<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement*
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ENRON GLOBAL POWER & PIPELINES L.L.C.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by Registration Statement number, or
the Form or Schedule, and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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* Note: This filing relates to the Consent Solicitation Statement to be
furnished to holders of Common Shares of Enron Global Power & Pipelines L.L.C.
(the "Registrant") for their approval of the items specified herein. The
Registrant anticipates that the Consent Solicitation Statement will be first
mailed on November 18, 1996.
<PAGE> 2
CONSENT SOLICITATION STATEMENT
ENRON GLOBAL POWER & PIPELINES L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
ENRON BUILDING
1400 SMITH STREET
HOUSTON, TEXAS 77002
(713) 853-1937
---------------------
This Consent Solicitation Statement is being furnished to holders (the
"Shareholders") of Common Shares (the "Common Shares") of Enron Global Power &
Pipelines L.L.C. (the "Company") in connection with the solicitation of consents
to approve (i) the ratification of the option (the "Option") granted by the
Company to Enron Holding Company L.L.C. ("EHC"), and subsequently assigned, in
part, by EHC to Enron Corp. ("Enron"), to acquire all or any portion of such
number of Common Shares as have an aggregate Conversion Market Price (as defined
herein) of $47 million on the date of exercise of the Option and (ii) the
issuance of Common Shares (the "Share Issuance") to Enron and EHC upon the
exercise of the Option. The Option was granted by the Company on July 31, 1996
in consideration of Enron's agreement to provide debt financing for the
acquisition by Enron Pipeline Company -- Argentina S.A., a direct wholly owned
subsidiary of the Company ("EPCA"), of a 12 1/2% interest in Compania de
Inversiones de Energia S.A. ("CIESA") then held by Argentina Private Development
Trust Company Limited ("APDT"). The terms of such financing, the Option and the
Share Issuance are set forth in that certain Agreement Regarding CIESA Interest,
dated as of July 31, 1996, by and among Enron, EHC, the Company and EPCA (the
"CIESA Agreement"), a copy of which is attached to this Consent Solicitation
Statement as Appendix A. See "The Consent Solicitation -- Reasons for and
Background of the Option and the Share Issuance" and "-- Terms of the Option and
the Share Issuance."
The Company believes that the ratification of the Option and approval of
the Share Issuance are fair to and in the best interests of the Shareholders.
Accordingly, the Company has approved the Option and the Share Issuance and
recommends the ratification of the Option and approval of the Share Issuance by
the Shareholders.
The close of business on November 8, 1996 has been established as the
record date for determining the Shareholders entitled to give their written
consent to the ratification of the Option and approval of the Share Issuance
(the "Record Date"). As of such date, Enron and its affiliates collectively
owned more than the number of Common Shares required to ratify the Option and
approve the Share Issuance, and such entities have indicated to the Company that
they will give their consents to the ratification of the Option and approval of
the Share Issuance with respect to the Common Shares held by them. Consents to
the ratification of the Option and approval of the Share Issuance are
nevertheless being solicited by the Company in accordance with the rules of the
New York Stock Exchange (the "NYSE").
It is currently anticipated that the Option will be exercised and the Share
Issuance will occur during the fourth calendar quarter of 1996, although it is
possible that the Option will not be exercised and the Share Issuance will not
occur until as late as September 30, 1997. The consents solicited by the Company
pursuant to this Consent Solicitation Statement authorize the exercise of the
Option and the Share Issuance in connection therewith on or prior to the
expiration of the Option, as it may be amended from time to time (currently
September 30, 1997).
THE CONSENT SOLICITATION COMMENCES ON NOVEMBER 18, 1996 AND WILL EXPIRE AT
5:00 P.M. (NEW YORK TIME) ON DECEMBER 9, 1996, UNLESS OTHERWISE EXTENDED (THE
"SOLICITATION PERIOD"). CONSENTS MAY BE REVOKED AT ANY TIME ON OR PRIOR TO THE
EXPIRATION OF THE SOLICITATION PERIOD ON THE TERMS AND CONDITIONS SET FORTH
HEREIN. SEE "CONSENT PROCEDURES."
---------------------
The Solicitation Agent for the Consent Solicitation is
First Chicago Trust Company of New York
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: Kevin Laurita
Each Shareholder is requested to complete, date and sign the accompanying
consent form and return the same to the Solicitation Agent at the address set
forth above. Consents should be delivered to the Solicitation Agent only and not
to the Company. However, the Company reserves the right to accept any consents
received by the Company. To be valid, such consents must be received by the
Solicitation Agent no later than 5:00 p.m. (New York Time) on December 9, 1996,
unless the Solicitation Period is extended one or more times in the discretion
of the Board of Directors of the Company (the "Board of Directors"). If the
Solicitation Period is extended, the Board of Directors will give written notice
of such extension to all Shareholders. For more information concerning this
solicitation or for additional copies of the Consent Solicitation Statement,
Shareholders may telephone the Solicitation Agent at (800) 519-3111.
This Consent Solicitation Statement was first mailed to Shareholders on
November 18, 1996.
<PAGE> 3
SUMMARY
The following summary of this Consent Solicitation Statement is not
intended to be complete. Shareholders are urged to read the more detailed
information appearing or referenced elsewhere in this Consent Solicitation
Statement.
The Option and the Share
Issuance................. This Consent Solicitation Statement is being
furnished to Shareholders in connection with the
solicitation of their consents to ratify the Option
and approve the Share Issuance. See "The Consent
Solicitation -- Reasons for and Background of the
Option and the Share Issuance" and "-- Terms of the
Option and the Share Issuance."
Recommendation of the Board
of Directors............... The Board of Directors has concluded that the
ratification of the Option and approval of the
Share Issuance are fair to and in the best
interests of the Shareholders. See "Recommendation
of the Board of Directors."
Record Date................ The Record Date has been fixed as the close of
business on November 8, 1996. See "Consent
Procedures -- Record Date and Required Approval."
Solicitation Period........ The Consent Solicitation commences on November 18,
1996 and will expire at 5:00 p.m. (New York Time)
on December 9, 1996, unless otherwise extended. See
"Consent Procedures."
Requisite Consents......... Holders of a majority in aggregate number of
outstanding Common Shares as of the Record Date
must grant (and not revoke) valid consents in order
to ratify the Option and approve the Share
Issuance. See "Consent Procedures -- Record Date
and Required Approval."
Procedure for Delivery of
Consents................. Consents must be received by the Solicitation Agent
on or prior to the expiration of the Solicitation
Period. See "Consent Procedures."
Revocation of Consents..... Revocation of consents may be made at any time on
or prior to the expiration of the Solicitation
Period. See "Consent Procedures."
Effectiveness.............. The Option will become effective, and the Share
Issuance will occur, upon proper exercise of the
Option by either Enron or EHC. See "The Consent
Solicitation -- Terms of the Option and the Share
Issuance."
Solicitation Agent......... First Chicago Trust Company of New York will serve
as the Solicitation Agent in connection with the
Consent Solicitation. See "Consent Procedures."
2
<PAGE> 4
THE CONSENT SOLICITATION
THE COMPANY
The Company is a Delaware limited liability company formed in November 1994
by Enron to acquire, own and manage Enron's operating power plants and natural
gas pipelines outside the United States, Canada and Western Europe and to
acquire similar assets from third parties. The Company's initial assets
consisted of interests contributed by Enron in two power plants located in the
Philippines (with 226 megawatts of aggregate net generating capacity), a power
plant located in Guatemala (with 110 megawatts of net generating capacity) and a
6,604 kilometer (4,104 mile) natural gas pipeline system located in Argentina
(the "Argentine Pipeline"). The Company subsequently acquired from Enron
interests in a power plant located in the Dominican Republic (with 185 megawatts
of net generating capacity) and a 575 kilometer (357 mile) natural gas pipeline
system located in Colombia. On July 31, 1996, the Company acquired an additional
interest in the Argentine Pipeline, which additional interest acquisition is the
basis for this Consent Solicitation and the Option and the Share Issuance
described herein. The initial public offering of the Common Shares was completed
in November 1994. As of the date hereof, Enron and its affiliates own
approximately 59% of the outstanding Common Shares. See "Share Ownership of
Certain Beneficial Owners."
The Company's strategy is to generate long-term growth in dividends, cash
flow and earnings per share through the selective acquisition and efficient
management of operating power plants and natural gas pipelines in emerging
economies around the world. In order to provide the Company with a long-term
source of project acquisition opportunities, Enron and the Company have entered
into the Purchase Right Agreement dated as of November 15, 1994, as amended by
Amendment No. 1 thereto dated as of September 29, 1995 (as amended, the
"Purchase Right Agreement") pursuant to which Enron is generally obligated to
offer to sell to the Company all of Enron's ownership interest in certain power
plant and natural gas pipeline projects developed or acquired by Enron outside
the United States, Canada and Western Europe that commence commercial operations
prior to 2005. Such offers to sell by Enron, which are required to be at prices
lower than those that Enron may make available to third parties, are subject to
the evaluation and approval of an independent oversight committee and the
receipt of a fairness opinion from an independent internationally recognized
financial advisor. This process is designed to ensure that the terms and
conditions for such purchases have been and will be fair to the Shareholders. In
addition to evaluating projects under the Purchase Right Agreement, the Company
seeks opportunities to purchase power plants, pipelines and related assets from
parties other than Enron and its affiliates. The Company is unable to predict
the number of such opportunities that may result in actual purchases.
The Company evaluates potential acquisitions based upon a variety of
factors, including prospective incremental earnings and cash flow per share,
internal rate of return, cost competitiveness, contractual commitments and
degree of political, currency and other risks. The Company is unable to predict
the number of projects that it may acquire pursuant to the Purchase Right
Agreement. The Company believes, and Enron has informed the Company, that Enron
will continue to actively develop power plant and natural gas pipeline projects
outside the United States, Canada and Western Europe; however, Enron is under no
obligation to do so. To the extent Enron is unable to develop, finance,
construct or acquire projects on acceptable terms, the Company's opportunities
to purchase new projects from Enron under the Purchase Right Agreement would be
reduced, and the future growth of the Company could be materially adversely
affected thereby.
