UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-13584
ENRON GLOBAL POWER & PIPELINES L.L.C.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0456366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ENRON BUILDING
1400 SMITH STREET
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 853-1937
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No o
Indicate the number of shares outstanding of each of the issuer's classes of
common shares, as of the latest practicable date:
CLASS OUTSTANDING AS OF AUGUST 1,
1996
_____________ _________________________
Common Shares 24,371,186 shares
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statement of Income - Three months Ended
June 30, 1996 and 1995 and Six Months Ended
June 30, 1996 and 1995................................ 1
Consolidated Balance Sheet - June 30, 1996
and December 31, 1995................................. 2
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1996 and 1995............... 3
Consolidated Statement of Changes in Shareholders'
Equity - Six Months Ended June 30, 1996............... 4
Notes to Consolidated Financial Statements ........... 5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 10
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote
of the Security-Holders...............................21
ITEM 5. Other Matters............................................21
ITEM 6. Exhibits and Reports on Form 8-K ........................22
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENRON GLOBAL POWER & PIPELINES L.L.C.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Technical Assistance Fees $ 2,704 $ 2,483 $ 5,308 $ 4,718
Equity in Earnings of Unconsolidated
Subsidiaries:
Pipeline operations 7,674 5,584 16,529 10,773
Power operations 4,231 2,753 7,855 5,201
Technical Assistance Fees
and Equity in Earnings 14,609 10,820 29,692 20,692
General and Administrative Expenses (1,314) (1,684) (2,911) (3,070)
Taxes Other Than Income (150) (92) (293) (242)
Other Income (Expenses), net (469) 205 (1,079) 725
Income Before Income Taxes 12,676 9,249 25,409 18,105
Income Taxes 1,101 967 2,313 1,947
Net Income $ 11,575 $ 8,282 $ 23,096 $ 16,158
Net Income Per Common Share $ .48 $ .40 $ .96 $ .78
Average Number of Common Shares
Used in Computation 24,051 20,840 24,024 20,840
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 32,024 $ 23,364
Accounts receivable 4,709 3,778
Current portion of note receivable 987 -
Total Current Assets 37,720 27,142
Investments in and Advances to
Unconsolidated Subsidiaries 220,528 159,621
Note Receivable 7,526 -
Other 1,109 950
Total Assets $ 266,883 $ 187,713
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 6,437 $ 5,341
Accrued taxes 1,562 2,481
Total Current Liabilities 7,999 7,822
Other 1,686 -
Deferred Income Taxes 3,531 2,539
Shareholders' Equity
Common shares, no par value,
200,000,000 shares authorized
and 24,371,186 and 20,858,750
shares issued and outstanding,
respectively 219,478 156,607
Retained earnings 34,189 20,745
Total Shareholders' Equity 253,667 177,352
Total Liabilities and Shareholders' Equity $ 266,883 $ 187,713
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities:
Reconciliation of net income
to net cash flows from
operating activities:
Net income $ 23,096 $ 16,158
Equity in earnings of unconsolidated
subsidiaries (24,384) (15,974)
Distributions from unconsolidated
subsidiaries 16,249 16,356
Deferred income taxes 992 701
Changes in components of working capital:
Accounts receivable 132 3,373
Accounts payable 1,056 (1,047)
Accrued taxes (919) (1,290)
Other, net 1,785 745
Net Cash Flows From Operating Activities 18,007 19,022
Cash Flows From Investing Activities:
Net investments in and advances to
unconsolidated subsidiaries - 1,561
Net Cash Flows From Investing Activities - 1,561
Cash Flows From Financing Activities:
Common Shares Issued 179 -
Dividends paid (9,526) (8,544)
Net Cash Flows Used in Financing Activities (9,526) (8,544)
Increase in Cash and Cash Equivalents 8,660 12,039
Cash and Cash Equivalents, Beginning of Period 23,364 6,570
Cash and Cash Equivalents, End of Period $ 32,024 $ 18,609
Supplemental Cash Flow Information:
Cash paid for Income Taxes $ 2,272 $ 1,031
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
Common Retained
SHARES EARNINGS
<S> <C> <C>
Balance at December 31, 1995 $ 156,607 $ 20,745
Net Income - 23,096
Dividends - (9,526)
Issuances for Acquisitions and
Stock Options 62,871 (126)
Balance at June 30, 1996 $ 219,478 $ 34,189
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Enron Global Power & Pipelines L.L.C. (EPP), a Delaware limited liability
company, was organized to initially own interests in a natural gas pipeline
system in Argentina, two power plants in the Philippines and a power plant in
Guatemala. EPP's pipeline operations in Argentina are conducted through its
wholly owned subsidiary, Enron Pipeline Company - Argentina S.A. (EPCA). EPCA
owns 25% of Compa<n~><i'>a de Inversiones de Energ<i'>a S.A. (CIESA) which in
turn owns 70% of Transportadora de Gas del Sur S.A. (TGS), the entity that owns
the pipeline system. EPP's power operations in the Philippines are conducted
through its wholly owned subsidiary, Enron Power Philippines Corp. (EPPC). EPPC
owns 50% of the outstanding stock of Subic Power Corp. and Batangas Power
Corp., the entities that own the respective power plants. The Guatemala power
operations are conducted through EPP's 50% ownership interest in Puerto Quetzal
Power Corp.
On May 9, 1996, EPP acquired an indirect 49% limited partnership interest (and
will, upon receipt of certain approvals, acquire a 1% general partnership
interest) in Centragas - Transportadora de Gas de la Reg<i'>on Central de Enron
Development & C<i'>a. S.C.A. (Centragas) in exchange for approximately 1.6
million common shares. Centragas is a Colombian limited partnership, formed to
build, own and operate, for a 15-year period, a 357 mile, 18-inch natural gas
pipeline and related facilities (the Colombia Pipeline) from Ballena on the
northern coast of Colombia to Barrancabermeja in the central region of the
country. In addition to EPP's interest discussed above, Tomen Corporation, a
Japanese corporation (Tomen), and Promigas S.A., a Colombian corporation and
the operator of the Colombia Pipeline (Promigas), each own a 25% limited
partner interest in Centragas. Construction of the pipeline was completed and
commercial operation was achieved on February 24, 1996. Empresa Colombiana de
Petr<o'>leos (Ecopetrol), the state-owned oil company of Colombia,became
obligated, as of February 24, 1996, to pay full tariffs to Centragas.
The Colombia Pipeline was developed under the terms of the Transportation
Services Contract dated May 12, 1994 (the Centragas Transportation Services
Contract), between Centragas and Ecopetrol. Pursuant to the Centragas
Transportation Services Contract, Centragas built and will own the Colombia
Pipeline and transport natural gas for Ecopetrol for a period of 15 years from
the commencement of commercial operations (February 24, 1996) and, at the end
of this 15-year period, transfer the Colombia Pipeline to Ecopetrol "as is" for
a payment equal to $500,000 plus 1% of the construction costs of the Colombia
Pipeline, subject to adjustment in certain cases. The Centragas Transportation
Services Contract provides that Ecopetrol will pay two monthly tariffs, an
availability tariff generally designed to cover debt service, certain taxes and
return of, and on, equity for Centragas and a transportation tariff generally
designed to cover the operation and maintenance costs of the Colombia Pipeline.
The full amount of the tariffs are payable without regard to the amount of gas
Ecopetrol delivers to the Colombia Pipeline. The tariffs are payable in
Colombian pesos but the majority of the tariffs are denominated in U.S. dollars
and Ecopetrol is obligated to indemnify Centragas against all losses, costs and
expenses resulting from conversion or devaluation of Colombian pesos in
connection with the U.S. dollar-denominated portion of the tariffs.
The Colombia Pipeline includes 21 lateral lines along the mainline to connect
with distribution networks, a dehydration facility and two metering stations.
The Colombia Pipeline has an initial design capacity of approximately 3.1
MMm{3}/d (110 MMcf/d) at an inlet pressure of 1200 pounds per square inch,
without compression. Demand for gas from the Colombia Pipeline is initially
expected to come from Ecopetrol's refinery at Barrancabermeja, which has the
capacity to use approximately 2.1 MMm{3}/d (75 MMcf/d).
Promigas, a publicly-traded Colombian company involved in natural gas
transportation and distribution in Colombia, operates and maintains the
Colombia Pipeline for the 15-year operational period in accordance with the
requirements of the Centragas Transportation Services Contract pursuant to an
Operations and Maintenance Contract between Centragas and Promigas. Promigas is
Colombia's largest natural gas pipeline company, transporting approximately 69%
of the natural gas consumed in Colombia in 1993. Excluding the Colombia
Pipeline, Promigas currently operates approximately 910 km (565 miles) of gas
pipelines in Colombia with a capacity in its principal pipeline of
approximately 9.1 MMm{3}/d (320 MMcf/d). On January 31, 1996, a wholly owned
indirect subsidiary of Enron acquired Ecopetrol's approximate 39% equity
interest in Promigas, making Enron the largest shareholder of Promigas.
Centragas has obtained project debt financing of $172 million through the
issuance in the international capital markets of Senior Secured Notes due 2010
(the "Notes"). The Notes have a 16-year maturity and an interest rate of 10.65%
per year. The Notes are collateralized by substantially all of the assets of
Centragas. Centragas is subject to certain dividend payment restrictions in
connection with the project financing.
On June 18, 1996, EPP acquired an indirect 50% limited partnership interest in
Smith/Enron Cogeneration Limited Partnership (SECLP) and Smith/Enron O&M
Limited Partnership (SEOM), which own and provide services, respectively, to a
185 megawatt power project in the Dominican Republic (the Puerto Plata Plant),
in exchange for approximately 1.9 million common shares. Smith Cogeneration
International, Inc. owns the remaining 50% of SECLP and SEOM.
The Puerto Plata Plant was developed under the terms of the Electric Energy
Supply and Sales Contract dated July 26, 1993, as amended (the Puerto Plata
Energy Supply Contract), with Corporaci<o'>n Dominicana de Electricidad (CDE),
the semi-autonomous government agency which provides electric services to the
Dominican Republic, and the Government of the Dominican Republic. Pursuant to
the Puerto Plata Energy Supply Contract, SECLP will own and SEOM will operate
the Puerto Plata Plant and will provide plant capacity and electricity to CDE
for a period of 19 years from the date combined cycle commercial operation
began (January 16, 1996), with the option for CDE to extend for one year. The
Puerto Plata Energy Supply Contract provides that CDE will pay fixed capacity
payments (subject to reduction if availability falls below 90% or if capacity
is less than 185 megawatt based on periodic testing), fixed and variable
operation and maintenance payments and an energy payment providing for a pass-
through of the Puerto Plata Plant's fuel costs with such pass-through being
subject to certain limitations. The capacity payments are designed to cover
debt service and return of, and on, equity for SECLP, and the operations and
maintenance payments are designed to cover the operation and maintenance costs
of the Puerto Plata Plant. CDE has the option of paying its obligations under
the Puerto Plata Energy Supply Contract in U.S. dollars or an equivalent amount
of Dominican Republic pesos based on the prevailing rate of exchange in the
Dominican Republic banking exchange market. SECLP has arranged to convert the
Dominican Republic pesos into U.S. dollars through short-term agreements with
commercial banks. The Puerto Plata Energy Supply Contract provides that CDE
must indemnify SECLP for any losses incurred by SECLP as a result of the
inability to convert or delay in converting Dominican Republic pesos to U.S.
dollars.
SECLP has arranged a total of $153 million in project debt financing for the
Puerto Plata Plant at interest rates ranging from 6.85% to 16% and final
maturities ranging from ten to 13.5 years. The debt is collateralized by
substantially all of the assets of the Puerto Plata Plant. SECLP is subject to
certain dividend payment restrictions in connection with the project financing.
2. BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by EPP
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they reflect all adjustments which are, in
the opinion of management, necessary for a fair presentation of the financial
results for the interim periods. Certain information and notes normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. However, EPP believes that the disclosures are adequate to make
the information presented not misleading. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in EPP's Annual Report on Form 10-K
for the year ended December 31, 1995.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from the estimates.
EPP records as cash equivalents all highly liquid short-term investments with
original maturities of three months or less. From time to time, EPP invests
excess funds with Enron Corp. affiliates under promissory notes payable on
demand at market interest rates. At June 30, 1996, approximately $27.5 million
was invested using such notes. Such amounts are classified as cash equivalents.
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
All monetary amounts presented in tables herein are expressed in thousands,
except per share amounts.
Certain prior period amounts have been reclassified to conform with the current
presentation.
3. SHAREHOLDERS' EQUITY
On June 14, 1996, EPP paid a quarterly cash dividend of $0.22 per share.
4. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES
EPP's investments in and advances to unconsolidated subsidiaries and the
changes in such balances are as follows:
<TABLE>
<CAPTION>
PIPELINE POWER TOTAL
<S> <C> <C> <C>
Balance at December 31, 1995 $ 97,609 $ 62,012 $ 159,621
Equity in Earnings 16,529 7,855 24,384
Acquisitions 22,422 30,531 52,953
Distributions (13,100) (3,149) (16,249)
Amortization of Excess Investment - (181) (181)
Balance at June 30, 1996 $ 123,460 $ 97,068 $ 220,528
</TABLE>
At June 30, 1996, EPP's share of undistributed earnings of its pipeline and
power subsidiaries totaled approximately $13.5 million and $18.6 million,
respectively. In the first six months of 1996, EPPC received $3.1 million in
dividends from its Philippine power operations. On March 6, 1996, TGS declared
a semiannual dividend of 0.095 Argentine pesos per share which was paid on
March 20, 1996. As a result, EPCA received $10.5 million in dividends from
CIESA. Additionally, on June 11, 1996, CIESA paid a special dividend of $10.4
million, of which EPCA's share was $2.6 million. Amortization of excess
investment relates to the amortization, over 19 years, of the difference
between equity contributions to SECLP and 50% of the equity of SECLP.
5. Acquisitions
Acquisitions of projects from Enron Corp. are transactions between entities
under common control that are accounted for similar to the pooling of interests
method of accounting using the historical carryover basis and restating
historical results to include the results of acquired projects. The
consolidated statement of income for the three and six months ended June 30,
1996, reflects equity in earnings from Centragas of $1.6 million and
$4.4 million, respectively (approximately $1.3 million and $2.8 million,
<PAGE>
ENRON GLOBAL POWER & PIPELINES L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
respectively, of which are related to an early completion bonus), and equity in
earnings from SECLP of $1.2 million and $2.6 million, respectively. In
addition, the consolidated statement of income for the three and six months
ended June 30, 1996, reflects expenses of approximately $1.0 million and
$1.9 million, respectively, associated with the acquisitions of Centragas and
SECLP and $0.1 million and $0.3 million, respectively, of withholding taxes in
Colombia that will be paid upon distribution of earnings from Centragas.
In addition to the acquisitions of Centragas and SECLP discussed above, EPP
acquired a note payable and accrued interest from SECLP to Enron Development
Corp. At June 18, 1996, the note had a face value of approximately $10.8
million and a stated interest rate of 13.5%. The note is due in 15 equal
principal payments plus accrued interest beginning December 15, 1996. EPP
recorded the note at its market value of approximately $8.5 million plus
accrued interest.
6. SUPPLEMENTAL CASH FLOW INFORMATION
During the second quarter of 1996, noncash investing activities included the
issuance of approximately 3.5 million shares of common stock in exchange for
assets totaling approximately $53.0 million related to the Centragas and SECLP
and SEOM acquisitions discussed above.
7. SUBSEQUENT EVENTS
On July 31, 1996, EPCA borrowed $117.5 million from Enron Corp. and purchased
an additional 12.5% interest in CIESA from the Argentine Private Development
Trust Company Limited (APDT) for $117.5 million. The note bears interest at one
month London Interbank Offering Rate plus 0.75% with interest due monthly and
principal due September 30, 1997. Perez Companc S.A., another shareholder in
CIESA, also purchased an additional 12.5% interest in CIESA from APDT. On
August 1, 1996, Enron Corp. and Perez Companc S.A. each agreed to purchase a
12.5% interest in CIESA from Citicorp Equity Investments S.A., and EPCA agreed
to sell to Enron Corp. by August 31, 1996, a 4 1/6% interest in CIESA for
approximately $39 million plus interest until closing. After consummation of
all of the above mentioned transactions, CIESA will be owned 50% by Perez
Companc S.A., 33 1/3% by EPCA and 16 2/3% by Enron Corp., however, voting
rights will be owned 50% by Perez Companc S.A. and 50% by EPCA.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
PRIMARY ASSETS AND SOURCES OF EARNINGS AND CASH
The primary assets of Enron Global Power & Pipelines L.L.C. ("EPP"), a
Delaware limited liability company owned approximately 59% by Enron Corp.
