exceptions, the Company may discharge its obligations under
the Indenture with respect to any series of Indenture Securities by (i) paying
or causing to be paid the principal of (and premium, if any) and interest on all
the Indenture Securities of such series outstanding, as and when the same shall
become due and payable; (ii) delivering to the Trustee all outstanding Indenture
Securities of such series for cancellation; or (iii) entering into an agreement
in form and substance satisfactory to the Company and the Trustee providing for
the creation of an escrow fund and depositing in trust with the Trustee, as
escrow agent of such fund, sufficient funds in cash and/or Eligible Obligations
and/or U.S. Government Obligations, maturing as to principal and interest in
such amounts and at such times, as will be sufficient to pay at the Stated
Maturity or Redemption Date all such Indenture Securities of such series not
previously delivered to the Trustee for cancellation, including principal (and
premium, if any) and interest to the Stated Maturity or Redemption Date.
(Section 401.)
The Indenture defines "Eligible Obligations" to mean interest bearing
obligations as a result of the deposit of which the Indenture Securities are
rated in the highest generic long-term debt rating category assigned to legally
defeased debt by one or more nationally recognized rating agencies. (Section
101).
For federal income tax purposes, there is a substantial risk that a legal
defeasance of a series of Indenture Securities by the deposit of cash, Eligible
Obligations, or U.S. Government Obligations in a trust would be characterized by
the Internal Revenue Service or a court as a taxable exchange by the holders of
the Indenture Securities of that series for either (i) an issue of obligations
of the defeasance trust or (ii) a direct interest in the cash and/or Eligible
Obligations and/or U.S. Government Obligations held in the defeasance trust. If
the defeasance were so characterized, then a holder of an Indenture Security of
the series defeased would be: (i) required to recognize gain or loss (which
would be capital gain or loss if the Indenture Securities were held as a capital
asset) at the time of the defeasance as if the Indenture Security had been sold
at such time for an amount equal to the amount of cash and the fair market value
of the Eligible Obligations and/or U.S. Government Obligations held in the
defeasance trust; (ii) required to include in income in each taxable year the
interest and any original issue discount or gain or loss attributable to either
such defeasance trust obligations or such securities, as the case may be; and
(iii) subject to the market discount provisions of the Internal Revenue Code as
they may pertain to such defeasance trust obligations or such securities. As a
result, a holder of an Indenture Security may be required to pay taxes on any
such gain or income even though such holder may not have received any cash
therefrom. Prospective investors are urged to consult their own advisors as to
the tax consequences of an actual or legal defeasance, including the
applicability and effect of tax laws other than Federal income tax law.
10
<PAGE> 12
CONCERNING THE TRUSTEE
Texas Commerce Bank National Association, 712 Main Street, Houston, Texas
77002, is the Trustee under the Indenture. Such bank may from time to time also
act as a depository of funds for, make loans to, and perform other services for,
the Company, or its affiliates in the normal course of business. Forrest E.
Hoglund, Chairman of the Board, President and Chief Executive Officer, and a
Director of the Company, is also an advisory director of Texas Commerce Bank
National Association.
The holders of a majority in principal amount of the outstanding securities
issued under the Indenture will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that if an Event
of Default occurs (and is not cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of such person's own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of securities issued under the Indenture,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense and then only to the
extent required by the terms of the Indenture. The Trustee may resign at any
time or may be removed by the Company. If the Trustee resigns, is removed or
becomes incapable of acting as Trustee or if a vacancy occurs in the office of
the Trustee for any cause, a successor Trustee shall be appointed in accordance
with the provisions of the Indenture.
If the Trustee shall have or acquire any "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 the Indenture. (Section 608.) The
Trust Indenture Act also contains certain limitations on the right of the
Trustee, as a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received by it in respect of such
claims, as security or otherwise. (Section 613.)
11
<PAGE> 13
THE SELLING STOCKHOLDER
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------ SHARES TO
SELLING STOCKHOLDER SHARES PERCENTAGE BE SOLD
- -------------------------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Enron Corp.............................................. 93,770,000 58.7% (2)
</TABLE>
- ---------------
(1) Enron Corp. has previously issued certain Exchangeable Notes, which at
maturity may be exchanged for no more than 10,500,000 shares of Common Stock
owned by Enron Corp., subject to adjustment under certain circumstances and
to Enron Corp.'s option to pay an amount in cash in lieu of such mandatory
exchange. The shares that may be delivered upon exchange therefor are
beneficially owned by Enron Corp. until such time, if any, as they are
delivered at maturity of the Exchangeable Notes. If the maximum number of
shares of Common Stock are delivered at maturity of the Exchangeable Notes,
Enron Corp. will beneficially own 83,270,000 shares of Common Stock or
approximately 52.1% of the outstanding shares.
(2) Enron Corp. may sell from time to time a number of shares of Common Stock
totaling up to an aggregate initial offering price of no greater than $400
million. Based upon the last reported sale price of the Common Stock of
$26.00 per share on the New York Stock Exchange Composite Tape on September
9, 1996, the Selling Stockholder would be permitted to sell up to
approximately 15,384,615 million shares of Common Stock hereunder. If the
maximum number of shares of Common Stock are sold hereunder (based upon the
last reported sale price on September 9, 1996), Enron Corp. would own
approximately 49% of the outstanding shares after such sale.
12
<PAGE> 14
RELATIONSHIP BETWEEN THE COMPANY AND ENRON CORP.