RELATIONSHIPS WITH ENRON AND CONFLICTS OF INTEREST
Through the Purchase Right Agreement, Enron will serve as a primary source
of acquisitions of new projects by the Company. Enron is a leading integrated
natural gas company headquartered in Houston, Texas. Enron provides
administrative and technical support to the Company and its projects as well as
services relating to employee benefit plans, investor relations, securities laws
compliance and reporting, telecommunications, computer systems, office space,
purchasing, technical consulting and certain other corporate staff and support
services pursuant to an Administrative Services Agreement. In addition, Enron
provides services to the Company's projects pursuant to separate agreements with
the companies that own such projects. Such
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services include, among other things: (i) day-to-day commercial management,
operation and maintenance of the projects, (ii) advice regarding policies,
procedures, plans and budgets to allow the operation and maintenance of the
projects to be performed in accordance with good utility practice, the operating
agreements and other material agreements, as well as applicable law, (iii)
auditing services, (iv) development of appropriate information systems, (v)
technical consulting and (vi) certain legal services. Enron may provide similar
or other services in connection with any future projects the Company acquires
from Enron.
Pursuant to a Contribution Agreement among the Company, Enron and certain
of their affiliates, Enron has agreed to maintain certain guarantees and letters
of credit and has made other covenants and shareholder commitments on behalf of
the Company for the benefit of certain of its subsidiaries as required by their
lenders and certain other third parties. In most instances, because the Company
replaced Enron as a shareholder of a subsidiary, the Company agreed to indemnify
Enron against liabilities incurred under such guarantees and letters of credit
and other covenants and shareholder commitments to the extent Enron does not
otherwise have a contractual right to be reimbursed for such liabilities.
Substantially all of such indemnity obligations of the Company to Enron reflect
the Company's pro rata share of preexisting obligations of the subsidiaries.
Although these indemnity obligations could result in certain otherwise
nonrecourse liabilities becoming recourse to the Company, the Company believes
the events that would trigger liability are remote and, therefore, does not
expect these obligations to create any additional liability to the Company.
Pursuant to a Cost Sharing Agreement between the Company and Enron Capital
& Trade Resources Corp., a wholly owned subsidiary of Enron ("ECT"), ECT
provides certain services related to the management of the projects to the
Company. These services include accounting, commercial, administrative and other
services. For these services, ECT is paid a capped fee per year.
Pursuant to the Amended and Restated Limited Liability Company Agreement of
the Company, dated as of November 15, 1994 (the "Company Agreement"), holders of
Common Shares are deemed to have consented to certain actions that might be
deemed conflicts of interest. In addition, certain other conflicts of interest
exist and may arise in the future as a result of the extensive relationships
between Enron and the Company.
REASONS FOR AND BACKGROUND OF THE OPTION AND THE SHARE ISSUANCE
The Company currently conducts pipeline operations in Argentina through
EPCA, which, prior to July 31, 1996, owned 25% of the common stock of CIESA.
CIESA, in turn, owns 70% of the common stock of Transportadora de Gas del Sur
S.A. ("TGS") which owns and operates the Argentine Pipeline. TGS holds a license
expiring in 2027 (subject to extension) giving it the exclusive right to operate
the existing southern Argentine gas transportation pipeline system. The
Argentine Pipeline connects major gas fields in southern and western Argentina
with distributors of gas in those areas and in the greater Buenos Aires area,
the principal population center of Argentina. TGS operates the General Cerris
gas processing complex with the associated Galvan loading and storage facility
at which natural gas liquids are separated from gas transported through the
Argentine Pipeline system and are sold or stored for delivery. TGS's gas
transportation and gas processing activities accounted for approximately 10% of
TGS's net revenues in 1995. Prior to July 31, 1996, the interests in CIESA were
held by Compania de Inversiones en Transporte de Gas S.A. ("CITGAS") (25%),
Perez Companc S.A. ("PC") (25%), APDT (25%) and EPCA (25%).
On July 31, 1996, EPCA and PC acquired APDT's 25% interest in CIESA, with
EPCA and PC each acquiring 12 1/2%. Pursuant to the CIESA Agreement, and in
consideration for the grant of the Option, Enron financed EPCA's portion of such
acquisition by making a $117.5 million loan to EPCA. The accompanying promissory
note bears interest at the one month London Interbank Offering Rate plus .75%,
with interest due monthly and principal due September 30, 1997. On August 23,
1996, EPCA sold 4 1/6% of its newly acquired interest in CIESA to Enron for an
amount of $39.2 million, the proceeds of which were used to repay a portion of
the $117.5 million loan. The repayment to Enron of the $117.5 loan is guaranteed
by the Company. As of November 7, 1996, the outstanding principal balance on
such loan was approximately $36.6 million.
In a separate transaction on August 8, 1996, Enron and PC entered into a
stock purchase agreement with CITGAS, whereby CITGAS transferred all rights and
obligations deriving from its 25% interest in CIESA
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<PAGE> 6
equally to subsidiaries of Enron and PC. The closing of the CITGAS transaction,
which is subject to regulatory approval and other requirements, is expected to
occur in mid-November 1996. The voting and economic rights associated with such
interest of CITGAS in CIESA, however, were transferred effective August 1, 1996.
As a result of the sales by APDT and CITGAS of their respective interests in
CIESA, the ownership of CIESA will be as follows: PC (50%), EPCA (33 1/3%) and
Enron (16 2/3%), although voting rights in CIESA initially will be held by PC
(50%) and EPCA (50%).
TERMS OF THE OPTION AND THE SHARE ISSUANCE
The grant of the Option by EPCA to EHC became effective on July 31, 1996,
the date of Enron's $117.5 million loan to EPCA in connection with its
acquisition of the 12 1/2% interest held by APDT in CIESA. The right to exercise
a portion of the Option subsequently was assigned by EHC to Enron in accordance
with the terms of the CIESA Agreement. Specifically, EHC and Enron currently
hold the right to exercise $25.5 million and $21.5 million, respectively, of the
Option.
The Option will allow EHC and Enron, collectively, to purchase at the
Current Market Price (as defined below), at any time and from time to time
during the period ending on the close of business on September 30, 1997, all or
any portion of such number of Common Shares as have a Conversion Market Price
(as defined below) of $47 million rounded up to the next full share.
The term "Current Market Price" is defined in the CIESA Agreement as either
(i) the average closing price per share of Common Shares on the NYSE for the 20
trading days immediately preceding the second trading day prior to the date that
notice of exercise of the Option is given to the Company or (ii) if the Option
is exercised in connection with any underwritten public offering which occurs
substantially contemporaneously with such exercise and which offers for sale to
the public any Common Shares held by the exercising holder of the Option or any
affiliate of such holder, the price at which Common Shares are purchased (a) as
to 52% of the amount (expressed in dollars) of the Option then being exercised,
by the public, and (b) as to 48% of the amount (expressed in dollars) of the
Option then being exercised, by the public less 5%. The election of (i) or (ii)
above must be made by EHC or Enron in its notice of exercise of the Option.
The term "Conversion Market Price" is defined as either (i) the average
closing price per share of Common Shares on the NYSE for the 20 trading days
immediately preceding the second trading day prior to the date that notice of
exercise of the Option is given to the Company or (ii) if the Option is
exercised in connection with any underwritten public offering which occurs
substantially contemporaneously with such exercise and which offers for sale to
the public any Common Shares held by the exercising holder of the Option or any
affiliate of such holder, the price at which Common Shares are purchased by the
public. The election of (i) or (ii) above, again, must be made by EHC or Enron
in its notice of exercise of the Option.
The Option is exercisable by a written notice to the Company which must
include (i) the election to exercise the Option and the portion of the Option
(expressed in dollars) in respect of which it is being exercised, (ii) the
method of determining each of the Conversion Market Price and the Current Market
Price elected to govern the exercise of the portion of the Option being
exercised and (iii) a signature on behalf of the person exercising the Option.
In addition, on the next succeeding business day following such notice, the
person exercising the Option must wire transfer to an account specified by the
Company the amount of the Current Market Price of the Common Shares for which
the Option is being exercised. Upon exercise of the Option, Enron or EHC, as
appropriate, is obligated to purchase, and the Company is obligated to issue,
that number of Common Shares determined in accordance with the foregoing
provisions. The proceeds of the Share Issuance may be used by the Company to
repay amounts borrowed from Enron pursuant to the CIESA Agreement or for other
general corporate purposes.
No further authorization for the Option or the Share Issuance by a vote of
the Shareholders will be required or solicited if the ratification of the Option
and approval of the Share Issuance by the Shareholders are received pursuant to
the consents solicited hereby. Assuming such approval, however, the Share
Issuance triggered upon exercise of the Option would result in the dilution of
the voting power and rights of existing Shareholders (other than Enron and EHC).
5
<PAGE> 7
CONSEQUENCES IF THE OPTION RATIFICATION AND SHARE ISSUANCE ARE NOT APPROVED
If the Option ratification and Share Issuance are not approved, then Enron
might seek to renegotiate the terms of the CIESA Agreement and/or the Company
would have to seek financing from sources other than the Share Issuance to repay
such amount. In the opinion of the Board of Directors, the opportunity to retain
the funds borrowed from Enron for an extended period could likely be
renegotiated but at a potentially higher rate of interest. The Company probably
would be able to obtain additional funds from another source, but probably on
less favorable terms than those set forth in the CIESA Agreement.
As of the Record Date, however, Enron and its affiliates collectively owned
more than the number of Common Shares required to ratify the Option and approve
the Share Issuance, and such entities have indicated to the Company that they
will give their consents to the ratification of the Option and approval of the
Share Issuance with respect to the Common Shares held by them. Therefore,
ratification of the Option and approval of the Share Issuance are assured. See
"Record Date and Required Approval."
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY OWNED
-------------------------------
SHAREHOLDER NUMBER(1) PERCENTAGE(1)
- ---------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Enron........................................................... 896,257(2) 3.4
Enron Equity Corp............................................... 725,332 2.8
Enron Development Corp.......................................... 31,536 .1
EHC............................................................. 13,724,670(3) 52.1
Enron International Inc......................................... 925,525 3.5
----------- ----
Total................................................. 16,303,320 61.9
</TABLE>
- ---------------
(1) On November 1, 1996, the Company filed with the Securities and Exchange
Commission a Registration Statement on Form S-3, as subsequently amended, to
register up to 3,000,000 Common Shares, some of which will be sold by the
entities listed in the foregoing table. Accordingly, the numbers and
percentages of Common Shares indicated in such table are subject to change.
(2) Includes a number of Common Shares, having an approximate aggregate market
price of $21.5 million, that are exercisable pursuant to the Option.
(3) Includes a number of Common Shares, having an approximate aggregate market
price of $25.5 million, that are exercisable pursuant to the Option.