(together with its subsidiaries, "Enron") at June 30, 1996, are its interests
in 50% or less owned companies ("Project Companies") which it holds directly or
indirectly through wholly owned subsidiaries. EPP accounts for its interests in
the Project Companies under the equity method of accounting and records its
proportionate share of the earnings or losses of the Project Companies. The
operations of the Project Companies are EPP's primary source of earnings. EPP
also receives technical assistance fees, paid by Project Companies to certain
wholly owned subsidiaries of EPP, primarily by Transportadora de Gas del Sur
S.A. ("TGS") to Enron Pipeline Company - Argentina S.A. ("EPCA"). EPP's primary
source of cash is dividends paid by the Project Companies and technical
assistance fees. Declaration and payment of such dividends are at the sole
discretion of the boards of directors of the Project Companies and are subject
to operating profitability of the Project Companies and certain restrictions
including among others, restrictions on the distribution of cash under
applicable credit agreements and government imposed currency restrictions, if
any.
RESULTS OF OPERATIONS OF EPP
General
For the six months ended June 30, 1996, EPP's technical assistance fees
and equity in earnings from its Argentine, Colombian and Philippine operations
constituted approximately 57%, 15% and 13%, respectively, of EPP's technical
assistance fees and equity in earnings. As of June 30, 1996, Argentine and
Philippine assets accounted for approximately 42% and 23%, respectively, of
EPP's assets. As a result, if Argentine, Colombian or Philippine operations
were materially and adversely affected, EPP's financial condition and results
of operations could be materially and adversely affected. See "Pipeline
Operations" and "Power Operations" below for the results of operations of EPP's
unconsolidated subsidiaries.
Acquisitions of projects from Enron are transactions between entities
under common control that are accounted for similar to the pooling of interests
method of accounting using the historical carryover basis and restating
historical results to include the results of acquired projects. The statement
of income for the three and six months ended June 30, 1996, reflects
$1.6 million and $4.4 million, respectively, of equity in earnings from
Centragas - Transportadora de Gas de la Reg<i'>on Central de Enron Development
& C<i'>a. S.C.A. ("Centragas") and $1.2 million and $2.6 million, respectively,
of equity in earnings from Smith/Enron Cogeneration Limited Partnership and
Smith/Enron O&M Limited Partnership (collectively, "SELP"). Additionally, the
three and six months ended June 30, 1996, include $1.0 million and $1.9
million, respectively, of acquisition related expenses and $0.1 million and
$0.3 million, respectively, of withholding taxes in Colombia. Approximately
$1.3 million and $2.9 million of the equity in earnings are due to an early
completion bonus earned at Centragas in the three and six months ended June 30,
1996, respectively. Centragas and SELP were not in full commercial operation
during the first half of 1995.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996 VS. THE
THREE MONTHS ENDED JUNE 30, 1995
TECHNICAL ASSISTANCE FEES AND EQUITY IN EARNINGS. Technical assistance
fees and equity in earnings increased $3.8 million (35%) in the second quarter
of 1996, compared to the second quarter of 1995. The increase is primarily due
to earnings resulting from the acquisitions of Centragas and SELP and increased
fees and earnings in Argentina.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased $0.4 million (22%) in the second quarter of 1996 compared to the
second quarter of 1995 primarily due to lower expenses at EPP headquarters and
in the Philippines.
OTHER INCOME (EXPENSES), NET. Other income (expenses), net was
$0.2 million of income in the second quarter of 1995 compared to $0.5 million
of expense in the second quarter of 1996. The $0.7 million net increase in
expenses was primarily due to acquisition related expenses totaling
$1.0 million partially offset by increased interest income in the Philippines.
INCOME TAXES. Income taxes increased $0.1 million (14%) for the second
quarter of 1996 compared to the second quarter of 1995 primarily due to
withholding taxes in Colombia. The income of EPP is not taxable to EPP;
however, EPCA and Enron Power Philippines Corp. ("EPPC"), wholly owned
subsidiaries of EPP, are taxable entities in their respective local
jurisdictions. The effective tax rate paid by these subsidiaries is less than
the statutory rate because a majority of the income of these subsidiaries
relates to ownership of equity investments, which is not subject to tax;
however, EPCA is subject to taxes (30%) on the technical assistance fees it
receives from TGS. Dividends paid to EPP from EPPC and Centragas are subject to
certain withholding taxes of 15% and 7%, respectively.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 VS. THE SIX
MONTHS ENDED JUNE 30, 1995
TECHNICAL ASSISTANCE FEES AND EQUITY IN EARNINGS. Technical assistance
fees and equity in earnings increased $9.0 million (43%) in the first half of
1996, compared to the first half of 1995. The increase is primarily due to
earnings resulting from the acquisitions of Centragas and SELP and increased
fees and earnings in Argentina.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased $0.2 million (5%) in the first half of 1996 compared to the first
half of 1995 primarily due to lower expenses at EPP headquarters and in the
Philippines.
OTHER INCOME (EXPENSES), NET. Other income (expenses), net was
$0.5 million of income in the first half of 1995 compared to $1.4 million of
expense in the first half of 1996. The $1.8 million net increase in expenses
was primarily due to acquisition related expenses totaling $1.9 million
partially offset by increased interest income in the Philippines.
INCOME TAXES. Income taxes increased $0.4 million (19%) for the first
half of 1996 compared to the first half of 1995 primarily due to withholding
taxes in Colombia.
LIQUIDITY AND CAPITAL RESOURCES OF EPP
PRIMARY CASH REQUIREMENTS
The primary cash requirements of EPP are the repayment of debt, the
payment of dividends to its shareholders and general and administrative
expenses, including overhead and costs incurred under an Administrative
Services Agreement between EPP and Enron. EPP may also use cash to satisfy its
payment obligations, if any, under various shareholder and credit agreements
relating to the Project Companies and under a Master Contribution Agreement
among EPP, Enron and certain of their subsidiaries (the "Contribution
Agreement"). Pursuant to the Contribution Agreement, Enron maintains certain
commitments on behalf of EPP for the benefit of certain Project Companies, as
required by project lenders and certain other third parties. Because EPP
replaced Enron as a shareholder of the Project Companies, in most instances EPP
has agreed to indemnify Enron against liabilities that may be incurred under
such commitments. Although these indemnity obligations could result in certain
otherwise nonrecourse liabilities becoming recourse to EPP, EPP believes the
events which would trigger liability are remote, and therefore does not expect
these obligations to create any additional liability. If, however, EPP were
required to make significant payments to Enron under the Contribution
Agreement, EPP believes it would be able to obtain financing for such payments
from Enron or other sources, or would be able to cause its subsidiaries to pay
to EPP cash dividends sufficient to make such payments, if necessary. There can
be no assurance, however, that sufficient dividends, or funds from other
sources, would be available for such purpose. On June 15, 1996, EPP paid a
quarterly dividend of approximately $4.9 million or $0.22 per share.
On July 31, 1996, EPCA borrowed $117.5 million from Enron to purchase an
additional 12.5% interest in Compa<n~>ia de Inversiones de Energ<i'>a
S.A.("CIESA") for $117.5 million. The note bears interest at one month London
Interbank Offering Rate plus 0.75% with interest due monthly and principal due
September 30, 1997. EPCA has agreed to sell a 4 1/6% interest in CIESA to Enron
by August 31, 1996, for $39 million and use the proceeds to repay a portion of
the $117.5 million debt.
PRIMARY SOURCES OF CASH
EPP relies primarily on dividends from the Project Companies and
technical assistance fees to meet its cash requirements. The ability of EPP's
unconsolidated subsidiaries to pay dividends will depend on the future earnings
and debt repayment obligations of such subsidiaries, dividend restrictions
included in credit agreements at the project level, applicable currency
restrictions, income and other taxes, other laws and the declaration of
dividends by the boards of directors of EPP's various subsidiaries. Project
financings typically require that certain cash reserves be established at the
Project Company and that certain other capital and legal requirements be
satisfied before the Project Company may pay dividends to its shareholders.
However, each of EPP's unconsolidated subsidiaries has a stated dividend
policy, set forth in its respective shareholders agreement, of maximizing
after-tax cash distributions to shareholders after taking into consideration
capital requirements and applicable legal requirements. In the future, the
Project Companies may also borrow funds or otherwise accept encumbrances on
their earnings resulting in further possible constraints on their ability to
pay dividends to EPP.
In the first six months of 1996, Subic Power Corp. ("Subic") and Batangas
Power Corp. ("Batangas") paid $1.3 million and $5.0 million in dividends,
respectively, of which EPPC received approximately $3.1 million. EPCA received
$13.1 million in dividends from CIESA in the first six months of 1996.
LONG-TERM FINANCING POLICY
EPP's business strategy is to generate long-term growth in earnings, cash
flow and dividends per share by acquiring interests in additional power and
natural gas pipeline projects from Enron and third parties. EPP currently
expects to fund any such acquisitions from Enron by issuing additional common
shares and to fund acquisitions from third parties with a combination of common
shares, cash or debt. EPP believes that it will have sufficient cash to meet
its obligations for the foreseeable future.
<PAGE>
PIPELINE OPERATIONS
Equity in earnings of the pipeline operations represents EPP's 25%
interest in CIESA, which owns 70% of TGS, and EPP's 50% interest in Centragas
which EPP acquired in May 1996 and which began full commercial operation in
February 1996. See "Results of Operations of EPP-General."
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996 VS. THE
THREE MONTHS ENDED JUNE 30, 1995
Presented below is the second quarter of 1996 and 1995 consolidated
information for CIESA combined with Centragas on a U.S. Generally Accepted
Accounting Principles ("GAAP"), historical U.S. dollar, 100% ownership basis.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
(IN THOUSANDS) 1996 1995
<S> <C> <C>
Transportation revenues $ 104,932 $ 85,812
Processing revenues 11,779 9,918
Total Revenues 116,711 95,730
Operating, administrative and selling expenses (33,562) (30,100)
Interest income 1,793 1,723
Interest expense, net of capitalized interest (22,287) (15,888)
Other income (expense), net (294) (333)
Income Before Minority Interest
and Income Taxes 62,361 51,132
Minority interest (12,551) (11,340)
Income tax expense (22,337) (17,458)
Net Income 27,473 22,334
EPP's Equity in Earnings of Pipeline Operations $ 7,674 $ 5,584
</TABLE>
TRANSPORTATION REVENUES. Transportation revenues increased $19.1 million
(22%) primarily due to the operations of Centragas ($17.1 million). At TGS,
firm transportation revenues increased $3.0 million (4%) in the second quarter
of 1996 compared to the same period in 1995 primarily due to an increase in
firm contracted capacity made possible by the June 1995 expansion of
transportation capacity along the General San Mart<i'>n pipeline by 45.9
million cubic feet per day and a 3.2% tariff increase in July 1995 net of a
0.16% tariff decrease effective January 1, 1996. These increases in revenues
were partially offset by a reduction in gas transportation billings to reflect
lower payroll taxes and the exercise of certain step down rights by Gas Natural
BAN S.A. ("BAN"). Interruptible transportation revenues decreased $0.9 million
(34%) for the second quarter of 1996 compared to the same period in 1995.
PROCESSING REVENUES. During the second quarter of 1996, processing
revenues increased by $1.9 million (19%) primarily due to increased volumes and
increased average prices for propane and butane in Argentina. Centragas does
not generate any processing revenues.
OPERATING, ADMINISTRATIVE AND SELLING EXPENSES. Operating expenses,
consisting primarily of labor, depreciation, technical assistance and other
professional fees and operation and maintenance expense, increased $3.5 million
(12%) for the second quarter of 1996 as compared to the same period in 1995 due
to the operations of Centragas ($4.6 million). The increase was partially
offset by decreased expenses at TGS resulting from improved operating
efficiencies partially offset by higher depreciation, resulting from capital
expenditures for pipeline expansion in 1995 and higher technical assistance
fees as a result of higher operating income.
INTEREST INCOME. Interest income was relatively unchanged in the second
quarter of 1996 compared to the same period in 1995.
INTEREST EXPENSE, NET OF CAPITALIZED INTEREST. Interest expense, net of
capitalized interest, increased $6.4 million (40%) during the second quarter of
1996 compared to 1995 primarily due to the operations of Centragas
($4.4 million). The increase from Argentine operations is primarily due to $1.7
million (10%) of higher interest expense as a result of the increase in average
indebtedness at TGS and higher interest rates at CIESA. In addition,
capitalized interest decreased $0.3 million (23%) due to lower capital
expenditures during the second quarter of 1996.
INCOME TAX EXPENSE. Income tax expense in the second quarter of 1996
increased $4.9 million (28%) compared to the second quarter of 1995, primarily
due to the operations of Centragas ($4.7 million). The statutory tax rate in
Argentina is 30% of taxable net income, calculated according to Argentine tax
regulations which differ in certain respects from accounting practices followed
under Argentine GAAP for the preparation of financial statements. The statutory
tax rate in Colombia is 35% of taxable net income, calculated according to
Colombian tax regulations. The effective tax rate for Centragas differs from
the statutory tax rate primarily due to the effects of inflation and foreign
currency exchange fluctuations.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 VS. THE SIX
MONTHS ENDED JUNE 30, 1995
Presented below is the first half of 1996 and 1995 consolidated
information for CIESA combined with Centragas on a U.S. GAAP, historical U.S.
dollar, 100% ownership basis.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS) 1996 1995
<S> <C> <C>
Transportation revenues $ 205,963 $ 169,460
Processing revenues 22,725 20,133
Total Revenues 228,688 189,593
Operating, administrative and selling
expenses (66,337) (58,014)
Interest income 3,364 3,426
Interest expense, net of capitalized interest (42,582) (30,559)
Other income, net 1,065 501
Income Before Minority Interest
and Income Taxes 124,198 104,947
Minority interest (25,280) (22,833)
Income tax expense (41,554) (39,022)
Net Income 57,364 43,092
EPP's Equity in Earnings of Pipeline Operations $ 16,529 $ 10,773
</TABLE>
TRANSPORTATION REVENUES. Transportation revenues increased $36.5 million
(22%) primarily due to the operations of Centragas ($32.1 million). At TGS,
firm transportation revenues increased $4.6 million (3%) in the first half of
1996 as compared to the same period in 1995 primarily due to an increase in
firm contracted capacity as a result of the previously discussed General San
Mart<i'>n pipeline expansion and a 3.2% reduction in gas transportation
billings which took effect July 1, 1995, net of a 0.16% tariff decrease
effective January 1, 1996. The increases were partially offset by a reduction
in gas transportation billings to reflect lower payroll taxes and by lower
revenues resulting from step down rights exercised by BAN. Interruptible
transportation revenues were relatively unchanged for the second half of 1996
compared to the same period in 1995.
PROCESSING REVENUES. Processing revenues increased $2.6 million (13%) in
the first six months of 1996 compared to the same period in 1995 primarily due
to higher gas liquids volumes and average prices in Argentina. Centragas does
not generate any processing revenues.
OPERATING, ADMINISTRATIVE AND SELLING EXPENSES. Operating expenses,
consisting primarily of labor, depreciation, technical assistance and other
professional fees, and operation and maintenance expense, increased
$8.3 million (14%) for the second half of 1996 as compared to the same period
in 1995. The increase is primarily due to the operations of Centragas
($8.3 million) with operating, administrative and selling expenses at TGS
remaining relatively unchanged.
INTEREST INCOME. Interest income remained relatively unchanged for the
six months ended June 30, 1996, compared to the same period in 1995.
INTEREST EXPENSE, NET. Interest expense is net of capitalized interest.
Interest expense increased $12 million (39%) in the first six months of 1996
compared to the same period in 1995 primarily as a result of the operations of
Centragas ($8.1 million), and higher outstanding debt at TGS and higher
interest rates at CIESA. Capitalized interest decreased $0.8 million (34%) in
the first six months of 1996 compared to the first six months of 1995 due to
lower capital expenditures during the first half of 1996.
INCOME TAX EXPENSE. Income tax expense in the first six months of 1996
increased $2.5 million (6%) compared to the first six months of 1995. The
increase was primarily due to the operations of Centragas ($6.8 million)
partially offset by a decrease at TGS due to a one time payment of $4.9 million
in April 1995 under a tax amnesty program offered by the Argentine tax
authority to settle certain income tax issues.
LIQUIDITY AND CAPITAL RESOURCES OF PIPELINE OPERATIONS
In May 1996, CIESA entered into a bridge loan facility for $220 million
with a group of banks led by Goldman Sachs & Co. and Societe Generale. The
proceeds were used to retire the $215 million loan agreement with Morgan
Guaranty Trust Company of New York which expired in May 1996.