Through its ability to elect all of the directors of the Company, Enron
Corp. has the ability to control all matters relating to the management and
policies of the Company. The nature of the respective businesses of the Company
and Enron Corp. and its affiliates is such as to potentially give rise to
conflicts of interest between the two companies. The Company and Enron Corp. and
its affiliates have in the past entered into material intercompany transactions
and agreements incident to their respective businesses, and they may be expected
to enter into transactions and agreements in the future. The Company believes
that its existing transactions and agreements with Enron Corp. and its
affiliates have been at least as favorable to the Company as could be obtained
from third parties, and the Company intends that the terms of any future
transactions and agreements between the Company and Enron Corp. and its
affiliates will be at least favorable to the Company as could be obtained from
third parties. In connection with the finance and trading business of Enron
Capital & Trade Resources Corp. ("ECT"), affiliates of ECT may make investments
in the debt or equity of companies engaged in the exploration for, and the
development, production and marketing of, natural gas and crude oil. Conflicts
may arise between these companies and the Company, and Enron Corp. will be
required to resolve such conflicts in a manner that is consistent with its
fiduciary and contractual duties to other investors in these companies and its
fiduciary duties to the Company.
13
<PAGE> 15
DESCRIPTION OF COMMON STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The authorized capital stock of the Company consists of 320,000,000 shares
of Common Stock, $.01 par value, of which 159,849,840 shares were outstanding on
September 1, 1996. The following summary description of the capital stock of the
Company is qualified in its entirety by reference to the Restated Certificate of
Incorporation of the Company, as amended, a copy of which is filed as an exhibit
to the Registration Statements of which this Prospectus is a part.
The Common Stock possesses ordinary voting rights for the election of
directors and in respect to other corporate matters, each share being entitled
to one vote. There are no cumulative voting rights, meaning that the holders of
a majority of the shares voting for the election of directors can elect all the
directors if they choose to do so. The Common Stock carries no preemptive rights
and is not convertible, redeemable or assessable, or entitled to the benefits of
any sinking fund. The holders of Common Stock are entitled to dividends in such
amounts and at such times as may be declared by the Board of Directors out of
funds legally available therefor.
Upon liquidation or dissolution, holders of Common Stock are entitled to
share ratably in all net assets available for distribution to stockholders after
payment of any corporate debts. All outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable.
The transfer agent and registrar of the Common Stock is First Chicago Trust
Company of New York, Jersey City, New Jersey.
LIMITATION ON DIRECTORS' LIABILITY
Delaware corporation law authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care. The duty of
care requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all material information
reasonably available to them. Absent the limitations authorized by such laws,
directors are accountable to corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty
of care. The Delaware laws enable corporations to limit available relief to
equitable remedies such as injunction or rescission. The Restated Certificate of
Incorporation, as amended, of the Company limits the liability of directors of
the Company to the Company or its stockholders (in their capacity as directors
but not in their capacity as officers) to the fullest extent permitted by the
Delaware law. Specifically, directors of the Company will not be personally
liable for monetary damages for breach of a director's fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper personal
benefit.
This provision in the Restated Certificate of Incorporation may have the
effect of reducing the likelihood of derivative litigation against directors,
and may discourage or deter stockholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefited the Company and its stockholders.
14
<PAGE> 16
PLAN OF DISTRIBUTION
The Company and/or the Selling Stockholder may sell the Securities offered
hereby (i) through underwriters, brokers, dealers or agents; or (ii) directly to
purchasers. In addition, the Selling Stockholder may sell any shares of Common
Stock offered hereby from time to time in transactions (including block
transactions in which the Selling Stockholder is the seller) on the NYSE or any
other exchange on which the Common Stock may be traded, or in the
over-the-counter market. The Selling Stockholder may also sell shares of Common
Stock in special offerings, exchange distributions or secondary distributions in
accordance with the rules of the NYSE or such other exchange, in negotiated
transactions, including through the writing of call options or the purchase of
put options on shares of the Common Stock (whether such options are listed on an
options exchange or otherwise), pursuant to Rule 144, or otherwise. The Selling
Stockholder may effect such transactions by selling shares of the Common Stock
to or through underwriters, dealers, brokers or agents. Such underwriters,
dealers, brokers or agents may sell such shares to institutional purchasers in
one or more transactions (including block transactions) on the NYSE or
otherwise. Any sales of the Securities may be made at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. If required in connection with a particular offering of
Securities, a Prospectus Supplement with respect to such offering of Securities
will set forth the terms of the offering of the Securities, including the name
or names of any underwriters, dealers, brokers or agents, the purchase price of
the Securities and the proceeds to the Company and/or the Selling Stockholder
from such sale, any delayed delivery arrangements, any underwriting discounts
and commissions and other items constituting underwriters' compensation, any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. In
connection with the sale of the Securities, underwriters, brokers, dealers or
agents may be deemed to have received compensation from the Company or the
Selling Stockholder in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the Securities for whom they may act
as agent or to whom they may sell as principal. Underwriters or agents may sell
the Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they may act as agent. The Securities
may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more firms acting as
underwriters. The underwriter or underwriters with respect to a particular
underwritten offering of Securities will be named in the Prospectus Supplement
relating to such offering and, if an underwriting syndicate is used, the
managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement
relating thereto, the obligations of the underwriters to purchase the Securities
will be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all the Securities offered if any are purchased.
If dealers are utilized in the sale of Securities, the Company and/or the
Selling Stockholder will sell such Securities to the dealers as principals. The
dealers may then resell such Securities to the public at varying prices to be
determined by such dealers at the time of resale. To the extent required, the
names of dealers or brokers acting as dealers and the terms of the transaction
will be set forth in the Prospectus Supplement relating thereto.