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SHARE OWNERSHIP OF THE BOARD OF DIRECTORS AND MANAGEMENT
<TABLE>
<CAPTION>
COMPANY COMMON SHARES ENRON COMMON STOCK
------------------------------ ------------------------------
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL
OWNERSHIP AS OF OWNERSHIP AS OF
OCTOBER 31, PERCENT OCTOBER 31, PERCENT
1996(1)(2) OF CLASS 1996(1)(2)(3) OF CLASS
----------------- -------- ----------------- --------
<S> <C> <C> <C> <C>
James M. Alexander(4).................. -- -- 127 *
K. Wade Cline.......................... 5,000 * 7,457 *
James V. Derrick, Jr................... 500 * 453,340 *
Rodney L. Gray......................... 4,000 * 484,346 *
Stanley C. Horton...................... 18,000 * 168,408 *
William C. Horwitz(5).................. 112,500 * 58,596(8) *
Richard D. Kinder...................... 10,000(7) * 1,406,122 *
Amanda K. Martin(6).................... -- -- 34,967 *
Paula H. Rieker........................ 10,000 * 24,808 *
Brent Scowcroft........................ 26,750 * -- --
Edmund P. Segner, III.................. 2,000 * 169,883 *
George S. Slocum....................... 30,250 * 6,975 *
Thomas C. Theobald..................... 41,250 * -- --
All directors and executive
officers as a group (13)............. 260,250 1.06 2,815,029 1.10
</TABLE>
- ---------------
* Less than 1%.
(1) Except as otherwise explained in the footnotes below, all shares are held
with sole voting power and sole investment power.
(2) Includes (a) Common Shares subject to share options exercisable within 60
days after October 31, 1996, as follows: Mr. Cline, 5,000; Mr. Horton,
16,000; Mr. Horwitz, 112,500; Ms. Rieker, 10,000; Mr. Scowcroft, 26,250; Mr.
Slocum, 26,250; Mr. Theobald, 36,250; and all directors and executive
officers as a group, 232,250 and (b) shares of Enron Common Stock subject to
stock options exercisable within 60 days after October 31, 1996, as follows:
Mr. Cline, 5,803; Mr. Derrick, 436,354; Mr. Gray, 409,204; Mr. Horton,
132,339; Mr. Horwitz, 43,369; Mr. Kinder, 1,157,858; Ms. Martin, 19,023; Ms.
Rieker, 18,424; Mr. Segner, 91,740; and all directors and executive officers
as a group 2,314,114.
(3) Includes shares held under Enron's Savings Plan (the "Enron Savings Plan")
and/or Employee Stock Ownership Plan (the "Enron ESOP") or unvested
restricted shares under Enron's 1991 Stock Plan (the "Enron 1991 Stock
Plan") as follows: Mr. Alexander, 127; Mr. Cline, 1,654; Mr. Derrick,
10,926; Mr. Gray, 53,464; Mr. Horton, 13,225; Mr. Horwitz, 14,412; Mr.
Kinder, 23,452; Ms. Martin, 15,944; Ms. Rieker, 6,189; and Mr. Segner,
18,908; and all directors and executive officers as a group, 158,301.
Participants in the Enron Savings Plan have sole voting power and limited
investment power with respect to shares in the Enron Savings Plan.
Participants in the Enron ESOP have sole voting power and no investment
power prior to distribution of shares from the Enron ESOP. Participants in
the Enron 1991 Stock Plan have sole voting power and no investment power for
restricted shares awarded thereunder until such shares vest in accordance
with the provisions of such plan. After vesting, the participant has sole
investment and voting powers.
(4) Mr. Alexander ceased to be an executive officer and employee of the Company
on November 1, 1995.
(5) Mr. Horwitz ceased to be an executive officer of the Company on June 28,
1995.
(6) Ms. Martin ceased to be an executive officer and employee of the Company on
September 1, 1996.
(7) Excludes 14,344,986 Common Shares owned indirectly by Enron with respect to
which Mr. Kinder, in his capacities as President of Enron and Enron Equity
Corp., has shared voting and investment power.
(8) Includes 340 shares of Enron Common Stock held jointly with Mr. Horwitz's
wife, with whom he shares voting and investment power.
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<PAGE> 9
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously has agreed to recommend to the
Shareholders that they give their consents to the ratification of the Option and
approval of the Share Issuance. In reaching its conclusion that the ratification
of the Option and approval of the Share Issuance are fair to and in the best
interests of the Shareholders, the Board of Directors considered a number of
factors including, but not limited to, the following:
- The Company did not have readily available financial resources to acquire
APDT's interest in CIESA pursuant to the CIESA Agreement, and Enron was
willing to finance such acquisition on favorable terms if the Option was
granted.
- The Company would have been unable to obtain the funds necessary to
acquire APDT's interest in CIESA on more favorable terms than those
obtained from Enron pursuant to the terms of the CIESA Agreement.
- Enron's acquisition of the 4 1/6% interest in CIESA has enabled the
Company to (i) reduce the indebtedness incurred in connection with the
CIESA acquisition and (ii) reduce its holdings in CIESA to a level
currently believed by the Company to be appropriate with respect to the
diversification of its assets. The Option affords the Company a possible
source of repayment of approximately 60% of the remaining funds borrowed
from Enron through the issuance of Common Shares at market prices.
CONSENT PROCEDURES
Each Shareholder is requested to complete, date and sign the accompanying
consent form and return the same to First Chicago Trust Company of New York,
which has been appointed to serve as the Solicitation Agent. To be valid, such
consents must be received by the Solicitation Agent no later than 5:00 p.m. (New
York Time) on December 9, 1996, unless the Solicitation Period is extended one
or more times in the discretion of the Board of Directors. If the Solicitation
Period is extended, the Board of Directors will give written notice of such
extension to all Shareholders. For more information concerning this
solicitation, Shareholders may telephone the Solicitation Agent at (800)
519-3111.
Each Shareholder must consent to, deny consent to, or abstain from
consenting to the ratification of the Option and approval of the Share Issuance
with respect to all Common Shares held by such Shareholder. The effect of
abstaining or failing to sign and return the consent form will be the same as
denying consent to the ratification of the Option and approval of the Share
Issuance. A duly executed consent form returned to the Solicitation Agent will
be deemed to constitute a consent to the ratification of the Option and approval
of the Share Issuance unless the consent form is marked to the contrary.
The consents being solicited hereby will (i) ratify the granting of the
Option by the Company and (ii) authorize the Board of Directors to take all
actions necessary or appropriate, as determined by the Board of Directors, to
complete the Share Issuance upon the exercise of the Option.
A consent executed by a Shareholder may be revoked or withdrawn by written
notice received by the Solicitation Agent at any time on or prior to the
expiration of the Solicitation Period. Following the expiration of the
Solicitation Period, a consent from a Shareholder shall become irrevocable,
unless revocability for all Shareholders is approved in writing by the Board of
Directors.
RECORD DATE AND REQUIRED APPROVAL
The close of business on November 8, 1996 has been established as the
Record Date. As of the Record Date, there were 24,387,352 Common Shares
outstanding held by a total of 62 record holders. Consents of Shareholders
holding at least a majority of the outstanding Common Shares are required to
ratify the Option and approve the Share Issuance. The ratification of the Option
and approval of the Share Issuance are not required to be submitted to the
Shareholders pursuant to the Securities Exchange Act of 1934, as amended, or
8
<PAGE> 10
the Company Agreement. However, the ratification of the Option and approval the
Share Issuance are required by the NYSE to list the corresponding Common Shares
on the NYSE.
As of the Record Date, Enron and its affiliates held, and are entitled to
exercise voting rights with respect to, an aggregate of 14,344,989 Common Shares
representing approximately 59% of the outstanding Common Shares of the Company.
Enron and its affiliates have advised the Company that they will consent to the
ratification of the Option and approval of the Share Issuance with respect to
all Common Shares held by them. Although the consent of Shareholders other than
Enron and its affiliates is not required for the ratification of the Option and
approval of the Share Issuance, the Company desires and respectfully requests
that all Shareholders respond to the Consent Solicitation.
DISSENTERS' OR APPRAISAL RIGHTS
There are no dissenters' or appraisal rights with respect to the
ratification of the Option or approval of the Share Issuance pursuant to the
Delaware Limited Liability Company Act, the Company Agreement or otherwise.
SHAREHOLDER PROPOSALS
Any proposals of Shareholders intended to be presented at the next annual
meeting of the Shareholders to be held in 1997 must by received by the Company,
addressed to the Secretary of Enron Global Power & Pipelines L.L.C., Enron
Building, 1400 Smith Street, Houston, Texas 77002, no later than November 29,
1996 to be considered for inclusion in the proxy statement and form of proxy
relating to such meeting.
RIGHT TO OBTAIN LIST OF SHAREHOLDERS
Upon written request from a Shareholder, or his or her duly authorized
representative who has been so designated in writing, the Board of Directors
will promptly furnish to each such person a list of the names and addresses of
the Shareholders of the Company as of the Record Date. Requests should be
directed to the Secretary of Enron Global Power & Pipelines L.L.C., Enron
Building, 1400 Smith Street, Houston, Texas 77002.
SOLICITATION OF CONSENTS
In addition to soliciting consents by mail, consents may be solicited by
directors, officers and employees of the Company and its affiliates, who will
not receive additional compensation therefor, by personal interview, telephone,
telegram, courier service, or similar means of communication. In addition, the
Company has retained First Chicago Trust Company of New York as Solicitation
Agent to solicit consents to the ratification of the Option and approval of the
Share Issuance from the Shareholders, mail information to Shareholders of record
and receive and tally all votes. Whether or not the ratification of the Option
and the Share Issuance are approved by the Shareholders, the Solicitation Agent
will be paid a usual and customary fee by the Company. All costs of solicitation
will be borne by the Company.
9
<PAGE> 11
APPENDIX A
- --------------------------------------------------------------------------------
AGREEMENT REGARDING CIESA INTEREST
AMONG
ENRON CORP.
ENRON HOLDING COMPANY L.L.C.
ENRON GLOBAL POWER & PIPELINES L.L.C.
AND
ENRON PIPELINE COMPANY -- ARGENTINA S.A.