Recently TGS filed a $350 million shelf registration with the Securities
and Exchange Commission in order to issue debt securities from time to time in
the United States. Under Argentine law, TGS established a Global Program
approved by the Comisi<o'>n Nacional de Valores. During April 1996, TGS issued
$150 million of bonds with an effective annual interest rate of 9.6% for a term
of five years as part of its Global Program. Approximately $100 million of the
proceeds were used to retire short-term debt and the remainder for other
corporate purposes.
TGS believes that cash flows from operations supplemented with external
debt financing will provide sufficient liquidity to fund its capital
expenditures, pay dividends, cover its debt service and provide sufficient
working capital.
As of June 30, 1996, CIESA's total capitalization amounted to $1.5
billion. Total capitalization was comprised of debt of $865 million,
shareholders' equity of $377 million and minority interest of $277 million.
Debt as a percentage of total capitalization increased from 56% at December 31,
1995, to 57% at June 30, 1996.
POWER OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996 VS. THE
THREE MONTHS ENDED JUNE 30, 1995
Presented below is a summary of income statement information for the
combined power operations of the Subic, Batangas, Puerto Quetzal Power Corp.
("PQPC") and SELP plants. SELP was acquired by EPP in June 1996 and began full
commercial operations in January 1996. See "Results of Operations of EPP-
General."
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
(IN THOUSANDS) 1996 1995
<S> <C> <C>
Capacity revenues $ 33,351 $ 23,020
Variable revenues 16,173 8,964
Total Revenues 49,524 31,984
Fuel costs 11,749 5,315
Operating and administrative expenses 9,635 7,567
Depreciation and amortization 8,868 6,914
Net Operating Income 19,272 12,188
Interest expense, net 9,494 5,346
Other expense, net 403 553
Income Before Income Taxes 9,375 6,289
Income tax expense 914 783
Net Income $ 8,461 $ 5,506
EPP's Equity in Earnings of Power Operations $ 4,231 $ 2,753
</TABLE>
Revenues. The majority of each Project Company's revenue is attributable
to payments tied to the capacity of the respective plant, based either on
annual availability (the Subic and Batangas plants) or periodic capacity tests
(the PQPC and SELP plants). Capacity revenues increased $10.3 million (45%) in
the second quarter of 1996 compared to the second quarter of 1995 primarily due
to the operations of the SELP plant ($9.3 million).
The second type of payment, an energy fee, varies directly with actual
output and, under the current cost structures of the plants, essentially covers
variable costs. The variable revenues increased $7.2 million (80%) in the
second quarter of 1996 compared to the second quarter of 1995. The increase is
primarily due to the operations of the SELP plant ($8.0 million) partially
offset by lower fuel revenues resulting from decreased sales at the PQPC plant.
FUEL COSTS. Fuel costs are the expense for the fuel used in the PQPC and
SELP plants. An Enron affiliate supplies fuel to the PQPC plant and SELP at
market based rates. Total fuel costs increased $6.4 million (121%) in the
second quarter of 1996 compared to the second quarter of 1995. The increase was
primarily due to the operations of the SELP plant ($7.4 million) partially
offset by lower fuel use related to decreased sales at PQPC discussed above.
Fuel is provided to the Subic and Batangas plants by their customer, National
Power Corporation, at no cost.
OPERATING AND ADMINISTRATIVE EXPENSES. Operating and administrative
expenses increased $2.1 million (27%) in the second quarter of 1996 compared to
the second quarter of 1995. The increase was primarily due to the operations of
the SELP plant ($1.5 million) and additional maintenance performed as part of
the connecting rod replacement program at the Subic and Batangas plants,
partially offset by lower fees resulting from certain contract amendments at
the PQPC plant.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $2.0 million (28%) in the second quarter of 1996 as compared to the
second quarter of 1995. The increase was due primarily to the operations of the
SELP plant ($1.9 million).
INTEREST EXPENSE, NET. Interest expense, net increased $4.1 million (78%)
in the second quarter of 1996 compared to the second quarter of 1995. The
increase is primarily due to the operations of the SELP plant ($3.8 million).
OTHER EXPENSE, NET. Other expense, net decreased $0.2 million (27%)
primarily due to an insurance deductible incurred at the Subic plant in 1995.
INCOME TAX EXPENSE. Income tax expense increased $0.1 million primarily
due to increased pretax net income from PQPC (38.75% tax rate). Income tax
expense is the tax on the power plants in their respective local jurisdictions.
On an aggregate basis, the effective tax rate for the Philippine power plants
is less than the statutory rate due to the Subic and Batangas plants being
granted certain income tax holidays and concessions that range from six to 15
years. PQPC is organized as a U.S. domiciled company with a foreign branch
office. SELP has been granted an income tax holiday for the life of the
project.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 VS. THE SIX
MONTHS ENDED JUNE 30, 1995
Presented below is a summary of income statement information for the
combined power operations of the Subic, Batangas, PQPC and SELP plants.
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS) 1996 1995
<S> <C> <C>
Capacity revenues $ 63,325 $ 45,912
Variable revenues 37,524 17,472
Total Revenues 100,849 63,384
Fuel costs 27,637 10,252
Operating and administrative expenses 18,193 16,177
Depreciation and amortization 17,741 13,637
Net Operating Income 37,278 23,318
Interest expense, net 18,241 11,572
Other expense, net 1,148 417
Income Before Income Taxes 17,889 11,329
Income tax expense 2,180 928
Net Income $ 15,709 $ 10,401
EPP's Equity in Earnings of Power Operations $ 7,855 $ 5,201
</TABLE>
REVENUES. Capacity revenues increased $17.4 million (38%) in the first
half of 1996 compared to the first half of 1995 primarily due to the operations
of the SELP plant ($17.3 million).
The variable revenues increased $20.1 million (115%) in the first half of
1996 compared to the first half of 1995. The increase is primarily due to the
operations of the SELP plant ($19.5 million) and increased sales and higher
fuel revenue as a result of increases in the price of fuel used to calculate
fuel revenue at the PQPC plant.
FUEL COSTS. Total fuel costs increased $17.4 million (170%) in the first
half of 1996 compared to the first half of 1995. The increase was primarily due
to the operations of the SELP plant ($17.6 million).
OPERATING AND ADMINISTRATIVE EXPENSES. Operating and administrative
expenses increased $2.0 million (12%) in the first half of 1996, compared to
the first half of 1995. The increase was primarily due to the operations of the
SELP plant ($2.6 million) partially offset by lower fees resulting from certain
contract amendments at the PQPC plant.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $4.1 million (30%) in the first half of 1996 as compared to the first
half of 1995. The increase was primarily due to the operations of the SELP
plant ($3.6 million).
INTEREST EXPENSE, NET. Interest expense, net increased $6.7 million (58%)
in the first half of 1996 compared to the first half of 1995. The increase is
primarily due to the operations of the SELP plant ($7.3 million) partially
offset by a lower interest rate for PQPC resulting from an interest rate swap
to fix floating rate debt.
OTHER EXPENSE, NET. Other expense, net increased $0.7 million primarily
due to an insurance deductible incurred at the Batangas plant and the
operations of the SELP plant ($0.4 million).
INCOME TAX EXPENSE. Income tax expense increased $1.3 million primarily
due to increased pretax net income from PQPC (38.75% tax rate).
LIQUIDITY AND CAPITAL RESOURCES OF POWER OPERATIONS
Capital expenditures for the power plant operations are expected to be
insignificant in 1996. The power operations expect to meet short- and long-
term liquidity needs using cash flows from operations. If a specific power
plant has short-term liquidity needs that cannot be met with cash flows from
operations, it is expected that such plant would borrow or be advanced the
necessary funds from an affiliated company, with such loans repaid out of
future cash flows.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
The statements in this Form 10-Q that are not historical information are
forward looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended.
Although EPP believes that its expectations are based on reasonable
assumptions, it can give no assurance that its goals will be achieved.
Important factors that could cause actual results to differ materially from
those in the forward looking statements herein include political developments
in foreign countries, the timing and success of Enron's efforts to develop
international power, pipeline and other infrastructure projects and conditions
of the capital markets and equity markets during the periods covered by the
forward looking statements.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of EPP was held on May 14, 1996, in
Houston, Texas, for the purpose of electing a board of directors and ratifying
the appointment of auditors. Proxies for the meeting were solicited pursuant to
Section 14(a) of the Securities Exchange Act of 1934, as amended, and there was
no solicitation in opposition to management's solicitation.
All of management's nominees for directors as listed in the proxy
statement were elected as follows:
Shares Shares
NOMINEE FOR WITHHELD
James V. Derrick, Jr. 17,507,830 7,875
Rodney L. Gray 17,508,430 7,275
Richard D. Kinder 17,508,430 7,275
Brent Scowcroft 17,508,330 7,375
Edmund P. Segner, III 17,508,330 7,375
George S. Slocum 17,508,430 7,275
Thomas C. Theobald 17,508,430 7,275
The appointment of Arthur Andersen LLP as EPP's independent auditors
for the year ending December 31, 1996, was approved by the following vote:
17,510,275 shares FOR; 700 shares AGAINST; and 4,730 shares ABSTAINING.
ITEM 5. OTHER MATTERS
On July 30, 1996, EPP, through its subsidiary, EPCA, entered into a
Stock Purchase Agreement among Argentina Private Development Trust Company
Limited, EPCA and Maip<u'> Inversora S.A. ("Maip<u'>), a subsidiary of Perez
Companc S.A. ("Perez"), whereby EPP and Perez agreed to acquire an additional
25% interest and other rights in CIESA for $235 million. The acquisition closed
on July 31, 1996, with EPP and Perez each buying a 12 1/2% interest in CIESA.
CIESA owns 70% of the common stock of TGS, a 4,104-mile gas pipeline system in
Argentina. The pipeline is the largest in South America, with a capacity of 1.9
billion cubic feet of gas per day.
Additionally, on July 31, 1996, EPP entered into an agreement among
Enron Corp., Enron Holding Company L.L.C. ("EHC"), EPCA and EPP, whereby (a)
Enron Corp. agreed to loan up to $117.5 million to EPP or a subsidiary thereof,
(b) EPP granted to EHC an option to acquire up to $47 million of EPP common
shares (proceeds of which will be used to repay debt to Enron), and (c) EPP
granted to Enron Corp. the right to acquire a 4 1/6% interest in CIESA from EPP
for approximately $39 million (proceeds of which will be used to repay debt to
Enron). Enron Corp. has exercised this right and this acquisition is expected
to close by August 31, 1996.
On August 1, 1996, Enron Corp. and Perez agreed to acquire from
Citicorp Equity Investments S.A. ("CEI") a 25% interest and other rights in
CIESA for a total of $249 million. Perez, through Maip<u'>, will acquire 12
1/2% of CIESA and Enron Corp. will acquire 12 1/2%. The transaction is expected
to close in mid-November.
EPP and Perez each currently owns a 37 1/2% interest in CIESA. As a
result of the acquisition of the CEI interest in CIESA and the exercise of
Enron Corp.'s right to acquire a 4 1/6% CIESA interest from EPP, which are
subject to the approval of ENARGAS, the Argentine regulatory authority, and the
fulfillment of certain requirements, Perez will hold 50% interest in CIESA, EPP
will indirectly own 33 1/3% and Enron Corp. will beneficially indirectly own 16
2/3%. Voting rights with respect to the CIESA interests will be divided equally
between Perez and EPP.
It is impracticable for the Registrant to provide the financial
statements required to be provided by Item 7 of Current Report on Form 8-K at
this time, however, the Registrant shall provide the required statements under
cover of Form 8-K as soon as practicable, but in any event not later than
October 14, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Indemnity Agreements dated as of May 15, 1996, between EPP and
Thomas C. Theobald, George S. Slocum and Brent Scowcroft,
individually.
10.2 Enron Global Power & Pipeline L.L.C. 1994 Share Option Plan
and First Amendment to Enron Global Power & Pipelines L.L.C.
1994 Share Option Plan dated February 13, 1996.
10.3 Stock Purchase Agreement dated July 30, 1996, among Argentina
Private Development Trust Company Limited, EPCA and Maip<u'>.
10.4 Agreement Regarding CIESA Interest dated July 31, 1996, among
Enron Corp., EHC, EPCA and EPP.
(b) Reports on Form 8-K
EPP filed Form 8-K on (a) July 3, 1996, to announce the acquisition of
(i) all of the outstanding share capital from Enron Corp. affiliates of two
companies collectively owning a 50% interest in the Puerto Plata, Dominican
Republic power project (the "Project") and (ii) approximately $11 million
principal amount of subordinated notes owed by the Project to Enron Corp. and
(b) July 23, 1996, to file the financial statements of Centragas.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENRON GLOBAL POWER & PIPELINES L.L.C.
(Registrant)
Date: August 14, 1996 By /S/ RODNEY L. GRAY
Rodney L. Gray
Chairman, President and
Chief Executive Officer
Date: August 14, 1996 By /S/ PAULA H. RIEKER
Paula H. Rieker
Vice President and
Chief Financial Officer
(Chief Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit
NO. METHOD OF FILING
10.1 Indemnity Agreements dated as of Filed herewith
May 15, 1996, between EPP and electronically
Thomas C. Theobald, George S. Slocum
and Brent Scowcroft, individually.
10.2 Enron Global Power & Pipeline L.L.C. Filed herewith
1994 Share Option Plan and First electronically
Amendment to Enron Global Power
& Pipelines L.L.C. 1994 Share Option
Plan dated February 13, 1996.
10.3 Stock Purchase Agreement dated Filed herewith
July 30, 1996, among Argentina electronically
Private Development Trust Company
Limited, EPCA and Maip<u'>.
10.4 Agreement Regarding CIESA Interest Filed herewith
dated July 31, 1996, among Enron Corp., electronically
EHC, EPCA and EPP.
INDEMNITY AGREEMENT
This AGREEMENT is made and entered into this 15th day May, 1996,
but effective as set forth below, by and between Enron Global Power &
Pipelines, L.L.C., a Delaware limited liability company (the "Company"), and
Thomas C. Theobald (the "Indemnitee").
WHEREAS, at the request of the Company, Indemnitee is serving as a
director of the Company and as a member of the Oversight Committee of the Board
of Directors of the Company (the "Oversight Committee") established pursuant to
Section 7.02(f) of the Amended and Restated Limited Liability Company Agreement
of the Company dated as of November 15, 1994 (the "Company Agreement"); and
WHEREAS, the Company believes that Indemnitee's undertaking of such
responsibilities is important to the Company and that the protection afforded
by this Agreement will enhance Indemnitee's ability to discharge such
responsibilities under existing circumstances;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's agreement to provide services to the Company, as contemplated by
the Company Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. CERTAIN DEFINITIONS:
(a) CHANGE IN CONTROL: shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation or other entity owned
directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of shares of
the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing 20% or more of the total voting power
represented by the Company's then outstanding Voting Securities
(other than any such person or any affiliate thereof that is such a
20% beneficial owner as of the date hereof), or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at
least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the
shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or
substantially all the Company's assets, or (v) any event occurs
with respect to Enron Corp. that would have constituted a Change in
Control if it had occurred with respect to the Company.
(b) CLAIM: any threatened, pending or completed action,
suit or proceeding, whether instituted by the Company or any other
person, or any inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action,
suit or proceeding, whether civil, criminal, administrative,
investigative or other.
(c) EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to
the fact that Indemnitee is or was serving as a director of the
Company or a member of the Oversight Committee, or to Indemnitee's
taking or failing to take any action or doing or failing to do
anything under the authority and direction set forth in, or
otherwise contemplated by, the Company Agreement.
(e) INDEPENDENT LEGAL COUNSEL: an attorney or firm of
attorneys, selected in accordance with the provisions of Section 3,
who shall not have otherwise performed services for the Company,
Enron Corp. or its affiliates or Indemnitee within the last five
years (other than with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements).
(f) REVIEWING PARTY: any appropriate person or body
consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Board who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(g) VOTING SECURITIES: any securities of the relevant
entity that vote generally in the election of directors.