The Securities may be sold directly by the Company and/or the Selling
Stockholder or through agents designated by the Company and/or the Selling
Stockholder from time to time. To the extent required, any agent involved in the
offer or sale of the Securities in respect to which this Prospectus is delivered
will be named, and any commissions payable by the Company and/or the Selling
Stockholder to such agent will be set forth, in the Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus Supplement, any
such agent will be acting on a best efforts basis for the period of its
appointment.
15
<PAGE> 17
If so indicated in the Prospectus Supplement, the Company and/or the
Selling Stockholder will authorize agents, underwriters, brokers or dealers to
solicit offers from certain types of institutions to purchase Securities from
the Company and/or the Selling Stockholder at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such contracts.
The Securities (other than the Common Stock), when first issued, will have
no established trading market. Any underwriters or agents to or through whom
Securities are sold by the Company or the Selling Stockholder for public
offering and sale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for any such Securities.
Agents, brokers, dealers and underwriters may be entitled under agreements
with the Company and/or the Selling Stockholder to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which such agents,
brokers, dealers or underwriters may be required to make in respect thereof.
Agents, brokers, dealers and underwriters may be customers of, engage in
transactions with or perform services for the Company or the Selling Stockholder
in the ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by Barry Hunsaker, Jr., Esq., Senior Vice President and General Counsel
of the Company, and for the Underwriters by Bracewell & Patterson, L.L.P. Mr.
Hunsaker owns substantially less than 1% of the outstanding shares of Common
Stock. Bracewell & Patterson, L.L.P. provides services to the Company and to
Enron Corp. and certain of its subsidiaries and affiliates on matters unrelated
to the offering of the Securities.
EXPERTS
The consolidated financial statements and schedule included in the
Company'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 report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
The letter report of DeGolyer and MacNaughton, independent petroleum
consultants, included as an exhibit to the Company'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.
16
<PAGE> 18
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 the Company
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>
Filing Fee for Registration Statement..................................... $ 51,725
Legal Fees and Expenses................................................... 20,000
Accounting Fees and Expenses.............................................. 25,000
Transfer Agent's Fees and Expenses........................................ 15,000
Blue Sky Fees and Expenses................................................ 25,000
Printing and Engraving Expenses........................................... 50,000
Miscellaneous............................................................. 13,275
--------
Total..................................................................... $200,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Restated Certificate of Incorporation, as amended, of the Company (the
"Corporation" therein) contains the following provisions relating to
indemnification of directors and officers, namely:
"Eighth: A.1. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
2. The foregoing provisions of this Article shall not eliminate or
limit the liability of a director for any act or omission occurring prior
to the effective date of this Restated Certificate of Incorporation. Any
repeal or amendment of this Article by the stockholders of the Corporation
shall be prospective only and shall not adversely affect any limitation on
the personal liability of a director of the Corporation existing at the
time of such repeal or amendment. In addition to the circumstances in which
a director of the Corporation is not personally liable as set forth in the
foregoing provisions of this Article, a director shall not be liable to the
fullest extent permitted by any amendment to the Delaware General
Corporation Law enacted that further limits the liability of a director.
B.1. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director or officer, of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent
II-1
<PAGE> 19
and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph 2.
hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation. The right to indemnification
conferred in this Section shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or
is rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of the proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this
Article or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
2. If a claim under paragraph B.1. of this Article is not paid in full
by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation
Law for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders)
that the claimant has not met such applicable standard of conduct, shall be
a defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
3. The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this Article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate
of Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
4. The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
5. If this Article or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify and hold harmless each director, officer, employee
and agent of the Corporation, and may nevertheless indemnify and hold
harmless each employee and agent of the Corporation, as to costs, charges
and expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative to the full extent
permitted by any applicable portion of this Article that shall not have
been invalidated and to the full extent permitted by applicable law.
6. For purposes of this Article, reference to the "Corporation" shall
include, in addition to the Corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger prior to (or, in the case of an entity specifically designated in a
resolution of the
II-2
<PAGE> 20
Board of Directors, after) the adoption hereof and which, if its separate
existence had continued, would have had the power and authority to
indemnify its directors, officers and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued."
The Form of Underwriting Agreement filed as Exhibit 1(a) hereto, under
certain specified circumstances, provides for indemnification by the
Underwriters of the directors, officers and controlling persons of the Company.
The Company has purchased liability insurance policies covering the
directors and officers of the Company to provide protection where the Company
cannot legally indemnify a director or officer and where a claim arises under
the Employee Retirement Income Security Act of 1974 against a director or
officer based on an alleged breach of fiduciary duty or other wrongful act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------
<S> <C>
*1(a) -- Form of Underwriting Agreement -- Debt Securities (Exhibit 1 to Form
S-3 Registration Statement No. 33-42640, filed September 6, 1991).
1(b) -- Form of Agency Agreement for Sales of Common Stock of Enron Oil & Gas
Company.
*3(a) -- Restated Certificate of Incorporation of Enron Oil & Gas Company
(Exhibit 3.1 to Form S-1 Registration Statement No. 33-30678, filed
August 24, 1989).
*3(b) -- Certificate of Amendment of Restated Certificate of Incorporation of
Enron Oil & Gas Company (Exhibit 4.1(b) to Form S-8 Registration
Statement No. 33-52201, filed February 8, 1994).
*3(c) -- Certificate of Amendment of Restated Certificate of Incorporation of
Enron Oil & Gas Company (Exhibit 4.1(c) to Form S-8 Registration
Statement No. 33-58103, filed March 15, 1995).
**3(d) -- Certificate of Amendment of Restated Certificate of Incorporation of
Enron Oil & Gas Company, dated June 11, 1996.