- --------------------------------------------------------------------------------
<PAGE> 12
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. DEFINED TERMS..................................................................... 1
2. OPTION............................................................................ 4
3. NOTES............................................................................. 5
4. ENRON CIESA ACQUISITION RIGHT..................................................... 7
5. REPRESENTATIONS AND WARRANTIES; COVENANTS......................................... 7
6. CONDITIONS TO BORROWING........................................................... 8
7. DEFAULTS.......................................................................... 9
8. SET-OFF; SHARING.................................................................. 10
9. LIMITATION OF LIABILITY........................................................... 10
10. RIGHTS CUMULATIVE, NO WAIVER...................................................... 10
11. NOTICES AND COMMUNICATIONS........................................................ 10
12. REIMBURSEMENT OF EXPENSES......................................................... 10
13. EXECUTION, AMENDMENTS, BINDING EFFECT AND ASSIGNMENTS............................. 11
14. ENTIRE CONTRACT................................................................... 11
15. CLOSING DOCUMENTS................................................................. 11
16. GOVERNING LAW..................................................................... 11
17. SEVERABILITY...................................................................... 11
18. NO THIRD PARTY BENEFICIARY........................................................ 12
19. CONFIDENTIALITY................................................................... 12
EXHIBIT "A" GUARANTEE AGREEMENT....................................................... 13
EXHIBIT "B" PROMISSORY NOTE........................................................... 17
EXHIBIT "C" TERMS PURSUANT TO WHICH CIESA INTEREST MUST BE OFFERED TO EPP PURSUANT TO
SECTION 4(B)(ii).................................................................... 19
EXHIBIT "D" NOTICE AND COMMUNICATION.................................................. 20
</TABLE>
i
<PAGE> 13
AGREEMENT REGARDING CIESA INTEREST
This Agreement Regarding CIESA Interest (the "Agreement") is entered into
as of July 31, 1996 among ENRON CORP. ("Enron"), ENRON HOLDING COMPANY L.L.C.
("EHC"), ENRON GLOBAL POWER & PIPELINES L.L.C. ("EPP") and ENRON PIPELINE
COMPANY -- ARGENTINA S.A. ("EPCA").
WHEREAS, EHC is an indirect wholly owned subsidiary of Enron and the owner
of approximately 52% of the outstanding Common Shares of EPP; and EPCA is a
wholly owned subsidiary of EPP that owns a 25% interest in Compania de
Inversiones de Energia S. A. ("CIESA");
WHEREAS, EPCA, as an owner of a 25% interest in CIESA, has certain rights
to purchase interests in CIESA that are offered for sale by other owners of
interests in CIESA; and EPCA prefers to increase its direct or indirect interest
in CIESA to 33% but may need to increase its direct or indirect interest in
CIESA to as much as 37 1/2%; and
WHEREAS, Argentina Private Development Trust Company Limited ("APDT") has
agreed to sell its 25% interest in CIESA; and EPCA and Perez Companc S. A.
("PC") have elected to exercise their rights to purchase their respective
prorata portions of such interest, with each of EPCA and PC purchasing from
APDT, or causing a subsidiary to purchase from APDT, a 12 1/2% interest in
CIESA; and
WHEREAS, Compania de Inversiones de Transporte de Gas S.A. ("CITGAS") may
also agree to sell its 25% interest in CIESA; and PC has elected to exercise its
right to purchase its prorata portion of such interest, with PC purchasing from
CITGAS, or causing a subsidiary to purchase from CITGAS, a 12 1/2% interest in
CIESA or an entity holding a 12 1/2% interest in CIESA; and
WHEREAS, the sale by CITGAS is subject to certain conditions and is not
expected to occur prior to October 1, 1996; and
WHEREAS, EPCA prefers not to purchase interests in CITGAS that would cause
it, directly or indirectly, to own in excess of 37 1/2% of CIESA; but Enron is
willing to purchase an interest in CIESA or one or more entities that would own
an interest in CIESA that would represent a 16% economic interest in CIESA; and
EPCA is willing to assign to Enron its preferential right to purchase from
CITGAS a 12 1/2% interest in CIESA and to assign a portion of its direct or
indirect economic ownership interest in CIESA in an amount equal to a 4 1/6%
interest in order to permit Enron to acquire, in the aggregate, a 16% economic
interest in CIESA;
WHEREAS, Enron is willing to finance the acquisition by EPCA of the APDT
CIESA Interest by making loans to EPP or a subsidiary of EPP that makes the
acquisition;
WHEREAS, in consideration of Enron's willingness to finance the acquisition
by EPCA or a subsidiary thereof of the APDT CIESA Interest as described herein
and to provide a possible source of funds for repayment of the loans to be made
by Enron to EPCA, EPP is willing to grant to EHC the right and option to acquire
additional Common Shares of EPP at the price and on the terms set forth herein;
NOW, THEREFORE, the parties agree as follows:
1. DEFINED TERMS
"Affiliate" shall mean, with respect to any person, any other person
controlling, controlled by, or under common control with that first person. As
used in this definition, the term "control" includes (a) with respect to any
corporation or other entity having voting shares or the equivalent and elected
directors, managers or managing members, or persons performing similar
functions, the ownership or power to vote, directly or indirectly, shares or the
equivalent representing 50.1% or more of the power to vote in the election of
directors, managers or managing members, or persons performing similar
functions, (b) ownership of 50.1% or more of the equity or beneficial interest
in any other entity and (c) the ability to direct the business and affairs of
any entity by acting as a general partner, manager or otherwise.
<PAGE> 14
"Agreement" shall have the meaning assigned in the initial paragraph
hereof.
"APDT" shall have the meaning assigned in the recitals to this Agreement.
"APDT CIESA Interest" shall mean one half of the interest in CIESA being
sold by APDT, composed of shares of capital stock of CIESA (and the right to
receive dividends thereto from and after July 31, 1996) and rights to receive
certain technical assistance fees earned after July 31, 1996 together with the
related rights and obligations with respect thereto.
"Borrower" shall have the meaning assigned in Section 3(A) of this
Agreement.
"Borrowing Notice" shall have the meaning assigned in Section 3(A) of this
Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday or United
States federal holiday on which banks are open for the conduct of business in
Houston, Texas.
"CIESA" shall have the meaning assigned in the recitals to this Agreement.
"CITGAS" shall have the meaning assigned in the recitals to this Agreement.
"Company Agreement" shall mean the Amended and Restated Limited Liability
Company Agreement of EPP dated as of November 15, 1994, as amended from time to
time.
"Common Shares" shall mean the equity securities of EPP authorized for
issuance pursuant to Section 4.01 of the Company Agreement and having the
designations, preferences and relative, participating, optional or other special
rights, powers and duties specified for "Common Shares" in the Company
Agreement.
"Conversion Market Price" shall mean, at the election of the holder of the
Option set forth in the notice of exercise of the Option, either (i) the average
closing price per share of Common Shares on the New York Stock Exchange for the
20 trading days immediately preceding the second trading day prior to the date
notice of exercise of the Option is given to EPP; or (ii) if the Option is
exercised in connection with any underwritten public offering which occurs
substantially contemporaneously with such exercise and which offers for sale to
the public any Common Shares held by the exercising holder of the Option or any
Affiliate of such holder, the price at which Common Shares are purchased by the
public.
"Current Market Price" shall mean, at the election of the holder of the
Option set forth in the notice of exercise of the Option, either (i) the average
closing price per share of Common Shares on the New York Stock Exchange for the
20 trading days immediately preceding the second trading day prior to the date
notice of exercise of the Option is given to EPP; or (ii) if the Option is
exercised in connection with any underwritten public offering which occurs
substantially contemporaneously with such exercise and which offers for sale to
the public any Common Shares held by the exercising holder of the Option or any
Affiliate of such holder, the price at which Common Shares are purchased (a) as
to 52% of the amount (expressed in Dollars) of the Option then being exercised,
by the public, and (b) as to 48% of the amount (expressed in Dollars) of the
Option then being exercised, by the public less 5%.
"Default" shall mean any condition or event that constitutes an Event of
Default or that with the giving of notice or lapse of time or both would become
an Event of Default.
"$" and "Dollars" each means and refers to lawful money of the United
States of America.
"EACSA" shall have the meaning assigned in Section 4(A)(i) of this
Agreement.
"EHC" shall have the meaning assigned in the initial paragraph of this
Agreement.
"Enron" shall have the meaning assigned in the initial paragraph of this
Agreement.
"Enron Purchase Price" shall have the meaning assigned in Section 4(a)(ii)
of this Agreement.
"EPCA" shall have the meaning assigned in the initial paragraph of this
Agreement.
"EPP" shall have the meaning assigned in the initial paragraph of this
Agreement.
2
<PAGE> 15
"Event of Default" shall have the meaning assigned in Section 7 of this
Agreement.
"Funding Date" shall have the meaning assigned in Section 3(A) of this
Agreement.
"Guarantee" shall have the meaning assigned in Section 3(A) of this
Agreement.
"Indebtedness" shall mean, with respect to any person at any date, the sum
(without duplication) at such date of (i) all indebtedness of such person for
borrowed money or for the deferred purchase price of property or services (which
shall not include accounts payable entered into in the ordinary course of
business), (ii) all indebtedness and other liabilities secured by any Lien on
any property owned by such person even though such person has not assumed or
otherwise become liable for payment thereof, (iii) all obligations of such
person under any lease of property, real or personal, if the then present value
of the minimum rental commitment thereunder should, in accordance with generally
accepted accounting principles consistently applied, be capitalized on a balance
sheet of the lessee, or any other such lease the obligations under which are
capitalized on a consolidated balance sheet of EPP and its Affiliates, and (iv)
all obligations of such person to reimburse the issuer of fidelity or
performance bonds, letters of credit, acceptances, or similar obligations issued
or created for the account of such person.
"Interest Payment Date" shall have the meaning assigned in Section 3(D) of
this Agreement.
"Interest Rate" shall mean LIBOR plus .75%.
"LIBOR" shall mean the variable annual rate of interest at which Dollar
deposits of an amount comparable to the amount of any Note and for an interest
period equal to one month, are offered to major banks as quoted from time to
time by the Telerate quotation service (currently Page 3750) or, if the Telerate
service ceases to be available, in the Money Rates tables of The Wall Street
Journal, fluctuating periodically as such quoted rates change from time to time,
any such adjustment to be effective two days following the first publication
thereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Loans" shall have the meaning assigned in Section 3(A) of this Agreement.
"Notes" shall have the meaning assigned in Section 3(B)(ii) of this
Agreement.
"Obligations" means (i) all principal of and interest (including, without
limitation, all interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Borrower) on any Note, (ii) all other amounts payable by
the Borrowers under the Agreement and (iii) any renewals or extensions of any of
the foregoing.
"Option" shall have the meaning assigned in Section 2(A) of this Agreement.
"Option Exercise Date" shall have the meaning assigned in Section 2(B) of
this Agreement.
"PC" shall have the meaning assigned in the recitals to this Agreement.
"Permitted Indebtedness" shall mean (i) Indebtedness in respect of the
Obligations of the Borrowers under this Agreement, (ii) Indebtedness existing on
the date of this Agreement, (iii) Indebtedness of any Affiliate of EPP which is
not a consolidated subsidiary in EPP's financial statements and which
Indebtedness is nonrecourse to EPP or any Affiliate of EPP which is such a
consolidated subsidiary of EPP, (iv) Indebtedness of EPP or any Affiliate of EPP
to any partially or wholly owned subsidiary of EPP which owns pipeline projects
or electric power plants in countries which limit the payment of dividends to
the amount of annual income of such partially or wholly owned subsidiary, and
(v) Indebtedness of EPP or any Affiliate of EPP incurred after the date of this
Agreement to Enron or any Affiliate of Enron (other than EPP) in an amount at
any one time outstanding not to exceed $10,000,000.