2. BASIC INDEMNIFICATION ARRANGEMENT.
(a) The Company hereby agrees to provide Indemnitee with
the indemnification set forth in Article 7.08 of the Company
Agreement, a copy of which is attached hereto as EXHIBIT A and made
a part hereof, to the full extent provided in such Article 7.08 and
by current law and regardless of whether such Article 7.08 is
hereafter amended or revoked. In addition, and not in limitation of
the immediately preceding sentence, in the event Indemnitee was, is
or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant
in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law, as soon as practicable but in any
event no later than thirty days after written demand is presented
to the Company, against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or
in respect of such Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested by Indemnitee,
the Company shall advance (within two business days of such
request) any and all Expenses to Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition that
the Reviewing Party shall not have determined (in a written
opinion, in any case in which the Independent Legal Counsel
referred to in Section 3 hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii)
the obligation of the Company to make an Expense Advance pursuant
to Section 2(a) shall be subject to the condition that, if, when
and to the extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings
in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not
be permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights
of appeal shall have been exhausted or have lapsed). If there has
not been a Change in Control, the Reviewing Party shall be selected
by the Board of Directors, and if there has been such a Change in
Control (other than a Change in Control which has been approved by
a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 3
hereof. If there has been no determination by the Reviewing Party
or if the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the Court or challenging any such
determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise
shall be conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or any
provision of the Company Agreement now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
Independent Legal Counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys' fees)
and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or any provisions of the Company Agreement now or hereafter in effect
relating to Claims for Indemnifiable Events or (ii) recovery under any
directors' and officers' liability insurance policy now or hereafter maintained
by the Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or recovery, as the
case may be.
5. PARTIAL INDEMNITY. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. BURDEN OF PROOF. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
7. NO PRESUMPTIONS. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. NONEXCLUSIVITY; SUBSEQUENT CHANGE IN LAW. The rights of
Indemnitee hereunder shall be in addition to any other rights Indemnitee may
have under the Company Agreement or Delaware law, or otherwise. To the extent
that a change in Delaware law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
Company Agreement and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
9. INSURANCE. To the extent that the Company maintains one or
more insurance policies providing directors' and officers' liability insurance,
Indemnitee shall be covered under such policies, in accordance with their
terms, to the maximum extent of the coverage available thereunder to any
officer or director of the Company.
10. AMENDMENTS; WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver.
11. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
12. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company and spouses, heirs, executors and
personal and legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to provide services to the Company
or to provide services to another person or entity at the Company's request.
13. SEVERABILITY. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state, without giving
effect to the principles of conflicts of laws.
15. EFFECTIVE DATE; SUPERSESSION OF EXISTING AGREEMENT. This
Agreement shall have effect from the time Indemnitee became a member of the
Oversight Committee, and effective as of such date the Indemnification
Agreement dated as of November 15, 1994 between the Company and Indemnitee is
hereby superseded and of no force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date set forth above.
ENRON GLOBAL POWER & PIPELINES, L.L.C.
By: /S/ RODNEY L. GRAY
Name: Rodney L. Gray
Title: Chairman, President and
Chief Executive Officer
/S/ THOMAS C. THEOBALD
Thomas C. Theobald
<PAGE>
The following exhibit has been intentionally omitted from the Indemnity
Agreement dated May 15, 1996, between the Company and Indemnitee, a copy of
which is filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and may be obtained by contacting the
Secretary of the Company:
Exhibit A Amended and Restated Limited Liability Company Agreement dated as of
November 15, 1994.
<PAGE>
INDEMNITY AGREEMENT
This AGREEMENT is made and entered into this 15th day of May, 1996,
but effective as set forth below, by and between Enron Global Power &
Pipelines, L.L.C., a Delaware limited liability company (the "Company"), and
George S. Slocum (the "Indemnitee").
WHEREAS, at the request of the Company, Indemnitee is serving as a
director of the Company and as a member of the Oversight Committee of the Board
of Directors of the Company (the "Oversight Committee") established pursuant to
Section 7.02(f) of the Amended and Restated Limited Liability Company Agreement
of the Company dated as of November 15, 1994 (the "Company Agreement"); and
WHEREAS, the Company believes that Indemnitee's undertaking of such
responsibilities is important to the Company and that the protection afforded
by this Agreement will enhance Indemnitee's ability to discharge such
responsibilities under existing circumstances;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's agreement to provide services to the Company, as contemplated by
the Company Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. CERTAIN DEFINITIONS:
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation or other entity owned
directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of shares of
the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing 20% or more of the total voting power
represented by the Company's then outstanding Voting Securities
(other than any such person or any affiliate thereof that is such a
20% beneficial owner as of the date hereof), or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at
least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the
shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or
substantially all the Company's assets, or (v) any event occurs
with respect to Enron Corp. that would have constituted a Change in
Control if it had occurred with respect to the Company.
(b) CLAIM: any threatened, pending or completed action,
suit or proceeding, whether instituted by the Company or any other
person, or any inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action,
suit or proceeding, whether civil, criminal, administrative,
investigative or other.
(c) EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to
the fact that Indemnitee is or was serving as a director of the
Company or a member of the Oversight Committee, or to Indemnitee's
taking or failing to take any action or doing or falling to do
anything under the authority and direction set forth in, or
otherwise contemplated by, the Company Agreement.
(e) INDEPENDENT LEGAL COUNSEL: an attorney or firm of
attorneys, selected in accordance with the provisions of Section 3,
who shall not have otherwise performed services for the Company,
Enron Corp. or its affiliates or Indemnitee within the last five
years (other than with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements).
(f) REVIEWING PARTY: any appropriate person or body
consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Board who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(g) VOTING SECURITIES: any securities of the relevant
entity that vote generally in the election of directors.
2. BASIC INDEMNIFICATION ARRANGEMENT.
(a) The Company hereby agrees to provide Indemnitee with
the indemnification set forth in Article 7.08 of the Company
Agreement, a copy of which is attached hereto as EXHIBIT A and made
a part hereof, to the full extent provided in such Article 7.08 and
by current law and regardless of whether such Article 7.08 is
hereafter mended or revoked. In addition, and not in limitation of
the immediately preceding sentence, in the event Indemnitee was, is
or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant
in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law, as soon as practicable but in any
event no later than thirty days after written demand is presented
to the Company, against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or
in respect of such Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested by Indemnitee,
the Company shall advance (within two business days of such
request) any and all Expenses to Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition that
the Reviewing Party shall not have determined (in a written
opinion, in any case in which the Independent Legal Counsel
referred to in Section 3 hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii)
the obligation of the Company to make an Expense Advance pursuant
to Section 2(a) shall be subject to the condition that, if, when
and to the extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings
in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not
be permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights
of appeal shall have been exhausted or have lapsed). If there has
not been a Change in Control, the Reviewing Party shall be selected
by the Board of Directors, and if there has been such a Change in
Control (other than a Change in Control which has been approved by
a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 3
hereof. If there has been no determination by the Reviewing Party
or if the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the Court or challenging any such
determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise
shall be conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or any
provision of the Company Agreement now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
Independent Legal Counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys' fees)
and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or any provisions of the Company Agreement now or hereafter in effect
relating to Claims for Indemnifiable Events or (ii) recovery under any
directors' and officers' liability insurance policy now or hereafter maintained
by the Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or recovery, as the
case may be.
5. PARTIAL INDEMNITY. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. BURDEN OF PROOF. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
7. NO PRESUMPTIONS. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. NONEXCLUSIVITY; SUBSEQUENT CHANGE IN LAW. The rights of
Indemnitee hereunder shall be in addition to any other fights Indemnitee may
have under the Company Agreement or Delaware law, or otherwise. To the extent
that a change in Delaware law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
Company Agreement and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
9. INSURANCE. To the extent that the Company maintains one or
more insurance policies providing directors' and officers' liability insurance,
Indemnitee shall be covered under such policies, in accordance with their
terms, to the maximum extent of the coverage available thereunder to any
officer or director of the Company.
10. AMENDMENTS; WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver.
11. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
12. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company and spouses, heirs, executors and
personal and legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to provide services to the Company
or to provide services to another person or entity at the Company's request.
13. SEVERABILITY. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state, without giving
effect to the principles of conflicts of laws.
15. EFFECTIVE DATE; SUPERSESSION OF EXISTING AGREEMENT. This
Agreement shall have effect from the time Indemnitee became a member of the
Oversight Committee, and effective as of such date the Indemnification
Agreement dated as of November 15, 1994 between the Company and Indemnitee is
hereby superseded and of no force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date set forth above.
ENRON GLOBAL POWER & PIPELINES, L.L.C.
By: /S/ RODNEY L. GRAY
Name: Rodney L. Gray
Title: Chairman, President and
Chief Executive Officer
/S/ GEORGE S. SLOCUM
George S. Slocum
<PAGE>
The following exhibit has been intentionally omitted from the Indemnity
Agreement dated May 15, 1996, between the Company and Indemnitee, a copy of
which is filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and may be obtained by contacting the
Secretary of the Company:
Exhibit A Amended and Restated Limited Liability Company Agreement dated as of
November 15, 1994.
<PAGE>
INDEMNITY AGREEMENT
This AGREEMENT is made and entered into this 15th day of May, 1996,
but effective as set forth below, by and between Enron Global Power &
Pipelines, L.L.C., a Delaware limited liability company (the "Company"), and
Brent Scowcroft (the "Indemnitee").
WHEREAS, at the request of the Company, Indemnitee is serving as a
director of the Company and as a member of the Oversight Committee of the Board
of Directors of the Company (the "Oversight Committee") established pursuant to
Section 7.02(f) of the Amended and Restated Limited Liability Company Agreement
of the Company dated as of November 15, 1994 (the "Company Agreement"); and
WHEREAS, the Company believes that Indemnitee's undertaking of such
responsibilities is important to the Company and that the protection afforded
by this Agreement will enhance Indemnitee's ability to discharge such
responsibilities under existing circumstances;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's agreement to provide services to the Company, as contemplated by
the Company Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. CERTAIN DEFINITIONS:
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation or other entity owned
directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of shares of
the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing 20% or more of the total voting power
represented by the Company's then outstanding Voting Securities
(other than any such person or any affiliate thereof that is such a
20% beneficial owner as of the date hereof), or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at
least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the
shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or
substantially all the Company's assets, or (v) any event occurs
with respect to Enron Corp. that would have constituted a Change in
Control if it had occurred with respect to the Company.
(b) CLAIM: any threatened, pending or completed action,
suit or proceeding, whether instituted by the Company or any other
person, or any inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action,
suit or proceeding, whether civil, criminal, administrative,
investigative or other.
(c) EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to
the fact that Indemnitee is or was serving as a director of the
Company or a member of the Oversight Committee, or to Indemnitee's
taking or failing to take any action or doing or falling to do
anything under the authority and direction set forth in, or
otherwise contemplated by, the Company Agreement.
(e) INDEPENDENT LEGAL COUNSEL: an attorney or firm of
attorneys, selected in accordance with the provisions of Section 3,
who shall not have otherwise performed services for the Company,
Enron Corp. or its affiliates or Indemnitee within the last five
years (other than with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements).
(f) REVIEWING PARTY: any appropriate person or body
consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Board who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(g) VOTING SECURITIES: any securities of the relevant
entity that vote generally in the election of directors.
2. BASIC INDEMNIFICATION ARRANGEMENT.
(a) The Company hereby agrees to provide Indemnitee with
the indemnification set forth in Article 7.08 of the Company
Agreement, a copy of which is attached hereto as EXHIBIT A and made
a part hereof, to the full extent provided in such Article 7.08 and
by current law and regardless of whether such Article 7.08 is
hereafter mended or revoked. In addition, and not in limitation of
the immediately preceding sentence, in the event Indemnitee was, is
or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant
in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law, as soon as practicable but in any
event no later than thirty days after written demand is presented
to the Company, against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or
in respect of such Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested by Indemnitee,
the Company shall advance (within two business days of such
request) any and all Expenses to Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition that
the Reviewing Party shall not have determined (in a written
opinion, in any case in which the Independent Legal Counsel
referred to in Section 3 hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii)
the obligation of the Company to make an Expense Advance pursuant
to Section 2(a) shall be subject to the condition that, if, when
and to the extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings
in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not
be permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights
of appeal shall have been exhausted or have lapsed). If there has
not been a Change in Control, the Reviewing Party shall be selected
by the Board of Directors, and if there has been such a Change in
Control (other than a Change in Control which has been approved by
a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 3
hereof. If there has been no determination by the Reviewing Party
or if the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the Court or challenging any such
determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise
shall be conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or any
provision of the Company Agreement now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
Independent Legal Counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys' fees)
and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or any provisions of the Company Agreement now or hereafter in effect
relating to Claims for Indemnifiable Events or (ii) recovery under any
directors' and officers' liability insurance policy now or hereafter maintained
by the Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or recovery, as the
case may be.
5. PARTIAL INDEMNITY. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. BURDEN OF PROOF. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
7. NO PRESUMPTIONS. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. NONEXCLUSIVITY; SUBSEQUENT CHANGE IN LAW. The rights of
Indemnitee hereunder shall be in addition to any other rights Indemnitee may
have under the Company Agreement or Delaware law, or otherwise. To the extent
that a change in Delaware law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
Company Agreement and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
9. INSURANCE. To the extent that the Company maintains one or
more insurance policies providing directors' and officers' liability insurance,
Indemnitee shall be covered under such policies, in accordance with their
terms, to the maximum extent of the coverage available thereunder to any
officer or director of the Company.
10. AMENDMENTS; WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver.
11. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
12. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company and spouses, heirs, executors and
personal and legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to provide services to the Company
or to provide services to another person or entity at the Company's request.
13. SEVERABILITY. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state, without giving
effect to the principles of conflicts of laws.
15. EFFECTIVE DATE; SUPERSESSION OF EXISTING AGREEMENT. This
Agreement shall have effect from the time Indemnitee became a member of the
Oversight Committee, and effective as of such date the Indemnification
Agreement dated as of November 15, 1994 between the Company and Indemnitee is
hereby superseded and of no force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date set forth above.
ENRON GLOBAL POWER & PIPELINES, L.L.C.
By: /S/ RODNEY L. GRAY
Name: Rodney L. Gray
Title: Chairman, President and
Chief Executive Officer
/S/ BRENT SCOWCROFT
Brent Scowcroft
<PAGE>
The following exhibit has been intentionally omitted from the Indemnity
Agreement dated May 15, 1996, between the Company and Indemnitee, a copy of
which is filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and may be obtained by contacting the
Secretary of the Company:
Exhibit A Amended and Restated Limited Liability Company Agreement dated as of
November 15, 1994.
ENRON GLOBAL POWER & PIPELINES L.L.C.
1994 SHARE OPTION PLAN
SECTION 1. PURPOSE
The purposes of this Enron Global Power & Pipelines L.L.C. 1994 Share Option
Plan (the "Plan") are to encourage selected persons employed by Enron Global
Power & Pipelines L.L.C. (together with any successor thereto, the "Company")
and its Affiliates and other eligible persons to develop a proprietary interest
in the growth and performance of the Company, to generate an increased
incentive to contribute to the Company's future success and prosperity, thus
enhancing the value of the Company for the benefit of its shareholders, and to
enhance the ability of the Company and its Affiliates to attract and retain key
individuals who are essential to the progress, growth and profitability of the
Company.
SECTION 2. ADMINISTRATION
2.1 COMMITTEE. The Plan shall be administered by the Committee. A majority
of the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved
in writing by all members of the Committee, shall be deemed the acts of the
Committee.
2.2 AUTHORITY. Subject to the terms of the Plan and applicable law, the
Committee shall have sole power, authority and discretion to: (i) designate
Participants; (ii) determine the types of Awards to be granted to a Participant
under the Plan; (iii) determine the number of Shares to be covered by or with
respect to which payments, rights, or other matters are to be calculated in
connection with Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, under what circumstances and how Awards
may be settled or exercised in cash, Shares, other securities, other Awards, or
other property, or may be canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with
respect to an Award under the Plan shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret,
construe and administer the Plan and any instrument or agreement relating to an
Award made under the Plan; (viii) establish, amend, suspend, or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; (ix) make a determination as to the
right of any person to receive payment of an Award or other benefit; and (x)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
2.3 DECISIONS FINAL AND BINDING. Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations, and other decisions
with respect to the Plan or any Award shall be within the sole discretion of
the Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any shareholder, and any
employee of the Company or of any Affiliate.
2.4 LIMITATION. The provisions of this Section 2 with respect to decisions
made by, and authority of, the Committee shall be subject to the controlling
provisions of Section 6.
SECTION 3. SHARES AVAILABLE FOR AWARDS
3.1 SHARES AVAILABLE.
(i) CALCULATION OF NUMBER OF SHARES AVAILABLE. The number of Shares
available
for granting Awards under the Plan shall be one million five hundred
thousand (1,500,000) Shares, subject to adjustment as provided in Section
3.2. Further, if after the effective date of the Plan, any Shares
covered by an Award granted under the Plan, or to which an Award relates,
are forfeited, or if an Award otherwise terminates without the delivery
of Shares or of other consideration, then the Shares covered by such
Award (or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of Shares available under the Plan
with respect to such Award, to the extent of any such forfeiture or
termination) shall again be available for granting Awards under the Plan.