*3(e) -- Bylaws of Enron Oil & Gas Company (Exhibit 3.2 to Enron Oil & Gas
Company Annual Report on Form 10-K for the year ended December 31,
1995).
*4(a) -- Form of Indenture dated as of September 1, 1991, between Enron Oil &
Gas Company and Texas Commerce Bank National Association (Exhibit
4(a) to Registration Statement No. 33-42640, filed September 6,
1991).
*4(b) -- Form of Debt Security, included in Exhibit 4(a).
*4(c) -- Specimen of Certificate evidencing the Common Stock (Exhibit 3.3 to
Form S-1 Registration Statement No. 33-30678, filed August 24, 1989).
**5 -- Opinion of Barry Hunsaker, Jr., Esq., Senior Vice President and
General Counsel of Enron Oil & Gas Company.
**12 -- Computation of Ratios of Earnings to Fixed Charges.
**23(a) -- Consent of Arthur Andersen LLP.
**23(b) -- Consent of DeGolyer and MacNaughton.
</TABLE>
II-3
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------
<S> <C>
**23(c) -- The consent of Barry Hunsaker, Jr., Esq. is contained in his opinion
filed as Exhibit 5 hereto.
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Texas Commerce Bank National Association.
</TABLE>
- ------------------
* Incorporated by reference as indicated.
** Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to each Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of each Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 22
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the 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, the 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-5
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Enron Oil & Gas
Company 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, State of Texas, on the 10th day of
September, 1996.
ENRON OIL & GAS COMPANY
(Registrant)
By: /s/ WALTER C. WILSON
-------------------------------
(Walter C. Wilson)
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities with Enron Oil & Gas Company indicated and on the 10th day of
September, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ FORREST E. HOGLUND Chairman of the Board, President and Chief
---------------------------- Executive Officer and Director
(Forrest E. Hoglund) (Principal Executive Officer)
/s/ WALTER C. WILSON Senior Vice President and Chief Financial
---------------------------- Officer (Principal Financial Officer)
(Walter C. Wilson)
/s/ BEN B. BOYD Vice President and Controller
---------------------------- (Principal Accounting Officer)
(Ben B. Boyd)
FRED C. ACKMAN* Director
----------------------------
(Fred C. Ackman)
RICHARD D. KINDER* Director
----------------------------
(Richard D. Kinder)
KENNETH L. LAY* Director
----------------------------
(Kenneth L. Lay)
EDWARD RANDALL, III* Director
----------------------------
(Edward Randall, III)
*By /s/ ANGUS H. DAVIS
----------------------------
(Angus H. Davis)
(Attorney-in-fact for persons indicated)
</TABLE>
II-6
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------------------------------------------------------------------------------
<S> <C>
*1(a) -- Form of Underwriting Agreement -- Debt Securities (Exhibit 1 to
Form S-3 Registration Statement No. 33-42640, filed September 6,
1991).
1(b) -- Form of Agency Agreement for Sales of Common Stock of Enron Oil &
Gas Company.
*3(a) -- Restated Certificate of Incorporation of Enron Oil & Gas Company
(Exhibit 3.1 to Form S-1 Registration Statement No. 33-30678, filed
August 24, 1989).
*3(b) -- Certificate of Amendment of Restated Certificate of Incorporation
of Enron Oil & Gas Company (Exhibit 4.1(b) to Form S-8 Registration
Statement No. 33-52201, filed February 8, 1994).
*3(c) -- Certificate of Amendment of Restated Certificate of Incorporation
of Enron Oil & Gas Company (Exhibit 4.1(c) to Form S-8 Registration
Statement No. 33-58103, filed March 15, 1995).
**3(d) -- Certificate of Amendment of Restated Certificate of Incorporation
of Enron Oil & Gas Company, dated June 11, 1996.
*3(e) -- Bylaws of Enron Oil & Gas Company (Exhibit 3.2 to Enron Oil & Gas
Company Annual Report on Form 10-K for the year ended December 31,
1995).
*4(a) -- Form of Indenture dated as of September 1, 1991, between Enron Oil
& Gas Company and Texas Commerce Bank National Association (Exhibit
4(a) to Registration Statement No. 33-42640, filed September 6,
1991).
*4(b) -- Form of Debt Security, included in Exhibit 4(a).
*4(c) -- Specimen of Certificate evidencing the Common Stock (Exhibit 3.3 to
Form S-1 Registration Statement No. 33-30678, filed August 24,
1989).
**5 -- Opinion of Barry Hunsaker, Jr., Esq., Senior Vice President and
General Counsel of Enron Oil & Gas Company.
**12 -- Computation of Ratios of Earnings to Fixed Charges.
**23(a) -- Consent of Arthur Andersen LLP.
**23(b) -- Consent of DeGolyer and MacNaughton.
**23(c) -- The consent of Barry Hunsaker, Jr., Esq. is contained in his
opinion filed as Exhibit 5 hereto.
**24 -- Powers of Attorney.
**25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Texas Commerce Bank National Association.
</TABLE>
- ---------------
* Incorporated by reference as indicated.