"Purchase Right Agreement" shall mean the Purchase Right Agreement between
Enron and EPP dated as of November 15, 1994, as amended from time to time.
3
<PAGE> 16
"Shareholders Agreement" shall mean the Shareholders Agreement dated as of
November 13, 1992 among APDT, CITGAS, EPCA and PC relating to the ownership of
shares of CIESA, as amended from time to time.
"Termination Date" shall mean the earlier of (i) September 30, 1997, or
(ii) the ninetieth day following the first Interest Payment Date on which Enron
and its Affiliates collectively own less than 50.0% of the outstanding Common
Shares.
2. OPTION
(A) Grant of Option. Effective upon the initial Funding Date, EPP hereby
grants to EHC an option to purchase (the "Option"), at any time or from time to
time during the term set forth in Section 2(B) below, all or any portion of such
number of Common Shares of EPP as have a Conversion Market Price, as of the date
or dates of exercise and taking into account all previous exercises of any
portion of the Option, of $47,000,000 rounded up to the next full share, and in
all respects subject to the terms of this Article 2.
(B) Term; Exercise of Option.
(i) This Option shall be exercisable in whole or in part for a number of
Common Shares having a Conversion Market Price equal to $47,000,000 at a price
per Common Share equal to the Current Market Price, and at any time and from
time to time, during the period ending on the close of business in Houston,
Texas on September 30, 1997.
(ii) This Option shall be exercisable by a written notice to EPP which
shall: (a) state the election to exercise the Option and the portion of the
Option (expressed in Dollars) in respect of which it is being exercised; (b)
state the method of determining each of the Conversion Market Price and the
Current Market Price elected to govern the exercise of the portion of the Option
then being exercised; (c) be signed on behalf of the person exercising the
Option; and (d) be followed on the next succeeding Business Day by a wire
transfer to an account specified by EPP of the amount of the Current Market
Price of the Common Shares for which the Option is being exercised. Any date on
which such written notice is transmitted to EPP is referred to herein as an
"Option Exercise Date."
(C) Transferability of Option. Subject to compliance with applicable
securities laws, this Option may be transferred or assigned in any manner and at
any time by EHC without the consent of EPP (but with notice to EPP); provided,
however, that EHC may not transfer the Option or any portion thereof if the
exercise of the Option would cause a default or an event that, with notice or
the passage of time, would constitute a default to exist under any financing
agreement relating to EPP, any Designated Development Project or Future Project
(as such capitalized terms are defined in the Purchase Right Agreement) or any
electric power or pipeline project in which an interest is currently or
subsequently owned by EPP.
(D) Adjustments upon Changes in Capitalization. If all or any portion of
the Option is exercised subsequent to any stock dividend, split-up,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization, or other change or transaction of or by EPP, as a result of
which shares of any class or other securities or cash (excluding ordinary cash
dividends) shall be issued in respect of outstanding Common Shares covered by
the Option, or if the Common Shares covered by the Option shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or other securities, the person or persons so exercising the Option
shall receive, for the aggregate option price payable upon such exercise of the
Option, the aggregate number and class of shares or other securities or cash
(excluding ordinary cash dividends) to which EHC would have been entitled had it
exercised this Option, immediately prior to such stock dividend, split-up,
recapitalization, combination or exchange of shares, merger, consolidation,
separation, reorganization, or other similar change or transaction.
4
<PAGE> 17
3. NOTES
(A) Commitment to Lend. Enron, on the terms and conditions hereinafter set
forth, agrees to make, or to cause one or more of its subsidiaries or Affiliates
to make (as appropriate, the "Lender"), one or more loans (the "Loans") to EPP,
or a direct subsidiary of EPP designated by EPP (as appropriate, the
"Borrower"), from time to time after the date hereof on each closing date of the
acquisition from APDT of the APDT CIESA Interest by EPCA or another subsidiary
of EPP, or on such earlier date which is a Business Day as may be necessary to
provide good funds to the Borrower on the scheduled closing date of any such
acquisition (each a "Funding Date") during the period from the date of this
Agreement until the Termination Date in an aggregate principal amount not to
exceed $117,500,000. Each Loan hereunder shall be in an aggregate amount not
less than $500,000. The Loans made hereunder to any Borrower other than EPP
shall be guaranteed by EPP by execution and delivery contemporaneously with the
delivery of the first Borrowing Notice of a Guarantee Agreement in the form of
Exhibit "A" hereto (the "Guarantee").
(B) Making the Loans; Use of Proceeds.
(i) Each Loan shall be made on notice, given not later than 11:00 a.m.
(Houston time) at least one Business Day prior to the Funding Date of the
proposed Loan, by Borrower to Enron (a "Borrowing Notice"). Each such notice of
a Loan shall specify therein the requested (a) Funding Date of such Loan, and
(b) the aggregate amount of such Loan, and the first such notice shall be
accompanied by delivery of the Guarantee executed on behalf of EPP and a
certification by an officer of EPP that the proceeds of each Loan will be used
only for the acquisition of the APDT CIESA Interest and related expenses. The
Lender shall, before 11:00 a.m. (Houston time) on the date of such Loan make
such funds available to the Borrower at such address or account as shall be
specified by Borrower in the notice of Loan.
(ii) The Loans shall be represented by one or more promissory notes,
substantially in the form of Exhibit "B" hereto (the "Notes"), which shall be
amended from time to time (either by amendment of the Note or by notation
thereon of any payments and prepayments hereunder) to reflect the principal
amount of Loans outstanding thereunder at such time.
(iii) The proceeds of the Loans shall be used only to acquire the APDT
CIESA Interest and for related expenses and for no other purpose.
(C) Repayment. The Borrower shall repay the unpaid principal amount of each
Loan made in accordance with the terms of the Note issued in respect thereof to
the order of the Lender. All Loans under any Note shall be due and payable on
the earlier of (i) the maturity date of the related Note, or (ii) the
Termination Date.
(D) Interest. The Borrower shall pay interest on the unpaid principal
amount of each of the Notes from the Funding Date of the related Loan until the
principal amount of such Notes shall be paid in full, at a rate per annum equal
to the Interest Rate and as set forth in Section 3(E) below. Interest shall be
payable monthly on the last day of each month unless such day is not a Business
Day, in which case interest shall be payable on the next preceding day which is
a Business Day (an "Interest Payment Date"). Enron shall determine the Interest
Rate applicable from time to time to the Loans hereunder by reference to the
Telerate service (or if applicable, to The Wall Street Journal) as described in
the definition of LIBOR, and shall give prompt notice to EPP by telecopy or hand
delivery of each rate of interest so determined. Such determination thereof
shall be conclusive in the absence of manifest error. EPP shall promptly notify
Enron of any error in such computation.
(E) Default Rate. Any overdue principal of and overdue interest on any
Loans shall bear interest, payable on demand, for each day from the date payment
thereof was due to the date of actual payment, at a rate per annum equal to the
sum of 2% plus the otherwise applicable Interest Rate for such day calculated in
accordance with Section 3(D) of this Agreement.
5
<PAGE> 18
(F) Prepayments.
(i) Mandatory Prepayments. Within one Business Day following the closing of
the acquisition by Enron of an acquisition of an interest in CIESA pursuant to
Section 4(A)(ii) of this Agreement, if any, the Borrower shall make a mandatory
prepayment of the Loans in an aggregate amount equal to the Enron Purchase
Price. Such mandatory prepayment shall be applied as provided in for optional
prepayments pursuant to Section 3(F)(ii) below.
(ii) Optional Prepayments. The Borrower may, upon at least one Business
Day's notice to the Lender, prepay any Note in whole at any time, or from time
to time in part, in an aggregate amount of $100,000 or any larger multiple of
$50,000, by paying the principal amount to be prepaid together with accrued
interest thereon, if the date of prepayment is an Interest Payment Date, to the
date of prepayment. If principal is prepaid on any date other than an Interest
Payment Date, accrued and unpaid interest to the date of prepayment shall be
paid on the next succeeding Interest Payment Date. The principal amount of the
Loans to be made hereunder shall be reduced permanently by an amount equal to
the amount of any principal paid or prepaid.
(iii) Notice of Optional Prepayment Irrevocable. Upon receipt of a notice
of prepayment pursuant to Section 3(F)(ii), such notice shall not thereafter be
revocable by the Borrower.
(G) General Provisions as to Payments.
(i) Each payment of principal of, and interest on, any Note, shall be made
not later than 11:00 A.M. (Houston, Texas time) on the date when due, in federal
or other funds available on the same day in Houston, Texas, to the Lender at its
address set forth on the signature page hereof.
(ii) Whenever any payment of principal of, or interest on, any Note shall
be due on a day that is not a Business Day, the date for payment thereof shall
be extended to the next succeeding Business Day unless such Business Day falls
in another calendar month, in which case the date for payment thereof shall be
the next preceding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
(H) Computation of Interest. Interest on Loans hereunder shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day).
(I) Maximum Interest Rate.
(i) Nothing contained in this Agreement or any Note shall require the
Borrower to pay or permit the Lender to receive interest at a rate exceeding the
then applicable maximum rate permitted by applicable law.
(ii) If the amount of interest payable to the Lender on any interest
payment date in respect of the immediately preceding interest computation
period, computed pursuant to Section 3(D) and 3(E) and taking into account any
other compensation received or to be received by the Lender which would
constitute interest under applicable law, would exceed the maximum amount
permitted by applicable law to be charged by the Lender to the Borrower under
any Note, the amount of interest payable to it on such interest payment date
shall be automatically reduced to such maximum permissible amount.
(iii) If the amount of interest payable to the Lender in respect of any
interest computation period is reduced pursuant to clause (ii) of this Section
3(I) and the amount of interest payable to it in respect of any subsequent
interest computation period, computed pursuant to Section 3(D) and 3(E), would
be less than the maximum amount permitted by applicable law to be charged by the
Lender, then the amount of interest payable to the Lender in respect of such
subsequent interest computation period shall be automatically increased to such
maximum permissible amount; provided that at no time shall the aggregate amount
by which interest paid to the Lender has been increased pursuant to this clause
(iii) exceed the aggregate amount by which interest paid to the Lender has
theretofore been reduced pursuant to clause (ii) of this Section 3(I).