(ii) ACCOUNTING FOR AWARDS. For purposes of this Section 3, if an
Award is
denominated in Shares, the number of Shares covered by such Award, or to
which such Award relates, shall be counted on the date of grant of such
Award against the aggregate number of Shares available for granting
Awards under the Plan; provided, however, that Awards that operate in
tandem with (whether granted simultaneously with or at a different time
from) other Awards may be counted or not counted under procedures adopted
by the Committee in order to avoid double counting.
(iii) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any shares
delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
3.2 ADJUSTMENTS.
(i) ADJUSTMENT EVENTS. In the event that the Committee shall determine
that
any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, share split,
reverse share split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company (or other similar
corporate transaction or event) affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee may,
subject to Section 3.2(ii), in such manner as it may deem equitable,
adjust any or all of (a) the number and type of Shares (or other
securities or property) which thereafter may be made the subject of
Awards, (b) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (c) the grant, purchase, or
exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award;
provided, however, that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.
(ii) REQUIRED ADJUSTMENTS. If, and whenever, prior to the
expiration of a
grant theretofore made, the Company shall effect a subdivision or
consolidation of Shares or the payment of a share dividend on Shares
without receipt of consideration by the Company, the number of Shares
with respect to which such grant may thereafter be vested or exercised
(a) in the event of an increase in the number of outstanding Shares shall
be proportionately increased, and if the grant is an Option the purchase
price per Share shall be proportionately reduced, and (b) in the event of
a reduction in the number of outstanding Shares shall be proportionately
reduced, and if the grant is an Option the purchase price per Share shall
be proportionately increased.
SECTION 4. ELIGIBILITY
4.1 PARTICIPANTS. Any Employee, including any officer or employee-director
of the Company or of any Affiliate, who is not a member of the Committee, any
individual who is a Director of the Company duly elected by shareholders of the
Company or who is a member of the board of directors of an Affiliate, who is
not an Employee at the time the grant is made and any individual performing
services for the Company as an independent contractor shall be eligible to be
designated a Participant. However, except as expressly authorized by Section
6, no grant of an Award will be made to a Director of the Company who is not an
Employee. Grants may be made to the same individual on more than one occasion.
4.2 RESTRICTION ON ELIGIBILITY. Except for grants made pursuant to Section
6, no individual who is subject to any written agreement with the Company that
generally restricts the acquisition of Shares shall be eligible for any grant
of an Award while such agreement is in effect.
SECTION 5. AWARDS
5.1 OPTIONS. Except as provided by Section 6, the Committee is hereby
authorized to grant Options to Participants with the following terms and
conditions and with such additional terms and conditions, which are not
inconsistent with the provisions of the Plan, as the Committee shall determine:
(i) EXERCISE PRICE. The per Share purchase price of an Option shall
not be
less than the Fair Market Value of a Share on the date of grant of such
Option and in no event less than the par value of a Share.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time at
which an Option may be exercised in whole or in part, and the method by
which (and the form, including without limitation, cash, Shares, other
Awards, or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price,
in which) payment of the exercise price with respect thereto may be made
or deemed to have been made.
(iii) OPTION AGREEMENT. Each Option shall be evidenced by an Award
Agreement.
(iv) LIMIT ON SIZE OF OPTION GRANTS. No individual shall be granted
Options
totaling more than 150,000 Shares in any single calendar year.
5.2 SHARE APPRECIATION RIGHTS. Except as provided by Section 6, the
Committee is hereby authorized to grant Share Appreciation Rights to
Participants. Each Share Appreciation Right shall be evidenced by an Award
Agreement which shall specify the term of the Share Appreciation Right as well
as vesting and termination provisions. Subject to the terms of the Plan, a
Share Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the Fair
Market Value of one Share on the date of exercise over (ii) the grant price of
the right, which shall not be less than the Fair Market Value of one Share on
the date of grant of the Share Appreciation Right and in no event less than the
par value of one Share. The Committee may impose such conditions or
restrictions on the exercise of any Share Appreciation Right as it may deem
appropriate; provided that the Committee shall retain final authority to
determine whether (a) a Participant shall be permitted, or (b) to approve an
election by a Participant, to receive cash in full or partial settlement of
Share Appreciation Rights. No individual shall be granted Share Appreciation
Rights totaling more than 150,000 Shares in any single calendar year.
5.3 RESTRICTED SHARES.
(i) ISSUANCE. Except as provided in Section 6, the Committee
is hereby
authorized to grant Awards of Restricted Shares to Participants, which
Awards shall be evidenced by Award Agreements.
(ii) RESTRICTIONS. Except as provided in Section 6, Restricted Shares
shall
be subject to such restrictions as the Committee may impose (including,
without limitation, any limitation on the right to vote a Restricted
Share), which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the Committee may
deem appropriate. Notwithstanding the foregoing, the number of
Restricted Shares which may be granted shall be limited to not more than
twenty-five percent (25%) of the total number of Shares available for
grant under the Plan.
(iii) CERTIFICATES AND DIVIDENDS. All dividends and distributions,
or cash
equivalent thereof (whether cash, Share or otherwise), on unvested
Restricted Shares shall be withheld from the respective Participant and
credited by the Company for the Participant's account. At such time as a
Participant becomes vested in a portion of the Award of Restricted
Shares, the restrictions thereon imposed by this Section 5.3(iii) shall
lapse and certificates representing such vested shares shall be delivered
to the Participant along with all accumulated credits for dividends and
distributions, or cash equivalent thereof attributable to such vested
shares. Interest shall not be paid on any dividends or distributions or
cash equivalent thereof, credited by the Company for the account of a
Participant. The Company shall have the option of paying such credits
for accumulated dividends or distributions or cash equivalent thereof, in
Shares of the Company rather than in cash or other medium. (If payment
is made in Shares, the conversion to Shares shall be at the average Fair
Market Value for the five trading days preceding the date of payment.)
Dividends and distributions, or cash equivalent thereof credited on
non-vested Restricted Shares shall be forfeited in the same manner and at
the same time as the respective Restricted Shares to which they are
attributable are forfeited, except that such forfeited credits for
dividends and distributions or cash equivalent thereof shall be canceled
and shall not be available for future distribution under this Plan.
(iv) PAYMENT. A Participant shall not be required to make any
payment for
Awards of Restricted Shares, except to the extent otherwise required by
law.
(v) FORFEITURE. Except as provided in Section 6, unless the Committee
decides
otherwise, non-vested Restricted Shares awarded to a Participant will be
forfeited if the Participant terminates employment or service for any
reason other than death, Disability, Retirement or Involuntary
Termination. At the time and on the date of a Participant's death,
Disability, Retirement or Involuntary Termination during the
Participant's employment or service, prior to the date the Participant
otherwise becomes fully vested in all the Restricted Shares awarded to
the Participant, all restrictions placed on each Restricted Share awarded
to the Participant shall lapse and the non-vested Restricted Share will
become fully vested Released Securities. From and after such date the
Participant or the Participant's estate, personal representative or
beneficiary, as the case may be, shall have full rights of transfer or
resale with respect to such Restricted Shares subject to applicable state
and federal regulations.
(vi) PERFORMANCE-BASED RESTRICTED SHARES. The Committee is hereby
authorized
to grant Awards of Restricted Shares which qualify as performance-based
compensation under Code Section 162(m), such that (i) the issuance is
contingent upon attainment of pre-established performance criteria; (ii)
restrictions lapse contingent upon attainment of pre-established
performance criteria; or (iii) the issuance is in lieu of cash payments
under the Enron Global Power & Pipelines L.L.C. Annual Incentive Plan
based upon attainment of the performance criteria established under the
terms of that shareholder approved plans. The performance criteria to be
used with such Awards shall be net income and/or cash flow, at the
Company and/or subsidiary level, as determined at the sole discretion of
the Committee. Performance criteria will be established by the Committee
prior to the beginning of each performance period, defined as January 1
of each year, or such later date as permitted under the Code, or
applicable regulations. Notwithstanding any other provision of the Plan,
no individual shall be granted Awards of Restricted Shares under this
Section 5.3(vi) totaling more than 25,000 Shares in any single calendar
year.
5.4 GENERAL.
(i) NO CASH CONSIDERATION FOR AWARDS. Except as otherwise provided
in the
Plan, awards shall be granted for no cash consideration or for such
minimal cash consideration as may be required by applicable law.
(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Except as
provided in
Section 6, Awards, in the discretion of the Committee, may be granted
either alone or in addition to, or in tandem with any other Award or any
award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards, or in
addition to or in tandem with awards granted under any other plan of the
Company or any Affiliate, may be granted either at the same time as or at
a different time from the grant of such other Awards or awards.
(iii) LIMITS ON TRANSFER OF AWARDS. No Award (other than Released
Securities)
and no right under any such Award, shall be assignable, alienable,
saleable or transferable by a Participant otherwise than by will or by
the laws of descent and distribution or, in the case of an Award of
Restricted Share by assignment to the Company; provided, however, if so
determined by the Committee, a Participant may, in the manner established
by the Committee, designate a beneficiary or beneficiaries to exercise
the rights of the Participant and to receive any property distributable
with respect to any Award upon the death of the Participant. Each Award
and each right under any Award shall be exercisable during the
Participant's lifetime only by the Participant or, if permissible under
applicable law, by the Participant's guardian or legal representative.
No Award (other than Released Securities) and no right under any such
Award may be pledged, alienated, attached or otherwise encumbered, and
any purported pledge, alienation, attachment or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate.
(iv) TERM OF AWARDS. Except as provided in Section 6, the term of each
Award
shall be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any Option or Share
Appreciation Right exceed a period of ten (10) years from the date of its
grant.
(v) RULE 16B-3. It is intended that the Plan and any Award made to
a Person
subject to Section 16 of the Securities Exchange Act of 1934, as amended,
meet all of the requirements of Rule 16b-3. If any provision of the Plan
or any such Award would disqualify the Plan or such Award under, or would
otherwise not comply with, Rule 16b-3, such provision or Award shall be
construed or deemed amended to conform to Rule 16b-3.
(vi) SHARE CERTIFICATES. All certificates for Shares or other
securities
delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations
and other requirements of the Securities and Exchange Commission, any
share exchange upon which such Shares or other securities are then listed
and any applicable Federal or state securities laws, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
SECTION 6. GRANTS TO NON-EMPLOYEE DIRECTORS
6.1 OPTION GRANTS.
(i) INITIAL OPTIONS. Subject to the limitation of the number of
Shares set
forth in Section 3, each Director of the Company who is not otherwise an
employee of the Company or any Affiliate (a "non-employee Director")
shall automatically receive an Option to purchase 25,000 Shares effective
on the date of the initial public offering of the Company (the "Public
Offering Closing Date") if such individual is serving as a non-employee
Director as of such date or, if later, the date such individual first
becomes a non-employee Director.
(ii) ANNUAL OPTIONS. Subject to the limitation of the number of
Shares set
forth in Section 3, each non-employee Director shall automatically,
effective during the term of the Plan, on each Monday next following the
Director's election at the annual meeting of shareholders of the Company
(commencing with the 1995 annual meeting of shareholders), effective on
such date, receive an Option to purchase 10,000 Shares.
6.2 OPTION PROVISIONS. The following provisions are applicable to Options
granted pursuant to Sections 6.1:
(i) EXERCISABILITY. Options shall not be exercisable for a period
of six
months from the date of grant (except in the event of death, Disability
or Retirement of the optionee), and shall become exercisable for twenty-
five percent (25%) of the Shares covered thereby after a period of six
(6) months from the date of grant, and thereafter, on a cumulative basis,
for an additional twenty-five percent (25%) of the Shares covered thereby
on each of the first, second and third anniversaries of the grant
thereof.
(ii) EXERCISE PRICE. The purchase price of a Share covered by an
Option
granted under 6.1(i) to an individual who is serving as a non-employee
Director on the Public Offering Closing Date shall be equal to the per
Share initial public offering price established in connection with the
initial public offering of the Company, but not less than the par value
of a Share. The purchase price of a Share covered by an Option granted
under 6.1(i) to an individual who first becomes a non-employee Director
after the Public Offering Closing Date of the Company shall be the Fair
Market Value of a Share on the date of grant, but not less than the par
value of a Share. The purchase price of a Share covered under an Option
granted under Section 6.1(ii) shall be the Fair Market Value of a Share
on the date of grant, but not less than the par value of a Share.
(iii) TIME AND METHOD OF EXERCISE. To the extent that the right to
exercise
an Option has accrued and is in effect, the Option may be exercised in
full at one time or in part from time to time by giving written notice,
signed by the optionee exercising the option, to the Company, stating the
number of Shares with respect to which the Option is being exercised,
accompanied by payment in full for such Shares, which payment may be in
whole or in part in Shares of the Company already owned by said optionee,
valued at Fair Market Value; provided, however, that (i) no Option shall
be exercisable after ten (10) years from the date on which it was
granted, and (ii) there shall be no such exercise at any one time for
fewer than one hundred (100) Shares or for all of the remaining Shares
then purchasable by the optionee exercising the Option, if fewer than one
hundred (100) Shares.
(iv) OPTION EXPIRATION. Each Option shall expire ten (10) years from
the date
of grant thereof, but shall be subject to earlier termination as follows.
Options, to the extent exercisable as of the date a non-employee Director
optionee ceases to serve as a Director of the Company, must be exercised
within three months of such date unless such event results from death,
Disability or Retirement, in which case such Options may be exercised by
the optionee, the optionee's legal representative, heir or devisee, as
the case may be, within one (1) year from the date of death, Disability
or Retirement; provided, however, that no such event shall extend the
normal expiration date of such Options.
(v) DELIVERY OF SHARES. Upon exercise of the Option,
delivery of a
certificate for fully paid and nonassessable Shares shall be made at the
corporate office of the Company in Houston, Texas to the optionee
exercising the Option either at such time during ordinary business hours
after fifteen (15) days but not more than thirty (30) days from the date
of receipt of the notice by the Company as shall be designated in such
notice, or at such time, place and manner as may be agreed upon by the
Company and the optionee exercising the Option.
(vi) OPTION CANCELLATION. That portion of Options granted under
Section 6.2
to a non-employee Director which is attributable to a portion of the
Director's Aggregate Fee which would not have been earned due to
termination of service as a Director or a change in the Director's
membership on a committee(s) of the Board of Directors automatically
shall be canceled upon such an event.
6.3 STATUS AS NON-EMPLOYEE DIRECTOR. A non-employee Director shall be
ineligible to receive a grant provided for in Sections 6.1 if as of the date of
such grant the Director (i) is an employee of the Company or any Affiliate or
(ii) has been an employee of the Company or any Affiliate for any part of the
calendar year preceding the calendar year in which such a grant is to be made.
6.4 INSUFFICIENCY OF SHARES. In the event that the number of Shares
available for grants under the Plan is insufficient to make all grants provided
for in this Section 6 hereby made on the applicable date, then all non-employee
Directors who are entitled to a grant on such date shall share ratably in the
number of Shares then available for grant under the Plan, and shall have no
right to receive a grant with respect to the deficiencies in the number of
available Shares.
6.5 CONTROLLING PROVISIONS. Except as expressly provided in this Section 6,
grants made pursuant to this Section 6 shall be subject to the terms and
conditions of the Plan; however, if there is a conflict between the terms and
conditions of the Plan and this Section 6, then the terms and conditions of
this Section 6 shall control. The Committee may not exercise any discretion
with respect to this Section 6 which would be inconsistent with the intent
expressed in Section 6.6.
6.6 RULE 16B-3. It is intended that the Plan meet the requirements of Rule
16b-3 and that any non-employee Director who is eligible to receive a grant or
to whom a grant is made pursuant to this Section 6 will not for such reason
cease to be a "disinterested person" within the meaning of Rule 16b-3 with
respect to the Plan and other share related plans of the Company.
6.7 AWARD AGREEMENTS. All Options under this Section 6 shall be evidenced by
Award Agreements.
SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
7.1 AMENDMENTS TO THE PLAN. The Board of Directors in its discretion may
terminate the Plan at any time with respect to any Shares for which a grant has
not theretofore been made. The Board of Directors shall have the right to
alter or amend the Plan or any part thereof from time to time, including
amending the Plan for the purpose of making additional shares available under
the Plan for granting Awards in lieu of other compensation or benefits, such as
cash bonus payments or Company contributions to the Enron Corp. Savings Plan,
to persons who are not subject to Section 16 of the Securities Exchange Act of
1934; provided, that the provisions of Section 6 shall not be amended more than
once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act, or the rules and regulations
thereunder; provided further, that no change in any grant theretofore made may
be made which would impair the rights of the recipient of a grant without the
consent of such recipient; and provided further, that notwithstanding any other
provision of the Plan or any Award Agreement, without the approval of the
shareholders of the Company no such amendment or alteration shall be made that
would:
(i) increase the total number of Shares available for Awards under
the Plan to
persons who are subject to Section 16 of the Securities Exchange Act of
1934, except as provided in Section 3 hereof;
(ii) change the minimum Option price;
(iii) change the class of Participants eligible to receive Awards;
(iv) extend the maximum period during which Awards may be granted
under the
Plan;
(v) increase the maximum number of Options that may be granted
under Section
5.1, Share Appreciation Rights that may be granted under Section 5.2 or
performance-based Restricted Shares that may be granted under Section
5.3(vi) to any individual in any calendar year; or
(vi) otherwise modify the material terms of the Plan.
7.2 ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS.
(i) Subject to the provisions of Section 7.2(ii), (iii) or (iv) below,
if a
transaction occurs which is not approved or recommended by a majority of
the Board of Directors of the Company in actions taken prior to, and with
respect to, such transaction in which either (i) the Company merges or
consolidates with any other corporation (other than one of the Company's
wholly owned subsidiaries) and is not the surviving corporation (or
survives only as the subsidiary of another corporation), (ii) the Company
sells all or substantially all of its assets to any other person or
entity, (iii) the Company is dissolved, or if (iv) any third person or
entity (other than the trustee or committee of any qualified employee
benefit plan of the Company and other than Enron Corp. and its
Affiliates), together with its Affiliates and Associates shall be,
directly or indirectly, the Beneficial Owner of at least thirty percent
(30%) of the Voting Shares of the Company, (v) the individuals who
constitute the members of Company's Board of Directors on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a Director subsequent
to the date hereof whose election or nomination for election by the
Company's shareholders was approved by a vote of at least eighty percent
(80%) of the Directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for Director, without objection
to such nomination) shall be, for purposes of this clause (v), considered
as though such person were a member of the Incumbent Board, or (vi) an
event described in clauses (i), (ii), (iii), (iv) or (v) of Section 7.2A
of the Enron Corp. 1991 Stock Plan (as in effect on the effective date of
the Plan, the "Enron Corp. 1991 Stock Plan") occurs, then within (a) ten
days of the approval by the shareholders of the Company of such merger,
consolidation, sale of assets or dissolution as described in clause (i),
(ii) or (iii) of this Section 7.2(i) (or ten days of the approval by the
shareholders of Enron Corp. of a merger, consolidation, sale of assets or
dissolution as described in clause (i), (ii) or (iii) of Section 7.2A of
the Enron Corp. 1991 Stock Plan, as the case may be, or (b) thirty (30)
days of the occurrence of such change of Beneficial Ownership or
Directors as described in clause (iv) or (v) of this Section 7.2(i) (or
30 days of the occurrence of a change in Beneficial Ownership or
directors described in clause (iv) or (v) of Section 7.2A of the Enron
Corp. 1991 Stock Plan, as the case may be), then with respect to
outstanding grants of Restricted Shares made under Section 5.3, each
recipient thereof shall have a fully vested right in all Restricted
Shares granted to the recipient and then outstanding, and with respect to
outstanding grants of Options and Share Appreciation Rights made under
Section 5.1 or Section 5.2, respectively, all such outstanding Options
and Share Appreciation Rights, irrespective of whether they are then
exercisable, shall be surrendered (at such time as may be necessary to
comply with Rule 16b-3) to the Company by each grantee thereof and such
Options and Share Appreciation Rights shall thereupon be canceled by the
Company, and the grantee shall receive a cash payment by the Company in
an amount equal to the number of Shares subject to the Options and/or
Share Appreciation Rights held by such grantee multiplied by the
difference between (x) and (y) where (y) equals, in the case of Options,
the purchase price per Share covered by the Option or, in the case of
Share Appreciation Rights, the grant price of the Share Appreciation
Right, and (x) equals (1) the per share price offered to shareholders of
the Company in any such merger, consolidation, sale of assets or
dissolution transaction, (2) the per share price offered to shareholders
of the Company in any tender offer or exchange offer whereby any such
change of Beneficial Ownership or Directors takes place, or (3) the Fair
Market Value of a Share on the date determined by the Committee (as
constituted prior to any change described in clause (iv) or (v) of this
Section 7.2(i) or clause (iv) or (v) of Section 7.2A of the Enron Corp.
1991 Stock Plan) to be the date of cancellation and surrender of such
Options and/or Share Appreciation Rights if any such change of Beneficial
Ownership or Directors occurs other than pursuant to a tender or exchange
offer, whichever is appropriate. In the event that the consideration
offered to shareholders of the Company in any transaction described in
this Section 7.2(i) consists of anything other than cash, the Committee
(as constituted prior to such transaction) shall determine the fair cash
equivalent of the portion of the consideration offered which is other
than cash.
(ii) Except as otherwise expressly provided herein, the issuance
by the
Company of shares of stock of any class or securities convertible into
stock or shares of any class, for cash, property, labor or services, upon
direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether
or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of Shares subject to
Restricted Shares, Share Appreciation Rights or Options theretofore
granted or the purchase price or grant price per share, if applicable.
(iii) Any adjustment provided for in Section 3.2 or Section 7.2
shall be
subject to any required shareholder action.
(iv) The rights granted to Participants who are subject to the
reporting
requirements of Section 16 of the 1934 Act pursuant to the provisions of
Section 7.2(i) above to have Restricted Shares fully vest or to receive
cash payments upon the occurrence of the events specified in clauses (i)
through (vi) of the first sentence of Section 7.2(i) (a "Triggering
Event") are subject to the following further limitations:
(a) the occurrence of the applicable Triggering Event
must occur
at least six months after the Restricted Shares, Options or Share
Appreciation Rights, as the case may be, shall have been granted, and the
grant thereof shall not have been in response to such Triggering Event;
(b) (A) in the case of a clause (i), (ii) or
(iii) Triggering
Event, the transaction shall have been approved by the Company's
shareholders eligible to vote on the transaction, other than Participants
who are subject to the reporting requirements of Section 16 of the 1934
Act or (B) in the case of a clause (vi) Triggering Event described in
clause (i), (ii) or (iii) of Section 7.2A of the Enron Corp. 1991 Stock
Plan, the transaction shall have been approved by Enron Corp.'s
shareholders eligible to vote on the transaction, other than Participants
who are subject to the reporting requirements of Section 16 of the 1934
Act; or
(c) (A) in the case of a clause (iv) Triggering Event
which
results from a tender offer, at least a majority of the Voting Shares
tendered in the tender offer and not withdrawn shall have been tendered
by shareholders other than Participants who are subject to the reporting
requirements of Section 16 of the 1934 Act, and the thirty percent
beneficial ownership level shall have been achieved without counting any
Voting Shares acquired from such Participants or (B) in the case of a
clause (vi) Triggering Event described in clause (iv) of Section 7.2A of
the Enron Corp. 1991 Stock Plan, which results from a tender offer, at
least a majority of the "Voting Shares" (for purposes of this clause (B),
as such term is defined in the Enron Corp. 1991 Stock Plan) tendered in
the tender offer and not withdrawn shall have been tendered by
shareholders of Enron Corp. other than Participants who are subject to
the reporting requirements of Section 16 of the 1934 Act, and the thirty
percent beneficial ownership level shall have been achieved without
counting any Voting Shares acquired from such Participants.
7.3 CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable in
the establishment or administration of the Plan.
SECTION 8. GENERAL PROVISIONS
8.1 NO RIGHTS TO AWARDS. No Employee, Participant or other Person shall have
any claim to be granted any Award under the Plan, and there is no obligation
for uniformity of treatment of Employees, Participants, or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards
need not be the same with respect to each Participant.
8.2 WITHHOLDING. The Company or any Affiliate is authorized (i) to withhold
from any Award granted or any payment due or any transfer made under any Award
or under the Plan the amount (in cash, Shares, other securities, other Awards,
or other property) of withholding taxes due in respect of an Award, its
exercise, or any payment or transfer under such Award or under the Plan, and
(ii) to take such other action as may be necessary in the opinion of the
Company or Affiliate to satisfy all obligations for the payment of such taxes.
8.3 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements and such arrangements may
be either generally applicable or applicable only in specific cases.
8.4 NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan unless otherwise expressly provided in the Plan or in any Award Agreement.
8.5 GOVERNING LAW. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with applicable Federal law, and to the extent not preempted thereby, with the
laws of the State of Texas.
8.6 SEVERABILITY. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to
any person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws. If it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
8.7 NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
8.8 NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares, or whether such fractional Shares or any rights
thereto shall be canceled, terminated or otherwise eliminated.
8.9 HEADINGS. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
8.10 NO LIMITATION. The existence of the Plan and the grants of Awards made
hereunder shall not affect in any way the right or power of the Board of
Directors or the shareholders of the Company (or shareholders of any Affiliate,
as applicable) to make or authorize any adjustment, recapitalization,
reorganization or other change in the capital structure or business of the
Company or any Affiliate, any merger or consolidation of the Company or any
Affiliate, any issue of debt or equity securities ahead of or affecting Shares
or the rights thereof or pertaining thereto, the dissolution or liquidation of
the Company or any Affiliate or any sale or transfer of all or any part of
Company or any Affiliate's assets or business, or any other corporate act or
proceeding.
8.11 NO RIGHT TO RETENTION. Neither the Plan, nor any Award granted pursuant
to the Plan, is a contract or agreement that the Company will retain a Director
for any period of time, or at any particular rate of compensation, nor does it
affect a right of a Director of the Company to resign or be removed, as the
case may be, from the Company's Board of Directors.
8.12 SECURITIES LAWS. Each Award granted under the Plan shall be subject to
the requirement that if at any time the Board of Directors shall determine, in
its discretion, that the listing, registration or qualification of the shares
subject to such grant upon any securities exchange or under any state or
federal law, or that the consent or approval of any government regulatory body,
is necessary or desirable as a condition of, or in connection with, such grant
or the issue or purchase of shares thereunder, such grant shall be subject to
the condition that such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
8.13 DELEGATION. Subject to the terms of the Plan, the Committee may (i) from
time to time determine and authorize the grant of a specific number of Shares
of Restricted Shares (which shall be subject to such restrictions as the
Committee may impose) to Participants who are not officers or directors of the
Company or any of its Affiliates, and (ii) delegate to other Persons the
authority and responsibility of designating the recipients of such Shares of
Restricted Shares (which recipients may not be officers or directors of the
Company or any of its Affiliates or any Person to whom the Committee has so
delegated such authority and responsibility). This Section 8.13 of the Plan
shall not become effective except as provided in Section 6.6.
SECTION 9. EFFECTIVE DATE OF THE PLAN
Except as set forth in Section 6 and Section 8.13, the Plan shall be effective
as of the Public Offering Closing Date.
SECTION 10. TERM OF THE PLAN
No Award shall be granted under the Plan after the earlier of (i) ten (10)
years from the date of approval of the Plan by the shareholders of the Company
pursuant to Section 9 or (ii) termination of the Plan pursuant to Section 7.1.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award theretofore granted may extend beyond such date, and
any authority of the Committee to amend, alter, suspend, discontinue or
terminate any such Award, or to waive any conditions or rights under any such
Award, and the authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date.
SECTION 11. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that directly or through one or
more intermediaries is controlled by the Company, (ii) any entity in
which the Company has a significant equity interest as determined by the
Committee, (iii) with respect to matters relating to Rule 16b-3, as the
term "affiliate" is used in Rule 16b-3 and (iv) as used in Section 7.2
and in the term "Associate," as the term "affiliate" is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended, or any
successor rule or regulation.
(b) "Associate" is used to indicate a relationship with a specified person
and shall mean (i) any corporation, partnership or other organization to
which such specified person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of ten percent (10%) or more of any
class of equity securities, (ii) any trust or other estate in which such
specified person has a substantial beneficial interest or as to which
such specified person serves as trustee or in a similar fiduciary
capacity, (iii) any relative or spouse of such specified person, or any
relative of such spouse, who has the same home as such specified person
or who is a Director or officer of the Company or any of its parents or
Affiliates, and (iv) any person who is a director or officer of such
specified person or any of its parents or Affiliates (other than the
Company or any wholly owned subsidiary of the Company).
(c) "Award" shall mean any Option, Share Appreciation Right or Restricted
Shares granted under the Plan.
(d) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(e) "Beneficial Owner" shall be defined by reference to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, or any successor rule or
regulation; provided, however, and without limitation, any individual,
corporation, partnership, group, association or other person or entity
which has the right to acquire any Voting Shares at any time in the
future, whether such right is contingent or absolute, pursuant to any
agreement, arrangement or understanding or upon exercise of conversion
rights, warrants or options, or otherwise, shall be the Beneficial Owner
of such Voting Shares.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
(g) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan and composed of
not less than two directors, each of whom is a "disinterested person"
within the meaning of Rule 16b-3.
(h) "Disability" shall mean, with respect to an Employee of the Company or
one of its Affiliates, such total and permanent disability as qualifies
the Employee for benefits under the long-term or extended disability plan
of the Company or Affiliate covering the Employee at the time. With
respect to a non-employee Director or an individual employed as an
independent contractor by the Company, Disability shall mean inability to
perform duties and services as a Director of the Company by reason of a
medically determinable physical or mental impairment supported by medical
evidence which in the opinion of the Committee can be expected to result
in death or which can be expected to last for a continuous period of not
less than twelve (12) months.
(i) "Employee" shall mean any person employed by the Company or any
Affiliate.
(j) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any Shares or other securities), the value of such
property determined by such methods or procedures as shall be established
from time to time by the Committee; provided, that so long as the closing
price of Shares as reported in the "NYSE-Composite Transactions" section
of the Midwest edition of THE WALL STREET JOURNAL is reported, Fair
Market Value with respect to Shares on a particular date shall mean such
closing price of Shares as so reported for such date (or, if no prices
are quoted for that date, as so quoted for the last preceding date for
which such prices were so quoted).
(k) "Involuntary Termination" shall mean termination of a Participant's
employment with the Company or an Affiliate at the election of the
Company or Affiliate, provided such termination is not Termination for
Cause. Involuntary Termination shall not include a transfer of
assignment or location of a Participant where the Participant is employed
by the Company or an Affiliate both before and after the transfer.
(l) "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
(m) "Option" shall mean an option granted under Section 5.1 or Section 6 of
the Plan.
(n) "Participant" shall mean an Employee or other individual described in
Sections 4.1 and 4.2 designated to be granted an Award under the Plan.
(o) "Person" shall mean any individual, corporation, partnership,
association, joint-share company, trust, unincorporated organization or
government or political subdivision thereof.
(p) "Released Securities" shall mean securities that were Restricted Shares
with respect to which all applicable restrictions have expired, lapsed or
been waived.
(q) "Restricted Shares" shall mean any Shares granted under Section 5.2 of
the Plan.
(r) "Retirement" shall mean (i) with respect to an employee of the Company or
one of its Affiliates, the commencement on or after an employee's Normal
Retirement Date of retirement benefits to such employee under the Enron
Global Power & Pipelines L.L.C. Retirement Plan, and (ii) with respect to
a Director of the Company, termination of service as a Director or
Honorary Director, after at least five (5) years of continuous service,
or upon or after the date the Director attains age 70.
(s) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended
from time to time.
(t) "Shares" shall mean the common shares of the Company representing limited
liability interests in the Company and such other securities or property
as may become the subject of Awards pursuant to an adjustment made under
Section 3.2 of the Plan.
(u) "Share Appreciation Right" shall mean any right granted under Section 5.2
of the Plan.
(v) "Termination for Cause" shall mean termination at the election of the
Company or an Affiliate because of the Participant's (i) conviction of a
felony (which, through lapse of time or otherwise, is not subject to
appeal); or (ii) willful refusal without proper legal cause to perform
the Participant's duties and responsibilities; or (iii) willfully
engaging in conduct which the Participant has, or in the opinion of the
Committee should have, reason to know is materially injurious to the
Company or an Affiliate. Such termination shall be effected by notice
thereof delivered by the Company or an Affiliate to the Participant and
shall be effective as of the date stated in such notice; provided,
however, that if (a) such termination is because of the Participant's
willful refusal without proper cause to perform any one or more duties
and responsibilities and (b) within seven (7) days following the date of
such notice the Participant shall cease such refusal and shall use all
reasonable efforts to perform such obligations, the termination, if made,
shall not be for cause.