** Previously filed.
<PAGE> 1
AGENCY AGREEMENT
FOR SALES OF COMMON STOCK
OF
ENRON OIL & GAS COMPANY
September __, 1996
Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Ladies and Gentlemen:
The undersigned (the "Agent") understands that Enron Corp., a Delaware
corporation (the "Selling Stockholder"), may from time to time offer and sell
shares of common stock, $.01 par value per share (the "Common Stock"), of Enron
Oil & Gas Company, a Delaware corporation (the "Company"), the sale of which has
been registered on registration statements on Form S-3 (file nos. 33-42620 and
333-09919). Such registration statements, including financial statements,
exhibits and Incorporated Documents (as hereinafter defined), are hereinafter
referred to as the "Registration Statement," and the prospectus or prospectuses
included in the Registration Statement or deemed, pursuant to Rule 429 under the
Securities Act of 1933, as amended (the "Securities Act"), to relate to the
Registration Statement, as supplemented or amended from time to time, including
by a prospectus supplement filed pursuant to Rule 424 under the Securities Act,
is or are hereinafter referred to as the "Prospectus." Any reference herein to
the Registration Statement or Prospectus shall be deemed to include all
documents incorporated, or deemed to be incorporated, therein by reference
pursuant to the requirements of Item 12 of Form S-3 under the Securities Act
(the "Incorporated Documents") and shall include, without limitation, any
electronically transmitted copies thereof filed with the Securities and Exchange
Commission (the "Commission") pursuant to EDGAR. The shares of Common Stock
whose sale has been registered under the Registration Statement are herein
referred to as the "Shares." Subject to the terms and conditions set forth
herein and upon the request of the Selling Stockholder, the Agent agrees to
provide certain brokerage services to the Selling Stockholder in connection with
such offers and sales Common Stock.
1. Appointment. Subject to the terms and conditions of this
agreement, the Selling Stockholder hereby appoints and authorizes the Agent to
act as agent and broker for the Selling Stockholder for the purpose of placing
orders and executing trades with respect to the Shares or any portion thereof
for the Selling Stockholder. Upon the request of the Selling Stockholder, the
Agent agrees to use its reasonable efforts to place orders or solicit offers to
purchase the Shares or such portion thereof as the Selling Stockholder shall
request in accordance
<PAGE> 2
with the plan of distribution described from time to time in the Prospectus
forming a part of the Registration Statement. The Selling Stockholder shall
have the sole right to accept or reject any offers to purchase Shares. The
Agent, in its discretion reasonably exercised without advising the Company or
the Selling Stockholder, may reject any offer received by it to purchase Shares,
in whole or in part, and any such rejection shall not be deemed a breach of this
agreement. In connection with the placing of orders, solicitation of offers to
purchase or execution of trades of the Shares or any portion thereof, the Agent
is not authorized to provide any person with any information relating to the
Company or the Selling Stockholder other than the Prospectus and the documents
incorporated therein by reference.
The Selling Stockholder may at any time advise the Agent to suspend
solicitations of offers to purchase Shares hereunder and will advise the Agent
to suspend solicitations of offers to purchase Shares hereunder (i) if there is
initiated or threatened by the Commission any proceeding for the issuance of
any order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of any prospectus and prospectus supplement or
suspending of qualification of the Shares for offering or sale in any
jurisdiction, or (ii) during the period in which copies of the Prospectus and
the prospectus supplement are required by law to be delivered, any event occurs
as a result of which the prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Solicitations of
offers to purchase Shares hereunder shall not resume until the Registration
Statement or the prospectus, as the case may be, has been amended or
supplemented and the Company and the Selling Stockholder have advised the Agent
that such solicitation may be resumed.
2. Payment and Delivery. All sales shall be settled within three
business days from the trade date; the date of receipt of immediately available
funds in U.S. currency by the Selling Stockholder in payment for the Shares
will constitute "Settlement." Concurrently with Settlement of any sales of
Shares through the Agent, the Selling Stockholder agrees to pay to the Agent a
brokerage commission in accordance with the schedule mutually agreed between
the Agent and the Selling Stockholder. Upon the Settlement of any sale of any
of the Shares pursuant to this agreement, the Agent shall make the proceeds
from such sale, net of any brokerage commissions due to the Agent, available to
the Selling Stockholder (in immediately available funds) by certified or
official bank check or checks payable to the order of the Selling Stockholder
or by transfer of such amounts to an account designated in writing by the
Selling Stockholder. All transactions for the account of the Selling
Stockholder shall be subject to the regulations of all applicable federal,
state and self-regulatory agencies, including the constitution, rules and
customs of the exchange or market (and its clearing house, if any) where
executed. In the event of the sale of any of the Shares not in the Agent's
possession at the time of the contract for sale, the Selling Stockholder will
deliver to the Agent the number of the Shares that are the subject of such
contract for sale one business day prior to the settlement date for such sale.
For purposes of this agreement, the term "business day" shall mean any day
which is not a Saturday or Sunday or which is not a day on which The New York
Stock Exchange, Inc. is closed for trading.
3. Representations and Warranties. The Company and the Selling
Stockholder jointly and severally represent and warrant to the Agent as
follows:
-2-
<PAGE> 3
(a) The Company has filed with the Commission, pursuant
to the Securities Act and the rules and regulations adopted by the
Commission thereunder (the "Rules"), the Registration Statement on
Form S-3, including a prospectus, relating to the Shares and such
Registration Statement has or will become effective prior to the time
any sales efforts are initiated hereunder.
(b) The Registration Statement, at the time it became
effective, and the Prospectus contained therein on such date,
complied, and on the date of this agreement and the date of any
Settlement and when any post-effective amendment to the Registration
Statement becomes effective or any supplement to such prospectus is
filed with the Commission, the Registration Statement, the Prospectus
and any such amendment or supplement, respectively, will comply, in
all material respects with the requirements of the Securities Act and
the Rules; the Incorporated Documents complied when they became
effective or were filed with the Commission, as the case may be, in
all material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations adopted by the Commission thereunder; and the Registration
Statement and any amendment or supplement thereto, at the time it
became effective and the Prospectus on the date the Registration
Statement first became effective, and any amendments or supplement
thereto, at the time it was first filed with the Commission pursuant
to Rule 424 under the Securities Act, 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, in light of the circumstances under which they were made, not
misleading. The Company has or will prior to any sales of the Shares
pursuant to this agreement, file the Prospectus and any amendment or
supplement thereto with The New York Stock Exchange, Inc. in
accordance with Rule 153 of the Rules.