(J) Taxes. Any and all payments by Borrower hereunder or under any Note
shall be made free and clear of, and without deduction for, or on account of,
any present or future income, stamp or other taxes, levies,
6
<PAGE> 19
imposts, deductions, fees, charges or withholdings, and all liabilities with
respect thereto now or hereafter imposed, levied, collected, withheld or
assessed by any country (or any political subdivision or taxing authority
thereof or therein).
4. ENRON CIESA ACQUISITION RIGHT
(A) On the date hereof, Enron has elected by notice to EPP given in the
manner set forth in Section 11 of this Agreement to acquire an interest in
CIESA; accordingly, each of EPP and EPCA agrees that it will, as promptly as
practicable, but in any event on or before August 31, 1996:
(i) assign to Enron Argentina CIESA Holdings S.A., an Argentine
sociedad anonima ("EACSA"), (or as otherwise directed by Enron) EPCA's
preferential right under the Shareholders Agreement to purchase whatever
interest in CIESA is to be sold by CITGAS that EPCA has a right to acquire,
or take such actions thereunder as may be necessary to allow Enron to
achieve ownership of the economic benefit thereof (but, except as set forth
in subsection (iii) below, not the right or power to vote with respect to
such interest) without payment of any additional consideration to EPP;
(ii) assign to EACSA (or as otherwise directed by Enron) the economic
benefits of one third of the APDT CIESA Interest owned directly or
indirectly by EPCA (but, except as set forth in subsection (iii) below, not
the right or power to vote with respect to such interest), for a purchase
price equal to $39,166,667 plus interest at the Interest Rate from the date
of the acquisition by EPP of the APDT CIESA Interest to the date one third
of such interest is acquired by Enron (the "Enron Purchase Price");
(iii) convey to EACSA (or as otherwise directed by Enron) the right to
vote with respect to the CIESA interest acquired pursuant to subsections
(i) and (ii) above if, but only if, the Securities and Exchange Commission
grants to Enron and EPP the exemption under Section 6(c) of the Investment
Company Act of 1940 pursuant to the application for exemption filed on May
15, 1996; and
(iv) instruct CIESA to pay directly to EACSA (or as otherwise directed
by Enron) and, if not so paid, to hold for the benefit of and convey to
EACSA immediately after the receipt from CIESA the amount of any dividend
or other distribution received after the date hereof in respect of the
portion of the APDT CIESA Interest being acquired by Enron pursuant to the
provisions of Section 4(A)(ii) of this Agreement.
(B) In respect of any transaction contemplated by Section 4(A) above, Enron
agrees that it will:
(i) take any action (including, without limitation, structuring the
acquisition of the economic benefit of an additional interest in CIESA in
such a way as to vest the power to vote such interest in EPCA) as may be
necessary (or in the opinion of counsel advisable) to permit EPCA to own,
directly or indirectly, the voting rights attributable to such interest in
order to avoid being or becoming an investment company subject to
registration under the Investment Company Act of 1940; and
(ii) at any time selected by Enron during the period commencing on the
first anniversary of the closing of an acquisition by Enron or an Affiliate
of Enron (other than EPP) of a direct or indirect interest in CIESA
pursuant to Section 4(A)(i) of this Agreement and concluding at the close
of business on the 180th day thereafter, offer to EPP the right to acquire
the entire interest in CIESA then held by Enron, if any, on terms similar
to those set forth in the Purchase Right Agreement, with such changes
thereto and variations from the Purchase Right Agreement as are set forth
in Exhibit "C" hereto.
5. REPRESENTATIONS AND WARRANTIES; COVENANTS
(A) Each party represents, warrants and covenants with respect to itself
that:
(i) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation or organization;
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<PAGE> 20
(ii) it has the requisite power to enter into, deliver and perform its
obligations under this Agreement;
(iii) it has taken all necessary action to authorize the entering
into, delivery and performance of this Agreement;
(iv) the entering into, delivery and performance of this Agreement
(and, with respect to the Borrower, the borrowing of any Loan or the
repayment thereof or the related Note) do not and will not violate or
conflict with its charter or bylaws (or comparable constituent documents),
any law applicable to it, any order of any court or other agency of
government applicable to it or any material agreement to which it is a
party or by which it or any of its property is bound;
(v) all authorizations, exemptions, consents, licenses, approvals of
and registrations or declarations with any governmental or other authority
that are required to be obtained or made by it with respect to this
Agreement have been obtained or made and are valid and are in full force
and effect, and it will maintain all the same in full force and effect and
will use all reasonable efforts to obtain or make (and to maintain in full
force and effect) any that may become necessary after the date of this
Agreement; and it will comply in all material respects with the terms of
each of them;
(vi) this Agreement constitutes (and, with respect to the Borrower,
each Note will constitute) its (and, in the case of EPCA, its or the
executing subsidiary Borrower's) legally valid and binding obligation,
enforceable against it in accordance with its terms, except as enforcement
may be limited by bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law); and
(vii) the information furnished in writing by such party to the other
party in connection with this Agreement is, as of the date of such
information, true, accurate and complete in every material respect.
(B) EPP hereby agrees that, until the later of (i) the date on which all of
the Obligations have been discharged in full, or (ii) the Termination Date, it
will not and will not permit any of its Affiliates to create, incur, or assume
or suffer to exist, any Indebtedness, except Permitted Indebtedness.
6. CONDITIONS TO BORROWING
The obligation of the Lender to make Loans pursuant to Article 3 is subject
to the satisfaction of the following conditions precedent:
(A) no Default shall have occurred and be continuing, or would exist
immediately after (and giving effect to) the Loan;
(B) the representations and warranties of the Borrower contained in
this Agreement shall be true on and as of the date of the Loan as if made
on and as of such date (except to the extent such representations and
warranties speak as of another specified date);
(C) the Borrower shall have performed and complied with each covenant
and other agreement that this Agreement provides shall be performed or
complied with on or before the date of the Loan;
(D) Enron shall have received a certificate, signed by an officer of
EPP, as to the facts specified in clauses (A), (B) and (C) of this Section
6(A);
(E) The Lender shall have received a duly executed Note, dated on or
before the date of the Borrowing, complying with the provisions of Section
3(B); and
(F) in respect of the first Loan hereunder, the Lender shall have
received a duly executed copy of the Guarantee.
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<PAGE> 21
7. DEFAULTS
If one or more of the following events ("Events of Default") shall have
occurred and be continuing:
(A) Borrower shall fail to pay when due any principal of any Note, or
shall fail to pay within five Business Days of the due date thereof any
interest on any Note or any fees or any other amount payable hereunder;
(B) Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(A) above) for thirty (30) days after notice of such failure from Enron;
(C) any representation, warranty, certification or statement made by
EPP or the Borrower in this Agreement, or in any certificate or other
document delivered pursuant hereto or thereto, or by the Guarantor in the
Guarantee shall prove to have been incorrect in any material respect when
made;
(D) any event or condition shall occur that results in the
acceleration of the maturity of any indebtedness of the Borrower or the
Guarantor in excess of $10,000,000;
(E) a judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or the Guarantor and
either (i) an enforcement proceeding shall have been commenced by any
creditor upon such judgment or order, or (ii) there shall have been a
period of 60 days during which a stay of enforcement of such judgment or
order, by reason of pending appeal or otherwise, was not in effect;
(F) the Borrower or the Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any action authorizing any
of the foregoing;
(G) an involuntary case or other proceeding shall be commenced against
the Borrower or the Guarantor seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 90 days;
or an order for relief shall be entered against the Borrower or the
Guarantor under the federal bankruptcy laws as now or hereafter in effect;
(H) there shall have been a default under the Guarantee; or
(I) the Guarantee shall for any reason cease to be in full force and
effect;
then, and in every such event, Enron may by notice to EPP declare any Note
(together with accrued interest thereon and all other amounts payable in respect
of Loans hereunder) to be, and such Note shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided that in the case of any
of the Events of Default specified in Section 6(F) or (G) above with respect to
the Borrower or the Guarantor without any notice to the Borrower or any other
act by the Lender, each Note (together with accrued interest thereon and all
other amounts payable hereunder) issued by any Borrower as to which such Event
of Default has occurred (and all Notes hereunder if such Event of Default occurs
with respect to the Guarantor) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
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8. SET-OFF; SHARING
In addition to any rights and remedies of the Lender provided by law, upon
the occurrence of an Event of Default and acceleration of the obligations owing
in connection with this Agreement, the Lender shall have the right, without
prior notice to the Borrower, any such notice being expressly waived to the
extent permitted by applicable law, to set off and apply against any
indebtedness, whether matured or unmatured, of that Borrower to the Lender, any
amount owing from the Lender to that Borrower at, or at any time after, the
happening of any of the above-mentioned events, and such right of set-off may be
exercised by the Lender against that Borrower or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, custodian or execution, judgment or attachment creditor of that
Borrower, or against anyone else claiming through or against such Borrower or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Lender prior to the making, filing or issuance, or service upon
the Lender of, or of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a receiver, or
issuance of execution, subpoena, order or warrant. The Lender agrees promptly to
notify the Borrower after any such set-off and application made by the Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
9. LIMITATION OF LIABILITY
No party shall be required to pay incidental, consequential or indirect
damages to any other party (except to the extent that the payments required to
be made pursuant to this Agreement are deemed to be such damages). If and to the
extent any payment required to be made pursuant to this Agreement is deemed to
constitute liquidated damages, the parties acknowledge and agree that damages
are difficult or impossible to determine and that such payment constitutes a
reasonable approximation of the amount of such damages.
10. RIGHTS CUMULATIVE, NO WAIVER
The rights and remedies herein provided are in addition to and not
exclusive of any rights and remedies provided by law and shall not affect or
impair any right to which either party may be entitled by law. No failure or
delay in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege.
11. NOTICES AND COMMUNICATIONS
All notices and other communications in connection with this Agreement
shall be in writing and sent by hand or by certified mail, postage prepaid,
return receipt requested, or transmitted via telex or telefacsimile, to the
addressee specified in Exhibit "D", or to such other address as it may have
designated by notice to the other party. Such notices shall be effective when
received, except that notices sent by telex shall be deemed received when the
appropriate answer back is received and notices sent by telefacsimile shall be
deemed received when receipt is confirmed by return telefacsimile; provided,
however, notice sent by telefacsimile received after normal business hours shall
be deemed to be received the following Business Day.
12. REIMBURSEMENT OF EXPENSES
(A) Any party in default in any of its obligations under this Agreement
agrees to reimburse the other party in Dollars, on demand, for actual expenses,
including, without limitation, legal fees and expenses, reasonably incurred by
such other party in contemplation of or otherwise in connection with the
enforcement of, or the preservation of any rights under, this Agreement.