(w) "Voting Shares" shall mean all outstanding equity securities of the
Company entitled to vote generally in elections for directors, considered
as one class; provided, however, that if the Company has a class of
Voting Shares entitled to more or less than one vote for any such share,
each reference to a proportion of Voting Shares shall be deemed to refer
to such proportion of the votes entitled to be cast by such shares.
(x) Any terms or provisions used herein which are defined in Sections 83,
421, or 424 of the Code or the regulations thereunder shall have the
meanings as therein defined.
1
973KWC.DOC
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STOCK PURCHASE AGREEMENT
BY AND AMONG
ARGENTINA PRIVATE DEVELOPMENT
TRUST COMPANY LIMITED
AS SELLER
and
ENRON PIPELINE COMPANY - ARGENTINA S.A.,
and
MAIPU INVERSORA S.A.
AS PURCHASERS
JULY 30, 1996
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS
1
1.1 Defined Terms 1
1.2 Other Definitions 2
1.3 Construction 2
ARTICLE 2.
PURCHASE AND SALE
3
2.1 Purchase and Sale 3
2.2 Termination of Fee Letter and Rights to Technical
Assistance Fee 3
2.3 Designated Subsidiary 4
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
4
3.1 Representations and Warranties of the Seller. 4
(a) Organization 4
(b) Qualification 4
(c) Authorizations; Approvals 4
(d) Absence of Conflicts 5
(e) Litigation 5
(f) CIESA Shares 5
(g) Technical Assistance Fee; Owners Agreement and
Shareholders
Agreement 5
3.2 Representations and Warranties of Each Purchaser 5
(a) Organization 5
(b) Qualification 6
(c) Authorizations; Approvals 6
(d) Absence of Conflicts 6
(e) Litigation 6
ARTICLE 4.
OTHER AGREEMENTS OF THE PARTIES
7
4.1 Consents and Waivers 7
4.2 Enargas Approval and CITGAS Consent; Other Consents
and
Approvals 7
4.3 Reasonable Efforts 8
ARTICLE 5.
CONDITIONS TO CLOSING; CLOSING
8
5.1 Conditions to the Obligations of the Seller 8
5.2 Conditions to the Obligations of the Purchasers 8
5.3 Closing 9
5.4 Rights Under Owners Agreement and Shareholders
Agreement 10
ARTICLE 6.
TERMINATION
10
6.1 Termination 10
6.2 Effect of Termination 11
ARTICLE 7.
MISCELLANEOUS
11
7.1 Several Liability; Rights to Enforce 11
7.2 Brokers 11
7.3 Notices 11
7.4 Survival of Representations and Warranties 12
7.5 Expenses 12
7.6 Public Statements 12
7.7 Assignment 12
7.8 Waiver and Amendment 13
7.9 Confidentiality 13
7.10 Further Assurances 13
7.11 Severability 13
7.12 Headings 13
7.13 Entire Agreement; Third Party Beneficiaries 13
7.14 Governing Law; Arbitration 13
7.15 Counterparts 14
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is
entered into as of July 30, 1996, by and among (i) ARGENTINA
PRIVATE DEVELOPMENT TRUST COMPANY LIMITED, a Cayman Islands
company (the "Seller"), and (ii) ENRON PIPELINE COMPANY -
ARGENTINA S.A., an Argentine sociedad anonima ("EPCA"), and
MAIPU INVERSORA S.A. ("MISA," and together with EPCA the
"Purchasers").
The Seller desires to sell to each Purchaser, and each
Purchaser, severally and on a pro-rata basis as set forth
below, desires to purchase or (in the case of EPCA) to cause
a subsidiary of such Purchaser to purchase from the Seller,
the CIESA Shares (as defined below), and EPCA and the Seller
desire to terminate the Fee Letter (as defined below).
NOW, THEREFORE, in consideration of the premises and of
the mutual representations, warranties and covenants herein
contained, the Seller and the Purchasers hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this
Agreement shall have the meanings ascribed to them in this
Section 1.1.
"Agreement" shall have the meaning given such term in
the introductory paragraph hereof.
"CIESA" shall have the meaning given such term in
Section 2.1.
"CIESA Shares" shall have the meaning given such term in
Section 2.1.
"CITGAS" shall mean Compania de Inversiones de
Transporte de Gas S.A., an Argentine sociedad anonima.
"CITGAS Consent" shall mean the consent of CITGAS to the
transfer of the CIESA Shares to MISA and EPCA or its
Designated Subsidiary as contemplated in this Agreement and
the waiver by CITGAS of its rights of purchase and tag-along
rights under the Shareholders Agreement with respect to such
transfer.
"Closing" shall have the meaning given such term in
Section 5.3.
"Closing Date" shall mean the date on which the Closing
occurs.
"Designated Subsidiary" shall have the meaning given
such term in Section 2.3.
"Enargas" shall have the meaning given such term in
Section 5.1(e).
"Enargas Approval" shall have the meaning given such
term in Section 4.2(a).
"Encumbrance" shall mean any encumbrance, charge, lien,
pledge, condemnation award, claim, restriction, security
interest, mortgage or other encumbrance.
"EPCA" shall have the meaning given such term in the
introductory paragraph hereof.
"Fee Letter" shall have the meaning given such term in
Section 2.2.
"Governmental Authority" shall mean any governmental
authority or judicial, regulatory, or administrative body of
any country or political subdivision thereof exercising
jurisdiction over the Seller or either Purchaser.
"Law" shall mean any constitution, statute, code,
regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental
Authority having jurisdiction.
"Material Adverse Effect" shall mean with respect to the
Seller or a Purchaser, a material and adverse effect on the
financial condition, business, or assets, taken as a whole,
of the Seller or such Purchaser, as applicable.
"MISA" shall have the meaning given such term in the
introductory paragraph hereof.
"Owners Agreement" shall mean the Owners Agreement dated
as of November 13, 1992, among the Seller, CITGAS, EPCA, and
MISA, as amended to the date hereof.
"Parties" shall mean the Seller and the Purchasers.
"Perez Companc" shall mean Perez Companc S.A., an
Argentine sociedad anonima.
"Purchase Price" shall have the meaning given such term
in Section 2.1.
"Purchasers" shall have the meaning given such term in
the introductory paragraph of this Agreement.
"Seller" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"Shareholders Agreement" shall mean the Shareholders
Agreement dated as of November 13, 1992, among the Seller,
CITGAS, EPCA, and MISA, as amended to the date hereof.
"Subject Percentage" shall mean (a) with respect to
EPCA, 50%, and (b) with respect to MISA, 50%.
"Technical Assistance Fee" shall have the meaning given
such term in Section 2.2.
"Termination Date" shall mean February 1, 1997.
1.2 Other Definitions. Other terms defined in this
Agreement have the meanings so given them.
1.3 Construction. Whenever the context requires, the
gender of all words used in this Agreement includes the
masculine, feminine, and neuter. Terms defined in the
singular have the corresponding meaning in the plural, and
vice versa. All references to Articles and Sections refer to
articles and sections of this Agreement, and all references
to Exhibits are to Exhibits attached to this Agreement, each
of which is made a part of this Agreement for all purposes.
The word "including" means "including, but not limited to."
All references to "dollars" and the symbol "$" refer to
United States dollars.
ARTICLE 2.
PURCHASE AND SALE
2.1 Purchase and Sale.
(a) Subject to and in accordance with the terms and
conditions of this Agreement, the Seller agrees to sell to
MISA and EPCA or its Designated Subsidiary, and each
Purchaser severally (but not jointly) agrees to purchase from
the Seller or (in the case of EPCA) to cause EPCA's
Designated Subsidiary to purchase from the Seller, at the
Closing, such Purchaser's Subject Percentage of 47,700,667
shares of the Class A Common Stock of Compania de Inversiones
de Energia S.A., an Argentine sociedad anonima ("CIESA"), and
such Purchaser's Subject Percentage of 45,830,053 shares of
the Class B Common Stock of CIESA (together, such shares of
the Class A Common Stock of CIESA and Class B Common Stock of
CIESA, the "CIESA Shares"), for the total purchase price of
$235,000,000 (as adjusted in accordance with Section 2.1(b),
the "Purchase Price").
(b) The Purchase Price shall be adjusted only in the
circumstances specified in this Section 2.1(b). The Purchase
Price reflected in Section 2.1(a) shall be adjusted as of the
Closing by (i) adding to the Purchase Price $61,650 for each
day from (but not including) July 31, 1996, through (and
including) the Closing Date and (ii) deducting from the
Purchase Price the sum of (A) the amount of all CIESA
dividends received by the Seller from the date of this
Agreement plus (B) the product of the amount of such
dividends multiplied by 0.000274 for each day from (but not
including) the date of the receipt of such dividends by the
Seller through (and including) the Closing Date; provided,
however, that the adjustment specified in (i) above shall be
made if and only if the Closing shall fail to occur on or
before July 31, 1996, because of the lack of timely approval
by Enargas to the transfer of the CIESA Shares and such delay
were solely due to such lack of the Enargas Approval; and
provided further that the adjustment specified in (ii) above
shall be made if and only if the Closing occurs after July
31, 1996, because of the lack of timely approval by Enargas
to the transfer of the CIESA Shares and such delay were
solely due to such lack of the Enargas Approval.
Notwithstanding anything to the contrary contained in this
Agreement, if the Closing fails to occur on or before July
31, 1996, because the CITGAS Consent has not been obtained or
as a result of any other delay attributable to the Seller,
including the failure to satisfy any of the conditions to the
Closing set forth in Section 5.2(a), (b), or (c), the
adjustment referred to in (i) above shall not be made, the
adjustment referred to in (ii) above shall be made, and the
Purchase Price shall additionally be reduced by the sum of
(A) the amount of all Technical Assistance Fee payments
received by the Seller for fees accrued as from July 31,
1996, through the Closing Date plus (B) the product of the
amount of such payments multiplied by 0.000274 for each day
from (but not including) the date of the receipt of such
payments by the Seller through (and including) the Closing
Date.
2.2 Termination of Fee Letter and Rights to Technical
Assistance Fee. Subject to and in accordance with the terms
and conditions of this Agreement, at and as of the Closing,
EPCA and the Seller agree to terminate the letter agreement
dated as of December 28, 1992, between the Seller and EPCA
(the "Fee Letter") and all of the Seller's right to receive
payments under the Fee Letter (the "Technical Assistance
Fee") except for the fees accrued unto July 31, 1996, and
thereafter in accordance with Section 2.1(b).
2.3 Designated Subsidiary. EPCA shall have the right
at or prior to the Closing by notice to the Seller and MISA
to designate a subsidiary all of the capital stock of which
is owned by EPCA (the "Designated Subsidiary") to acquire the
CIESA Shares EPCA has the right to acquire pursuant to this
Agreement, in which case the Seller shall transfer EPCA's
Subject Percentage of the CIESA Shares to such the Designated
Subsidiary in accordance with and subject to all of the terms
and conditions of this Agreement. The designation of a
Designated Subsidiary by EPCA pursuant to the terms hereof
shall not relieve EPCA of its obligations hereunder. Perez
Companc guarantees MISA's obligations hereunder.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller. The
Seller hereby represents and warrants to each Purchaser as
follows:
(a) Organization. The Seller is a company duly
incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Seller
has all requisite power and authority to own and operate its
properties and carry on its business as currently conducted.
(b) Qualification. The Seller is duly qualified to do
business and is in good standing in each jurisdiction in
which the nature of its business as now conducted or its
assets makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have
a Material Adverse Effect with respect to the Seller or a
material and adverse effect on the CIESA Shares.
(c) Authorizations; Approvals. The execution and
delivery by the Seller of this Agreement and the performance
of its obligations hereunder have been duly and validly
authorized by all requisite corporate action. This Agreement
has been duly executed and delivered by the Seller, and this
Agreement constitutes the legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance
with its terms, except insofar as the enforceability hereof
may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of
whether such principles are considered in a proceeding at law
or in equity. Except for the Enargas Approval, the Seller
need not give any notice to, make any filing or register
with, or obtain any consent, approval, authorization, waiver,
permit, certificate or order of any Governmental Authority to
consummate the transactions contemplated by this Agreement.
(d) Absence of Conflicts. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby (assuming receipt of the
Enargas Approval and the CITGAS Consent) will (i) conflict
with, result in a breach under, or give rise to any consent
or preferential purchase right under (A) any Law applicable
to the Seller, (B) the constituent documents of the Seller,
or (C) any material contract, agreement, lease, license or
other arrangement to which the Seller is a party or by which
it or any of its properties is bound, (ii) result in the
creation or imposition of any Encumbrance on any of the
property of the Seller, or (iii) with the passage of time or
the giving of notice or the taking of any action of any third
party have any of the effects set forth in clause (i) or (ii)
of this Section 3.1(d).
(e) Litigation. As of the date of this Agreement,
there are no material actions, suits, proceedings or
investigations pending or, to the knowledge of the Seller,
threatened against the Seller before or by any Governmental
Authority that would have a Material Adverse Effect with
respect to the Seller or a material and adverse effect on the
CIESA Shares.
(f) CIESA Shares. The Seller owns beneficially and
holds of record the CIESA Shares free and clear of all
restrictions on transfer, purchase rights, warrants, options,
contracts, commitments, taxes, and other Encumbrances, except
as set forth in the Owners Agreement and the Shareholders
Agreement. Other than the Owners Agreement and the
Shareholders Agreement, the Seller is not a party to any
voting trust, proxy, or other agreement or understanding with
respect to the voting of the CIESA Shares. The CIESA Shares
are fully paid and nonassessable.
(g) Technical Assistance Fee; Owners Agreement and
Shareholders Agreement. The Seller has good and marketable
title to the Technical Assistance Fee, free and clear of all
Encumbrances. The Fee Letter, the Owners Agreement, and the
Shareholders Agreement are valid, binding, and in full force
and effect and are enforceable against the Seller in
accordance with their respective terms, and there has been no
default by the Seller under the Fee Letter, the Owners
Agreement, or the Shareholders Agreement or, to the knowledge
of the Seller, by EPCA under the Fee Letter or by any other
party under the Owners Agreement or the Shareholders
Agreement.
3.2 Representations and Warranties of Each Purchaser.
Each Purchaser (which shall for purposes of this Section 3.2
include Perez Companc) (severally and not jointly) hereby
represents and warrants to the Seller as follows:
(a) Organization. Such Purchaser is a corporation or
company duly incorporated or formed, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation or formation. Such Purchaser has all requisite
power and authority to own and operate its properties and
carry on its businesses as currently conducted.
(b) Qualification. Such Purchaser is duly qualified to
do business and is in good standing in each jurisdiction in
which the nature of its business as now conducted or its
assets makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have
a Material Adverse Effect with respect to such Purchaser.
(c) Authorizations; Approvals. The execution and
delivery by such Purchaser of this Agreement and the
performance of its obligations hereunder have been duly and
validly authorized by all requisite corporate (or equivalent)
action. This Agreement has been duly executed and delivered
by such Purchaser, and this Agreement constitutes the legal,
valid and binding obligation of such Purchaser enforceable
against such Purchaser in accordance with its terms, except
insofar as the enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such principles
are considered in a proceeding at law or in equity. Except
for the Enargas Approval, such Purchaser need not give any
notice to, make any filing or register with, or obtain any
consent, approval, authorization, waiver, permit, certificate
or order of any Governmental Authority to consummate the
transactions contemplated by this Agreement.
(d) Absence of Conflicts. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby (assuming receipt of the
Enargas Approval and the CITGAS Consent) will (i) conflict
with, result in a breach under, or give rise to any consent
or preferential purchase right under (A) any Law applicable
to such Purchaser, (B) the constituent documents of such
Purchaser, or (C) any material contract, agreement, lease,
license or other arrangement to which such Purchaser is a
party or by which it or any of its properties is bound,
(ii) result in the creation or imposition of any Encumbrance
on any of the property of such Purchaser, or (iii) with the
passage of time or the giving of notice or the taking of any
action of any third party have any of the effects set forth
in clause (i) or (ii) of this Section 3.2(d).
(e) Litigation. As of the date of this Agreement,
there are no material actions, suits, proceedings or
investigations pending, or to the knowledge of such
Purchaser, threatened against such Purchaser before or by any
Governmental Authority that would have a Material Adverse
Effect with respect to such Purchaser.
ARTICLE 4.