(c) The Selling Stockholder has and on the date of each
Settlement of a sale will have good, valid and unencumbered title to
the Shares to be sold by the Selling Stockholder and has full right,
power and authority to enter into this agreement and to sell, assign,
transfer and deliver the Shares to be sold by the Selling Stockholder;
and upon delivery of and payment for the Shares sold, the purchasers
will acquire good, valid and unencumbered title to the Shares sold by
the Selling Stockholder.
(d) This agreement and the transactions contemplated
hereunder have been duly authorized by all necessary corporate action
on the part of the Company and the Selling Stockholder, and the
consummation of the transactions contemplated hereunder will not
conflict with or constitute a breach of, or a default under, any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which such company is a party or by which
it may be bound or to which any of the properties or assets of either
of them is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or Bylaws of such
company or any statute, administrative regulation or administrative or
court order or decree applicable to such company.
-3-
<PAGE> 4
4. Indemnification.
(a) The Company and the Selling Stockholder, jointly and
severally, will indemnify and hold harmless the Agent against any
losses, claims, damages or liabilities, joint or several, to which the
Agent may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Agent for any legal or
other expense reasonably incurred by such Agent in connection with
investigating or defending any such action or claim as such expenses
are incurred.
(b) Promptly after receipt by an indemnified party under
subsection (a) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise
than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party (which shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action 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. Further, an indemnifying party shall not be
liable for any settlement of any action or claim effected without its
consent, which consent shall not be unreasonably withheld.
(c) If the indemnification provided for in this Section 4
is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholder on the one hand and the
Agent on the other
-4-
<PAGE> 5
from the offering and sale of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice
required under subsection (b) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the
Selling Stockholder on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholder
on the one hand and the Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering and
sale of the Shares purchased under this agreement (before deducting
expenses) received by the Selling Stockholder bear to the total
brokerage and commissions received by the Agent with respect to sale
of the Shares. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Selling Stockholder on the one hand or the Agent on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company, the Selling Stockholder and the Agent agree that it would not
be just and equitable if contributions pursuant to this subsection (c)
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (c). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (c) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (c), the Agent shall not be required
to contribute any amount in excess of the amount by which the total
commissions received by it under this agreement exceeds the amount of
any damages which the Agent has otherwise been required to pay by
reason of 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 Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(d) The obligations of the Company and the Selling
Stockholder under this Section 4 shall be in addition to any liability
which the Company and the Selling Stockholder may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls the Agent within the meaning of the Securities Act.
5. Termination. This agreement may be terminated by the Selling
Stockholder or the Agent at any time by notifying the other parties hereto but
such termination shall not effect any commission then owed to the Agent.
6. Status of Agent. In acting pursuant to this agreement, the
Agent is acting solely as agent for the Selling Stockholder and not as
principal. The Agent will make reasonable efforts to assist the Selling
Stockholder in obtaining performance by each purchaser whose offer to purchase
Shares from the Selling Stockholder has been accepted by the Selling
Stockholder, but the Agent shall have no liability to the Selling Stockholder
in the event any such purchase is not consummated
-5-
<PAGE> 6
for any reason. If the Selling Stockholder shall default in its obligations to
deliver Shares to a purchaser which transaction has been authorized or accepted
by the Selling Stockholder, the Selling Stockholder shall (i) hold the Agent
harmless against any loss, claim or damage arising from or as a result of such
default by the Selling Stockholder and (ii), in particular, pay to the Agent
any commission to which it would be entitled in connection with such sale.
7. Miscellaneous. The reimbursement and indemnification
agreements contained in Sections 4 hereof and the representations, warranties,
covenants and agreements of the Company and the Selling Stockholder in this
agreement shall remain in full force and effect regardless of (a) any
termination of this agreement, (b) any investigation (or any statement as to
the results thereof) made by or on behalf of the Agent or any of its officers,
directors or controlling persons and (c) delivery of and payment for Shares
sold under this agreement.
This agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
All statements, requests, notices, communications and agreements
hereunder shall be in writing, and if to the Agent shall be delivered or
sent by mail, telex or facsimile transmission to the Agent in care of
S.B.C. Warburg, Inc. at 141 W. Jackson Blvd., Chicago, Illinois 60604,
Attention: Russell Hackman, Facsimile No. 312-554-6271; if the Company shall be
delivered or sent by mail, telex, or facsimile transmission to it at 1400 Smith
Street, Houston, Texas 77002, Attention: Walter Wilson, Senior Vice President
and Chief Financial Officer, Facsimile No. (713) 646-2113; and if to the Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to it at 1400 Smith Street, Houston, Texas 77002, Attention: Kurt Huneke, Vice
President, Finance and Treasurer, Facsimile No. (713) 646-4831. Any such
statements, requests, notices, communications or agreements shall take effect
upon receipt thereof.
Please confirm your agreement by having an authorized officer sign a
copy of this agreement in the space set forth below and returning the signed
copy to us.
Very truly yours,
S.B.C. WARBURG, INC.
Accepted:
ENRON OIL & GAS COMPANY
ENRON CORP.