(B) Each party shall pay any stamp, registration, documentation or similar
tax, levy or duty imposed in respect of its execution of this Agreement or any
Note or performance of its obligations hereunder or
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<PAGE> 23
thereunder by any jurisdiction in which it is incorporated, organized, managed
and controlled or considered to have its seat, or in which a branch or office
through which it is acting for purposes of this Agreement is located. If a party
has failed to pay any amount it is required to pay pursuant to the foregoing
sentence and the other party has made a payment in respect of that amount, the
first party shall reimburse the second on demand for the amount the second has
paid. However, if both parties would be responsible for payment of the same tax,
levy or duty pursuant to the preceding sentence (other than any such tax in
respect of any Note, which shall be borne and paid by the Borrower thereunder),
each shall pay one half, or if either party pays the full amount, the other
shall reimburse it on demand for one half.
13. EXECUTION, AMENDMENTS, BINDING EFFECT AND ASSIGNMENTS
(A) This Agreement may be executed in counterparts, each of which when
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument. No amendment, waiver,
modification or supplement of any provision of this Agreement and no consent to
any departure therefrom shall be effective unless in writing and signed by the
parties effected thereby.
(B) This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided that except as
expressly provided herein, neither EPP nor EPCA shall be entitled to assign or
otherwise transfer its rights or obligations hereunder (whether by security or
otherwise) or any interest herein without the prior written consent of Enron,
and any purported transfer without such consent will be void. Except as
otherwise provided in Section 2(C), Enron may assign or otherwise transfer any
such rights, obligations or interest to an Affiliate of Enron on two Business
Days' prior written notice.
14. ENTIRE CONTRACT
This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and supersedes all prior communications or
agreements between them relating thereto.
15. CLOSING DOCUMENTS
(A) On the date of execution hereof, each party shall furnish to the other
the following documents in form and substance satisfactory to the other party:
(i) certified copies of its Articles of Incorporation and By-Laws or other
equivalent organizational documents; (ii) certified copies of the resolutions of
its Board of Directors authorizing the execution and delivery of this Agreement;
and (iii) a certificate as to the incumbency and specimen signatures of its
officers executing this Agreement.
(B) Each party shall, upon request, furnish to the other party as soon as
practicable such other documents as the other party shall reasonably request.
16. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
law of the State of Texas, excluding any conflict of law principles.
17. SEVERABILITY
Any provision of this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
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<PAGE> 24
18. NO THIRD PARTY BENEFICIARY
This Agreement is not intended, and shall not be construed, to confer any
benefits on, or result in any responsibility to, any party other than the
parties hereto.
19. CONFIDENTIALITY
The existence of this Agreement, its contents, and the existence of and
contents of all other instruments and documents relating to this Agreement and
any information made available by one party to the other with respect to this
Agreement or this Agreement is confidential and will not be discussed with or
disclosed to any third party (nor shall any public announcement or press release
be made by either party, except with the express prior written consent of the
other party hereto), or except for such information (a) as may become generally
available to the public, (b) as may be required or appropriate in response to
any summons, subpoena or otherwise in connection with any litigation or to
comply with any applicable law, order, regulation or ruling, (c) as may be
obtained from a nonconfidential source that declared such information in a
manner that did not violate its obligations to the other party in making such
disclosure, (d) as may be required to be furnished to that party's auditors, or
that party's lawyers, financial institutions, or prospective business parties
with which the party has a written agreement to keep the information that is
disclosed in confidence, or (e) as otherwise may be required by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ENRON CORP.
By: /s/ LOUIS E. POTEMPA
----------------------------------
Name: Louis E. Potempa
Title: Vice President
ENRON HOLDING COMPANY L.L.C.
By: /s/ LOUIS E. POTEMPA
----------------------------------
Name: Louis E. Potempa
Title:
ENRON GLOBAL POWER &
PIPELINES L.L.C.
By: /s/ K. WADE CLINE
----------------------------------
Name: K. Wade Cline
Title: Vice President, General
Counsel & Secretary
ENRON PIPELINE COMPANY --
ARGENTINA S.A.
By: /s/ MICHAEL P. HOCKENBERRY
----------------------------------
Name: Michael P. Hockenberry
Title: President
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EXHIBIT "A"
GUARANTEE AGREEMENT
GUARANTEE, dated as of July , 1996, by Enron Global Power & Pipelines
L.L.C., a Delaware limited liability company ("EPP"), in favor of Enron Corp., a
Delaware corporation (the "Lender").
Pursuant to an Agreement Regarding CIESA Interest, dated as of July 31,
1996, between EPP, Enron Holding Company L.L.C., Enron Pipeline
Company -- Argentina S.A. ("EPCA") and the Lender (as amended, modified,
supplemented or restated from time to time, the "Agreement"), the Lender has
agreed to lend amounts up to $117,500,000 to EPP, EPCA or to certain of EPP's
subsidiaries designated by EPP (individually a "Borrower" and collectively the
"Borrowers") to enable the Borrowers to finance the acquisition of an interest
in Compania de Inversiones de Energia S.A. ("CIESA") and for certain other
purposes.
It is a condition precedent to the obligation of the Lender to make its
loans to the Borrowers under the Agreement that EPP, to the extent Loans are
made to EPCA or subsidiaries of EPP, shall have executed and delivered this
Guarantee Agreement for the benefit of the Lender.
EPP will derive substantial direct and indirect benefit from the Loans made
under the Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the Lender
to enter into the Agreement and to induce the Lender to make Loans to the
Borrowers under the Agreement, EPP (acting in its capacity as Guarantor
hereunder, the "Guarantor") hereby agrees with the Lender as follows:
1. Defined Terms. Capitalized terms used herein that are not defined
herein shall have the meanings ascribed thereto in the Agreement.
2. Guarantees. The Guarantor hereby unconditionally and irrevocably
guarantees to the Lender the prompt and complete payment and performance by
the Borrowers when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations. The Guarantor further agrees to pay any and
all reasonable expenses (including, without limitation, all reasonable
fees, disbursements and charges of counsel) which may be paid or incurred
by the Lender in enforcing, or obtaining advice of counsel in respect of,
any of its rights under this Guarantee. This Guarantee shall remain in full
force and effect until the Obligations are paid in full.
The Guarantor agrees that whenever, at any time, or from time to time,
it shall make any payment to the Lender on account of its liability
hereunder, it will notify the Lender in writing that such payment is made
under this Guarantee for such purpose. No payment or payments made by any
Borrower or any other Person or received or collected by the Lender from
any Borrower or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application, at any time or from time to
time, in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of the Guarantor
hereunder which shall remain obligated hereunder, notwithstanding any such
payment or payments, until the Obligations are paid in full.
3. Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default with respect to a particular Borrower, the Lender is
hereby irrevocably authorized by the Guarantor at any time and from time to
time without notice to the Guarantor, any such notice being hereby waived
by the Guarantor, to set off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Lender to or for the credit or
the account of the Guarantor, or any part thereof, in such amounts as the
Lender may elect, on account of the liabilities of the Guarantor hereunder
then due and owing, in any currency, whether arising hereunder, under the
Agreement or any Note of such Borrower as the Lender may elect, whether or
not the Lender has made any demand for payment. The Lender shall notify the
Guarantor promptly of any such set-off made by it and the application made
by it of the proceeds thereof, provided that the failure to give such
notice shall not affect the validity of such set-off
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and application. The rights of the Lender under this paragraph are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Lender may have.
4. Waiver of Rights as a Creditor. Until the expiration of a period of
one year and one day following the payment in full of all of the
Obligations, the Guarantor irrevocably waives any and all rights to which
it may be entitled, by operation of law or otherwise, as a "creditor" (as
defined in the Bankruptcy Code, 11 U.S.C. sec.sec. 101, et. seq.) of any
defaulting Borrower, whether such rights as a "creditor" arise as a result
of a payment hereunder or otherwise, including, without limitation, any and
all rights to which Guarantor may be entitled, upon making any payment
hereunder, (i) to be subrogated to the rights of the Lender against such
defaulting Borrower with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by such defaulting Borrower in
respect thereof or (ii) to receive any payment, in the nature of
contribution or for any other reason, from any other Person with respect to
such payment.
5. Amendments, etc. with respect to the Obligations. The Guarantor
shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor, and without notice to or
further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Lender may be rescinded by the Lender, and any of
the Obligations continued, and the Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Lender,
and the Agreement, any Note and any other document executed and delivered
in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Lender and the Borrower may deem
advisable from time to time, and any guarantee or right of offset at any
time held by the Lender for the payment of the Obligations may, after the
occurrence of an Event of Default, be sold, exchanged, waived, surrendered
or released. The Lender shall not have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto.
6. Guarantee Absolute and Unconditional. To the extent permitted by
law, the Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by the Lender upon this Guarantee or acceptance of this Guarantee;
the Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred in reliance upon this Guarantee; and all
dealings between the Borrowers or the Guarantor, on the one hand, and the
Lender, on the other, shall likewise be conclusively presumed to have been
had or consummated in reliance upon this Guarantee. To the extent permitted
by law, the Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon any defaulting
Borrower or the Guarantor with respect to the Obligations. This Guarantee
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity or enforceability of the
Agreement, any Note, any of the Obligations or guarantee or right of offset
with respect thereto at any time or from time to time held by the Lender,
(b) any defense, set-off or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by any
Borrower against the Lender, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of any Borrower or the Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of any Borrower for the Obligations, or of the Guarantor under
this Guarantee, in bankruptcy or in any other instance. When the Lender is
pursuing its rights and remedies hereunder against the Guarantor, the
Lender may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the Borrowers or any other Person or
guarantee for the Obligations or any right of offset with respect thereto,
and any failure by the Lender to pursue such other rights or remedies or to
collect any payments from the Borrowers or any such other Person or to
realize upon any such guarantee or to exercise any such right of offset, or
any release of any Borrower or any such other Person or of any such
guarantee or right of offset, shall not relieve the Guarantor of any
liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Lender against the Guarantor.
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<PAGE> 27
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned to the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Borrower or the Guarantor
or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Borrower or any substantial part
of its property, or otherwise all as though such payments had not been
made.
8. Payments. The Guarantor hereby agrees that the Obligations will be
paid to the Lender without set-off or counterclaim in U.S. Dollars at the
Lender's office at 1400 Smith Street, Houston, Texas 77002, or at such
other office as the Lender may direct by notice to the Borrower.
9. Representations and Warranties. The Guarantor represents and
warrants to the Lender that:
(a) The Guarantor is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware and has
the limited liability company power and authority and the legal right to
own and operate its property and to conduct the business in which it is
engaged.
(b) The execution, delivery and performance by the Guarantor of
this Guarantee are within the Guarantor's power, have been duly
authorized by all necessary limited liability company action, require no
action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under,
or require the consent of any party under, any provision of applicable
law or regulation or of the limited liability company agreement of the
Guarantor or of any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Guarantor, or result in the
creation or imposition of any Lien on any asset of the Guarantor.
(c) This Guarantee has been duly and validly executed and delivered
by the Guarantor and constitutes a legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with
its terms, except as the enforceability thereof may be limited by
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and subject, as
to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
10. Severability. Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. Paragraph Headings. The paragraph headings used in this Guarantee
are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
12. No Waivers; Cumulative Remedies. The Lender shall not by any act
(except by a written instrument pursuant to paragraph 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default
or in any breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising, on the part of the Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right
or remedy which the Lender would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by
law.
13. Notices. All notices and other communications in connection with
this Guarantee shall be in writing and sent by hand or by certified mail,
postage prepaid, return receipt requested, or transmitted via telex or
telefacsimile, to the addressee specified in Exhibit "D" to the Agreement,
or to such other address as it may have designated by notice to the other
party. Such notices shall be effective when
15
<PAGE> 28
received, except that notices sent by telex shall be deemed received when
the appropriate answer back is received and notices sent by telefacsimile
shall be deemed received when receipt is confirmed by return telefacsimile;
provided, however, notice sent by telefacsimile received after normal
business hours shall be deemed to be received the following Business Day.
14. Amendments and Waivers. Any provision of this Guarantee may be
amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Guarantor and the Lender.
15. Successors and Assigns. The provisions of this Guarantee shall be
binding upon the successors and assigns of the Guarantor and shall inure to
the benefit of the Lender and its successors and assigns.
16. STATE OF TEXAS LAW. THIS GUARANTEE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed as of the day and year first above written.
ENRON GLOBAL POWER &
PIPELINES L.L.C.
By:
----------------------------------
----------------------------------
(Name)
----------------------------------
(Title)
1400 Smith Street
36th Floor
Houston, Texas 77002
Telecopy: (713) 646-2371
ACCEPTED AND AGREED:
ENRON CORP.
By:
--------------------------------
(Name)
--------------------------------
(Title)
1400 Smith Street
Houston, Texas 77002
Telecopy: (713) 646-3422
16
<PAGE> 29
EXHIBIT "B"
PROMISSORY NOTE
U.S. $117,500,000.00 Dated: , 1996
FOR VALUE RECEIVED, THE UNDERSIGNED, ENRON PIPELINE COMPANY -- ARGENTINA
S.A. [or insert other Borrowers name] (the "Borrower"), HEREBY PROMISES TO PAY
to the order of ENRON CORP. ("the Lender") or permitted assigns on the earlier
of (i) September 30, 1997, (ii) the ninetieth day following the first Interest
Payment Date on which Enron and its Affiliates collectively own less than 50.0%
of the outstanding Common Shares, or (iii) the date of any mandatory prepayment
required under the Agreement (but only to the extent of the mandatory prepayment
required thereby)(the "Maturity Date") the principal sum of U.S. ONE HUNDRED
SEVENTEEN MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS (U.S.
$117,500,000.00) or, if less, the aggregate unpaid principal amount of the Loans
(as defined below) made by the Lender to the Borrower pursuant to the Agreement
outstanding on the Maturity Date.
The Borrower promises to pay interest on the unpaid principal amount hereof
from the date of the related Loan until such principal amount is paid in full,
at such interest rates and at such times, as are specified in the Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at 1400 Smith Street, Houston, Texas 77002, in
same day funds. Each Loan made by the Lender to the Borrower pursuant to the
Agreement, and all payments made on account of principal thereof, shall be
recorded by the Lender, and, prior to any permitted transfer hereof, endorsed on
the grid attached hereto which is part of this Note.
This Note is one of the Notes referred to in, and is subject to and is
entitled to the benefits of, the Agreement Regarding CIESA Interest dated as of
July 31, 1996 the ("Agreement") among Enron Corp., Enron Holding Company L.L.C.,
Enron Global Power & Pipelines L.L.C. ("EPP") and Enron Pipeline
Company -- Argentina S.A. The Agreement, among other things (i) provides for the
making of loans (the "Loans") by the Lender to persons specified therein as
Borrowers from time to time in an aggregate amount not to exceed
U.S.$117,500,000.00, the indebtedness of the Borrower resulting from any such
Loan being evidenced in whole or in part by this Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the Maturity Date upon the terms and conditions therein specified. Capitalized
terms used in this Note but not defined herein have the respective meanings
assigned them in the Agreement.
This Note is entitled to the benefit of the Guarantee, as such term is
defined in the Agreement, issued by EPP to the Lender on the date hereof.
This Note shall be governed by, and construed in accordance with, the laws
of the State of Texas.
ENRON PIPELINE COMPANY --
ARGENTINA S.A.
[or other Borrower]
By:
--------------------------------
Name:
Title:
17
<PAGE> 30
SCHEDULE OF LOANS
<TABLE>
<CAPTION>
AMOUNT OF OUTSTANDING
PRINCIPAL PRINCIPAL UNPAID
AMOUNT OF PAID OR PRINCIPAL
DATE OF LOANS INTEREST RATE LOAN PREPAID BALANCE
- ------------------- ------------- --------- --------- -----------
<S> <C> <C> <C> <C>
</TABLE>
18
<PAGE> 31
EXHIBIT "C"
TERMS PURSUANT TO WHICH CIESA INTEREST
MUST BE OFFERED TO EPP
PURSUANT TO SECTION 4(B)(II)
The offer pursuant to Section 4(B)(ii) must be made in a manner similar to
an Offer under the Purchase Right Agreement of an interest in an Eligible
Project that is not a Designated Development Project, except as provided herein.
Capitalized terms used in this exhibit are used as defined in the Purchase Right
Agreement, and reference to sections are to sections of the Purchase Right
Agreement.
1. Section 2.01(b) -- Project Scope and Project Description may be omitted
from Pre-Offer Notice.
2. Section 2.01(c) -- Financial Projections may be omitted from Pre-Offer
Notice.
3. Section 2.02(a) -- Project Description may be omitted from the Offer.
4. Offer Period -- as specified in Section 4(B)(ii).
5. Section 2.02(b) -- EPP will have an Acceptance Period of 15 days after
receipt of the Offer.
6. Section 2.02(g) -- The provisions relating to Limited Recourse Financing
will not be applicable, but the requirements of Section 2.02(g)(i) and (ii) will
apply.
7. Section 2.06 -- Enron will have the obligation to offer the interest to
EPP even though it is an Exempt Interest.
19
<PAGE> 32
EXHIBIT "D"
NOTICE AND COMMUNICATION
<TABLE>
<S> <C>
Notice to Enron: Notice to EHC:
Enron Corp. Enron Holding Company L.L.C.
P.O. Box 1188 1400 Smith Street
Houston, Texas 77251-1188 Houston, Texas 77002
Attn: Treasurer Attn: President
Facsimile No. (713) 646-3422 Facsimile No. (713) 646-6367
Notice to EPP: Notice to EPCA:
Enron Global Power & Pipelines L.L.C. Enron Pipeline Company -- Argentina S.A.
1400 Smith Street 1400 Smith Street
Houston, Texas 77002 Houston, Texas 77002
Attn: General Counsel Attn: General Counsel
Facsimile No. (713) 646-2371 Facsimile No: 646-2371
</TABLE>
20
<PAGE> 33
[BACK COVER PAGE]
Requests for assistance should be directed to the Solicitation Agent.
Requests for additional copies of this Consent Solicitation Statement and the
consent should be directed to the Solicitation Agent. You also may contact your
broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Consent Solicitation.
The Solicitation Agent for the Consent Solicitation is:
First Chicago Trust Company of New York
525 Washington Boulevard
Jersey City, New Jersey 07310
Attn: Kevin Laurita
Collect: (201) 222-4235
Toll Free: (800) 519-3111
THE DATE OF THIS CONSENT SOLICITATION STATEMENT IS NOVEMBER 18, 1996
<PAGE> 34
APPENDIX B
Please mark your ENRON |
[X] votes as in this GLOBAL POWER & PIPELINES L.L.C. | 4835
example. |________
________________________________________________________________________________
The Board of Directors recommends that you consent to the following proposal.
________________________________________________________________________________
The undersigned hereby consents to the DO NOT
ratification of the Option and approval CONSENT CONSENT ABSTAIN
of the Share Issuance described in the [ ] [ ] [ ]
Consent Solicitation Statement.
All as more particularly described
in the Consent Solicitation
Statement, the receipt of which
is hereby acknowledged.
SIGNATURE(S) ________________________ DATE _________
NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title
as such.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
ENRON THIS IS YOUR CONSENT.
GLOBAL POWER & PIPELINES L.L.C. YOUR VOTE IS IMPORTANT.
IF YOU NEED ASSISTANCE, CALL OUR SOLICITATION AGENT AT THE NUMBER BELOW
OR WRITE TO SUCH SOLICITATION AGENT AT:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
525 WASHINGTON BOULEVARD
JERSEY CITY, NEW JERSEY 07310
ATTENTION: KEVIN LAURITA
(800) 519-3111
<PAGE> 35
C CONSENT SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O The consents solicited hereby will (i) ratify the Option and
approve the Share Issuance and (ii) authorize the Board of Directors
N of the Company to take all actions necessary or appropriate to
consummate the Share Issuance upon the exercise of the Option.
S
Each Shareholder is requested to complete, date and sign this
E consent and return the same to the Solicitation Agent in the enclosed
self-addressed envelope. Consents should be delivered to the
N Solicitation Agent only and not to the Company. However, the Company
reserves the right to accept any consent received by the Company. To be
T valid, such consents must be received no later than 5:00 p.m. (New York
Time) on December 9, 1996, unless the Solicitation Period is extended
| one or more times in the discretion of the Board of Directors. If the
| Solicitation Period is extended, the Board of Directors will give
| written notice of such extension to all Shareholders.
|
The effect of abstaining or failing to sign and return the consent
form will be the same as denying consent to the ratification of the
Option and approval of the Share Issuance. A duly executed consent form
returned to the Solicitation Agent will be deemed to constitute a
consent to the ratification of the Option and approval of the Share
Issuance unless the consent form is marked to the contrary. A consent
may be revoked or withdrawn by a written notice received by the
Solicitation Agent at any time prior to expiration of the Solicitation
Period.
All terms not otherwise defined in this consent will have the
meanings ascribed to them in the related Consent Solicitation Statement.