-6-
<PAGE> 7
AGENCY AGREEMENT
FOR SALES OF COMMON STOCK
OF
ENRON OIL & GAS COMPANY
September __, 1996
Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Ladies and Gentlemen:
The undersigned (the "Agent") understands that Enron Corp., a Delaware
corporation (the "Selling Stockholder"), may from time to time offer and sell
shares of common stock, $.01 par value per share (the "Common Stock"), of Enron
Oil & Gas Company, a Delaware corporation (the "Company"), the sale of which has
been registered on registration statements on Form S-3 (file nos. 33-42620 and
333-09919). Such registration statements, including financial statements,
exhibits and Incorporated Documents (as hereinafter defined), are hereinafter
referred to as the "Registration Statement," and the prospectus or prospectuses
included in the Registration Statement or deemed, pursuant to Rule 429 under the
Securities Act of 1933, as amended (the "Securities Act"), to relate to the
Registration Statement, as supplemented or amended from time to time, including
by a prospectus supplement filed pursuant to Rule 424 under the Securities Act,
is or are hereinafter referred to as the "Prospectus." Any reference herein to
the Registration Statement or Prospectus shall be deemed to include all
documents incorporated, or deemed to be incorporated, therein by reference
pursuant to the requirements of Item 12 of Form S-3 under the Securities Act
(the "Incorporated Documents") and shall include, without limitation, any
electronically transmitted copies thereof filed with the Securities and Exchange
Commission (the "Commission") pursuant to EDGAR. The shares of Common Stock
whose sale has been registered under the Registration Statement are herein
referred to as the "Shares." Subject to the terms and conditions set forth
herein and upon the request of the Selling Stockholder, the Agent agrees to
provide certain brokerage services to the Selling Stockholder in connection with
such offers and sales Common Stock.
1. Appointment. Subject to the terms and conditions of this
agreement, the Selling Stockholder hereby appoints and authorizes the Agent to
act as agent and broker for the Selling Stockholder for the purpose of placing
orders and executing trades with respect to the Shares or any portion thereof
for the Selling Stockholder. Upon the request of the Selling Stockholder, the
Agent agrees to use its reasonable efforts to place orders or solicit offers to
purchase the Shares or such portion thereof as the Selling Stockholder shall
request in accordance
<PAGE> 8
with the plan of distribution described from time to time in the Prospectus
forming a part of the Registration Statement. The Selling Stockholder shall
have the sole right to accept or reject any offers to purchase Shares. The
Agent, in its discretion reasonably exercised without advising the Company or
the Selling Stockholder, may reject any offer received by it to purchase Shares,
in whole or in part, and any such rejection shall not be deemed a breach of this
agreement. In connection with the placing of orders, solicitation of offers to
purchase or execution of trades of the Shares or any portion thereof, the Agent
is not authorized to provide any person with any information relating to the
Company or the Selling Stockholder other than the Prospectus and the documents
incorporated therein by reference.
The Selling Stockholder may at any time advise the Agent to suspend
solicitations of offers to purchase Shares hereunder and will advise the Agent
to suspend solicitations of offers to purchase Shares hereunder (i) if there is
initiated or threatened by the Commission any proceeding for the issuance of
any order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of any prospectus and prospectus supplement or
suspending of qualification of the Shares for offering or sale in any
jurisdiction, or (ii) during the period in which copies of the Prospectus and
the prospectus supplement are required by law to be delivered, any event occurs
as a result of which the prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Solicitations of
offers to purchase Shares hereunder shall not resume until the Registration
Statement or the prospectus, as the case may be, has been amended or
supplemented and the Company and the Selling Stockholder have advised the Agent
that such solicitation may be resumed.
2. Payment and Delivery. All sales shall be settled within three
business days from the trade date; the date of receipt of immediately available
funds in U.S. currency by the Selling Stockholder in payment for the Shares
will constitute "Settlement." Concurrently with Settlement of any sales of
Shares through the Agent, the Selling Stockholder agrees to pay to the Agent a
brokerage commission in accordance with the schedule mutually agreed between
the Agent and the Selling Stockholder. Upon the Settlement of any sale of any
of the Shares pursuant to this agreement, the Agent shall make the proceeds
from such sale, net of any brokerage commissions due to the Agent, available to
the Selling Stockholder (in immediately available funds) by certified or
official bank check or checks payable to the order of the Selling Stockholder
or by transfer of such amounts to an account designated in writing by the
Selling Stockholder. All transactions for the account of the Selling
Stockholder shall be subject to the regulations of all applicable federal,
state and self-regulatory agencies, including the constitution, rules and
customs of the exchange or market (and its clearing house, if any) where
executed. In the event of the sale of any of the Shares not in the Agent's
possession at the time of the contract for sale, the Selling Stockholder will
deliver to the Agent the number of the Shares that are the subject of such
contract for sale one business day prior to the settlement date for such sale.
For purposes of this agreement, the term "business day" shall mean any day
which is not a Saturday or Sunday or which is not a day on which The New York
Stock Exchange, Inc. is closed for trading.
3. Representations and Warranties. The Company and the Selling
Stockholder jointly and severally represent and warrant to the Agent as
follows:
-2-
<PAGE> 9
(a) The Company has filed with the Commission, pursuant
to the Securities Act and the rules and regulations adopted by the
Commission thereunder (the "Rules"), the Registration Statement on
Form S-3, including a prospectus, relating to the Shares and such
Registration Statement has or will become effective prior to the time
any sales efforts are initiated hereunder.
(b) The Registration Statement, at the time it became
effective, and the Prospectus contained therein on such date,
complied, and on the date of this agreement and the date of any
Settlement and when any post-effective amendment to the Registration
Statement becomes effective or any supplement to such prospectus is
filed with the Commission, the Registration Statement, the Prospectus
and any such amendment or supplement, respectively, will comply, in
all material respects with the requirements of the Securities Act and
the Rules; the Incorporated Documents complied when they became
effective or were filed with the Commission, as the case may be, in
all material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations adopted by the Commission thereunder; and the Registration
Statement and any amendment or supplement thereto, at the time it
became effective and the Prospectus on the date the Registration
Statement first became effective, and any amendments or supplement
thereto, at the time it was first filed with the Commission pursuant
to Rule 424 under the Securities Act, 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, in light of the circumstances under which they were made, not
misleading. The Company has or will prior to any sales of the Shares
pursuant to this agreement, file the Prospectus and any amendment or
supplement thereto with The New York Stock Exchange, Inc. in
accordance with Rule 153 of the Rules.
(c) The Selling Stockholder has and on the date of each
Settlement of a sale will have good, valid and unencumbered title to
the Shares to be sold by the Selling Stockholder and has full right,
power and authority to enter into this agreement and to sell, assign,
transfer and deliver the Shares to be sold by the Selling Stockholder;
and upon delivery of and payment for the Shares sold, the purchasers
will acquire good, valid and unencumbered title to the Shares sold by
the Selling Stockholder.
(d) This agreement and the transactions contemplated
hereunder have been duly authorized by all necessary corporate action
on the part of the Company and the Selling Stockholder, and the
consummation of the transactions contemplated hereunder will not
conflict with or constitute a breach of, or a default under, any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which such company is a party or by which
it may be bound or to which any of the properties or assets of either
of them is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or Bylaws of such
company or any statute, administrative regulation or administrative or
court order or decree applicable to such company.
-3-
<PAGE> 10
4. Indemnification.
(a) The Company and the Selling Stockholder, jointly and
severally, will indemnify and hold harmless the Agent against any
losses, claims, damages or liabilities, joint or several, to which the
Agent may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Agent for any legal or
other expense reasonably incurred by such Agent in connection with
investigating or defending any such action or claim as such expenses
are incurred.
(b) Promptly after receipt by an indemnified party under
subsection (a) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise
than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party (which shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action 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. Further, an indemnifying party shall not be
liable for any settlement of any action or claim effected without its
consent, which consent shall not be unreasonably withheld.
(c) If the indemnification provided for in this Section 4
is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholder on the one hand and the
Agent on the other
-4-
<PAGE> 11
from the offering and sale of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice
required under subsection (b) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the
Selling Stockholder on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholder
on the one hand and the Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering and
sale of the Shares purchased under this agreement (before deducting
expenses) received by the Selling Stockholder bear to the total
brokerage and commissions received by the Agent with respect to sale
of the Shares. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Selling Stockholder on the one hand or the Agent on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company, the Selling Stockholder and the Agent agree that it would not
be just and equitable if contributions pursuant to this subsection (c)
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (c). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (c) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (c), the Agent shall not be required
to contribute any amount in excess of the amount by which the total
commissions received by it under this agreement exceeds the amount of
any damages which the Agent has otherwise been required to pay by
reason of 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 Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(d) The obligations of the Company and the Selling
Stockholder under this Section 4 shall be in addition to any liability
which the Company and the Selling Stockholder may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls the Agent within the meaning of the Securities Act.
5. Termination. This agreement may be terminated by the Selling
Stockholder or the Agent at any time by notifying the other parties hereto but
such termination shall not effect any commission then owed to the Agent.
6. Status of Agent. In acting pursuant to this agreement, the
Agent is acting solely as agent for the Selling Stockholder and not as
principal. The Agent will make reasonable efforts to assist the Selling
Stockholder in obtaining performance by each purchaser whose offer to purchase
Shares from the Selling Stockholder has been accepted by the Selling
Stockholder, but the Agent shall have no liability to the Selling Stockholder
in the event any such purchase is not consummated
-5-
<PAGE> 12
for any reason. If the Selling Stockholder shall default in its obligations to
deliver Shares to a purchaser which transaction has been authorized or accepted
by the Selling Stockholder, the Selling Stockholder shall (i) hold the Agent
harmless against any loss, claim or damage arising from or as a result of such
default by the Selling Stockholder and (ii), in particular, pay to the Agent
any commission to which it would be entitled in connection with such sale.
7. Miscellaneous. The reimbursement and indemnification
agreements contained in Sections 4 hereof and the representations, warranties,
covenants and agreements of the Company and the Selling Stockholder in this
agreement shall remain in full force and effect regardless of (a) any
termination of this agreement, (b) any investigation (or any statement as to
the results thereof) made by or on behalf of the Agent or any of its officers,
directors or controlling persons and (c) delivery of and payment for Shares
sold under this agreement.
This agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
All statements, requests, notices, communications and agreements
hereunder shall be in writing, and if to the Agent shall be delivered or
sent by mail, telex or facsimile transmission to the Agent in care of
Jefferies & Company, Inc. at 909 Fannin, Suite 3100, Houston, Texas 77010,
Attention: David Frischkorn, Facsimile No. 713-650-8730; if the Company shall be
delivered or sent by mail, telex, or facsimile transmission to it at 1400 Smith
Street, Houston, Texas 77002, Attention: Walter Wilson, Senior Vice President
and Chief Financial Officer, Facsimile No. (713) 646-2113; and if to the Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to it at 1400 Smith Street, Houston, Texas 77002, Attention: Kurt Huneke, Vice
President, Finance and Treasurer, Facsimile No. (713) 646-4831. Any such
statements, requests, notices, communications or agreements shall take effect
upon receipt thereof.
Please confirm your agreement by having an authorized officer sign a
copy of this agreement in the space set forth below and returning the signed
copy to us.
Very truly yours,
JEFFERIES & COMPANY, INC.
Accepted:
ENRON OIL & GAS COMPANY
ENRON CORP.
-6-