OTHER AGREEMENTS OF THE PARTIES
4.1 Consents and Waivers.
(a) EPCA hereby consents, in accordance with Section
2.2 of the Owners Agreement, to the transfer by the Seller of
MISA's Subject Percentage of the CIESA Shares to MISA on the
terms and conditions set forth in this Agreement, and hereby
waives all rights of purchase and tag-along rights with
respect to such transfer under the Shareholders Agreement.
EPCA hereby consents, in accordance with Section 2.2 of the
Owners Agreement, to the transfer by the Seller of EPCA's
Subject Percentage of the CIESA Shares to EPCA's Designated
Subsidiary on the terms and conditions set forth in this
Agreement, and hereby waives all rights of purchase and tag-
along rights with respect to such transfer under the
Shareholders Agreement.
(b) Perez Companc hereby consents, in accordance with
Section 2.2 of the Owners Agreement, to the transfer by the
Seller of the CIESA Shares to EPCA or its Designated
Subsidiary on the terms and conditions set forth in this
Agreement, and hereby waives all rights of purchase and tag-
along rights with respect to such transfer under the
Shareholders Agreement. Perez Companc hereby consents, in
accordance with Section 2.2 of the Owners Agreement, to the
transfer by the Seller of the CIESA Shares to MISA on the
terms and conditions set forth in this Agreement, and hereby
waives all rights of purchase and tag-along rights with
respect to such transfer under the Shareholders Agreement.
Perez Companc executes this Agreement for the purpose of
granting the consent referred to in this Section 4.1(b) and
for guaranteeing all MISA's obligations hereunder.
4.2 Enargas Approval and CITGAS Consent; Other Consents
and Approvals.
(a) Commencing immediately following the execution of
this Agreement, the Seller and the Purchasers shall take all
actions reasonably within their power to obtain the approval
of Enargas of the transfer of the CIESA Shares to MISA and
EPCA or its Designated Subsidiary as contemplated in this
Agreement (the "Enargas Approval"). The Purchasers and the
Seller shall cooperate in all reasonable respects in seeking
to obtain the Enargas Approval, including by providing to
Enargas all information reasonably requested by Enargas
concerning the purchase and sale of the CIESA Shares
hereunder and all documentation reasonably requested by
Enargas with respect to the existence and ownership of MISA
and EPCA's Designated Subsidiary.
(b) The Seller shall obtain the consent of CITGAS to
the transfer of the CIESA Shares to MISA and EPCA or its
Designated Subsidiary as contemplated in this Agreement and
the waiver by CITGAS of its rights of purchase and tag-along
rights under the Shareholders Agreement with respect to such
transfer and shall deliver same to the Purchasers. The
Purchasers shall cooperate with the Seller in all reasonable
respects in seeking to obtain such consent and waiver,
including by providing to CITGAS all information reasonably
requested by CITGAS concerning the purchase and sale of the
CIESA Shares hereunder.
(c) Each of the Parties shall use its commercially
reasonable efforts to obtain any authorizations, consents,
orders or approvals of third parties or Governmental
Authorities (other than the Enargas Approval and the CITGAS
Consent, which are covered by Sections 4.2(a) and 4.2(b))
that may be or become necessary or advisable for the
performance of its obligations pursuant to this Agreement and
the consummation of the transactions contemplated hereby and
shall cooperate in all reasonable respects with each other in
promptly seeking to obtain such authorizations, consents,
orders or approvals.
4.3 Reasonable Efforts. The Purchasers and the Seller
shall use commercially reasonable efforts to obtain the
satisfaction of all conditions to Closing in an expeditious
matter.
ARTICLE 5.
CONDITIONS TO CLOSING; CLOSING
5.1 Conditions to the Obligations of the Seller. The
obligation of the Seller to consummate the transactions
contemplated by this Agreement is subject to the fulfillment
or waiver in writing by the Seller at or prior to the Closing
Date of the following conditions:
(a) each Purchaser's and Perez Companc's
representations and warranties are accurate in all material
respects as of the Closing Date;
(b) each Purchaser has complied in all material
respects with its obligations to be performed prior to or at
the Closing with respect to the purchase and sale of the
CIESA Shares and the termination of the Fee Letter;
(c) no order shall have been entered and remain in
effect in any action or proceeding before any Governmental
Authority that would prevent or make illegal the consummation
of the purchase and sale of the CIESA Shares or the
termination of the Fee Letter; and
(d) the Ente Nacional Regulador de Gas ("Enargas") has
approved the transfer by the Seller of the CIESA Shares to
MISA and EPCA or its Designated Subsidiary in accordance with
the respective Subject Percentages of the Purchasers in
accordance with this Agreement.
5.2 Conditions to the Obligations of the Purchasers.
The obligation of each Purchaser to consummate the
transactions contemplated by this Agreement is subject to the
fulfillment or waiver in writing by each Purchaser at or
prior to the Closing Date of the following conditions:
(a) the Seller's representations and warranties are
accurate in all material respects as of the Closing Date;
(b) the Seller has complied in all material respects
with its obligations to be performed prior to or at the
Closing;
(c) each Purchaser shall have received an opinion of
counsel for the Seller to the effect that the Seller holds of
record the CIESA Shares free and clear of all restrictions on
transfer, purchase rights, warrants, options, contracts,
commitments, taxes, and other Encumbrances, except as set
forth in the Owners Agreement and the Shareholders Agreement;
(d) no order shall have been entered and remain in
effect in any action or proceeding before any Governmental
Authority that would prevent or make illegal the consummation
of any of the transactions contemplated by this Agreement;
(e) CITGAS shall have consented in writing to the
transfer of the CIESA Shares to MISA and EPCA or its
Designated Subsidiary in accordance with this Agreement, and
shall have waived in writing its rights of purchase and tag-
along rights under the Shareholders Agreement with respect to
such transfer, and the Seller shall have delivered to the
Purchasers evidence reasonably satisfactory to the Purchasers
of such consent and waiver; and
(f) Enargas has approved the transfer by the Seller of
the CIESA Shares to MISA and EPCA or its Designated
Subsidiary in accordance with the respective Subject
Percentages of the Purchasers in accordance with this
Agreement.
5.3 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take
place at the offices of Perez Companc, commencing at
11:00 a.m., local time, on July 31, 1996, or, if the
conditions to Closing in Sections 5.1 and 5.2 (other than
those relating to obligations of the Parties to be performed
at Closing) have not been satisfied or waived on or prior to
July 31, 1996, the third business day after such conditions
have been satisfied or waived, or at such other time and
place and on such other date as the Parties shall agree in
writing. At the Closing, the Parties shall take the
following actions:
(a) each Purchaser shall pay to the Seller, or shall
cause (in the case of EPCA) its Designated Subsidiary to pay
to the Seller, by wire transfer or other delivery of
immediately available funds to a bank and an account
designated in writing by the Seller to each Purchaser
exclusively in dollars, an amount equal to such Purchaser's
Subject Percentage of the Purchase Price;
(b) EPCA and the Seller shall execute and deliver a
letter agreement in the form of Exhibit A hereto terminating
the Fee Letter;
(c) the Seller shall execute and deliver to each
Purchaser a notification letter addressed to CIESA to notify
CIESA of the transfer of such Purchaser's Subject Percentage
of the CIESA Shares in favor of each Purchaser (or, if
applicable in the case of EPCA, to such Purchasers Designated
Subsidiary) pursuant to the provisions of Section 215 of the
Argentine Business Corporations Law, duly certified by notary
public who should certify the identity and powers of the
person signing the notification letter; and
(d) the Seller shall deliver to the Purchasers executed
documents reasonably satisfactory to the Purchasers whereby
each officer, director, and syndic of CIESA or of
Transportadora de Gas del Sur S.A., an Argentine sociedad
anonima, appointed by the Seller resigns his position
effective as of the Closing.
5.4 Rights Under Owners Agreement and Shareholders
Agreement. The Seller hereby agrees and acknowledges that
from and after the Closing it shall have no further rights as
an Owner under either the Owners Agreement or the
Shareholders Agreement.
ARTICLE 6.
TERMINATION
6.1 Termination. This Agreement and the rights and
obligations of the Parties hereunder may be terminated only
in accordance with the following provisions:
(a) This Agreement may be terminated and the
transactions contemplated hereby abandoned by the mutual
written consent of the Parties at any time prior to the
Closing.
(b) This Agreement may be terminated by mutual
agreement of the Purchasers, in which event the transactions
contemplated hereby shall be abandoned by all Parties, if:
(i) there has been a material breach of any
representation or warranty or obligation of the Seller
set forth in this Agreement and the Seller has failed to
cure such breach within 10 business days following
receipt by the Seller of written notice by such
Purchaser of such breach;
(ii) a final, non-appealable order to restrain or
enjoin the consummation of the purchase and sale of any
of the CIESA Shares or the termination of the Fee Letter
shall have been entered; or
(iii) the Closing has not occurred on or prior
to the Termination Date by reason of any failure of the
conditions precedent specified in Section 5.2 to be
satisfied or waived in writing by each Purchaser.
(c) This Agreement may be terminated by the Seller, in
which event the transactions contemplated hereby shall be
abandoned by all Parties, if:
(i) there has been a material breach of any
representation or warranty or obligation of any
Purchaser set forth in this Agreement and such Purchaser
has failed to cure such breach within 10 business days
following receipt by such Purchaser of written notice by
the Seller of such breach;
(ii) a final, non-appealable order to restrain or
enjoin the consummation of the purchase and sale of the
CIESA Shares or the termination of the Fee Letter shall
have been entered; or
(iii) the Closing of the purchase and sale of
the CIESA Shares and the termination of the Fee Letter
has not occurred on or prior to the Termination Date by
reason of any failure of the conditions precedent
specified in Section 5.1 to be satisfied or waived in
writing by the Seller.
6.2 Effect of Termination. In the event of any
termination of this Agreement, the Parties shall have no
obligation or liability to each other except that (i) the
provisions of Article 7, to the extent applicable, shall
survive any such termination and (ii) no such termination
shall relieve any Party from liability for any breach of this
Agreement prior to such termination or, with respect to those
provisions that survive such termination, prior to or
following termination.
ARTICLE 7.
MISCELLANEOUS
7.1 Several Liability; Rights to Enforce. The
obligations of each Party hereunder shall be several and not
joint, and no Party shall have any liability or obligation to
any other Party for any breach or default of any other Party.
No Purchaser shall have any liability to any other Purchaser
hereunder.
7.2 Brokers. Each Party shall defend, indemnify, and
hold harmless the other Parties for any and all brokerage
fees, commissions, finder's fees, and similar fees arising
from the employment by such Party of any broker, finder, or
similar agent in connection with the transactions
contemplated by this Agreement.
7.3 Notices. All notices, requests, demands, claims
and other communications which are required to be or may be
given under this Agreement shall be in writing and shall be
deemed to have been duly given if (a) delivered in person or
by courier, (b) sent by telecopy or facsimile transmission,
answer back requested, or (c) mailed, by registered or
certified mail, postage prepaid, return receipt requested, to
the parties hereto at the following addresses:
if to the Seller: Argentina Private Development
Trust Company Limited
P.O. Box 1109
Mary Street
Grand Cayman, Cayman Islands
Attn: Santiago del Puerto and Miguel
Riglos
Fax: (541) 334-0238 and (809) 949-7634
if to EPCA: Enron Pipeline Company - Argentina
S.A.
1400 Smith
Houston, Texas 77002
Attn: Stan Horton
Fax: (713) 853-3919
if to MISA: Maipu Inversora S.A.
Edificio Perez Companc
Maipu A. - Piso 21E
(1599) Buenos Aires
Argentina
Attn: Jorge O. Mosquera
Fax: (541) 331-6051
if to Perez Companc: Perez Companc S.A.
Edificio Perez Companc
Maipu A. - Piso 22E
(1599) Buenos Aires
Argentina
Attn: Oscar A. Vicente
Fax: (541) 331-6051
or to such other address as either Party shall have furnished
to the other by notice given in accordance with this
Section 7.3. Such notices shall be effective, (A) if
delivered in person or by courier, upon actual receipt by the
intended recipient, (B) if sent by telecopy or facsimile
transmission, when the answer back is received, or (C) if
mailed, the date of delivery as shown by the return receipt
therefor.
7.4 Survival of Representations and Warranties. All of
the representations and warranties of the Parties contained
in Article 3 shall survive the Closing and continue in full
force and effect thereafter, subject to applicable statutes
of limitation.
7.5 Expenses. Each Party shall bear and pay all its
own costs and expenses in connection with the transactions
contemplated by this Agreement.
7.6 Public Statements. Each Party agrees to consult
with, and obtain the approval of (which approval shall not be
unreasonably withheld), each other Party prior to issuing any
press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall
not issue any such press release or make any such public
statement prior to such consultation and approval, except as
may be required by law.
7.7 Assignment. This Agreement shall inure to the
benefit of and shall be binding upon the Parties and their
respective legal representatives, successors and permitted
assigns. This Agreement shall not be assignable by any Party
without the prior written consent of each other Party.
7.8 Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the Party that is
entitled to the benefits thereof. This Agreement may not be
amended or supplemented at any time, except by an instrument
in writing signed on behalf of each Party hereto. The waiver
by any Party hereto of any condition or of a breach of
another provision of this Agreement shall not operate or be
construed as a waiver of any other condition or subsequent
breach.
7.9 Confidentiality. The Seller hereby acknowledges
and agrees that the Seller remains bound and shall remain
bound after the Closing by the confidentiality provisions of
Section 2.5 of the Shareholders Agreement.
7.10 Further Assurances. In case at any time after the
Closing Date any further action is necessary to carry out the
purposes of this Agreement including the transfer of the
CIESA Shares to MISA and EPCA or its Designated Subsidiary,
the Parties shall take such further action (including the
execution and delivery of such further instruments and
documents) as any other Party reasonably may request.
7.11 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force
and effect and shall in no way be affected, impaired or
invalidated unless such an interpretation would materially
alter the rights and privileges of any party hereto or
materially alter the terms of the transactions contemplated
hereby.
7.12 Headings. The section headings herein are for
convenience only and shall not affect the construction
hereof.
7.13 Entire Agreement; Third Party Beneficiaries. This
Agreement, and any other documents executed and delivered
pursuant to this Agreement, constitute the entire agreements
and supersede all other prior agreements and understandings,
both oral and written, between the Parties with respect to
the subject matter hereof, including without limitation the
letters dated June 20, 1996, July 2, 1996, and July 5, 1996,
and neither this nor any document delivered in connection
with this Agreement confers upon any person not a party
hereto any rights or remedies hereunder.
7.14 Governing Law; Arbitration. This Agreement shall
be governed by the substantive laws of Argentina (excluding
its conflicts-of-laws principles). All disputes relating to
this Agreement shall be resolved by arbitration pursuant to
the Rules of Arbitration of the International Chamber of
Commerce (excluding its conflicts-of-laws principles). Such
arbitration shall involve a panel of three arbitrators, shall
take place in New York, New York, and shall be conducted in
the English language. The arbitration decisions shall be
final and binding upon the applicable Parties and judgment
upon the award may be entered in any court having
jurisdiction over the Parties against which enforcement is
sought.
7.15 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed as of the date first above written.
SELLER:
ARGENTINA PRIVATE DEVELOPMENT TRUST
COMPANY LIMITED
By: /s/ Julio de la Torre /s/
Santiago Del Puerto
Name: Julio de la Torre
Santiago Del Puerto
Title: Attorney-in-Fact
Attorney-in-Fact
PURCHASERS:
ENRON PIPELINE COMPANY - ARGENTINA
S.A.
By: /s/ Michael P. Hockenberry
Name: Michael P. Hockenberry
Title: President
MAIPU INVERSORA S.A.
By: /s/ Jo Mosquera /s/ Walter
F. Schmal
Name: Joe Mosquera Walter F.
Schmal
Title: Director Director
Perez Companc executes this
Agreement as guarantor pursuant to
Section 2.3, for purposes of the
consent in Section 4.1(b), and for
purposes of Section 3.2 and
Section 5.1(a):
PEREZ COMPANC S.A.
By: /s/ Jo Mosquera /s/ Walter
F. Schmal
Name: Jo Mosquera Walter
F. Schmal
Title: Director Director
050nat.doc
Exhibit A
TERMINATION LETTER
[APDT Letterhead]
July ___, 1996
Enron Pipeline Company - Argentina S.A.
1400 Smith
Houston, Texas 77002
Attn: Stan Horton
Dear Mr. Horton:
This letter evidences the termination by mutual agreement as
of the date hereof of the letter agreement dated as of
December 28, 1992, between Argentina Private Development
Trust Company Limited (the "Seller") and Enron Pipeline
Company - Argentina S.A. ("EPCA"), a copy of which is
attached to this letter. The fees payable to the Seller
under such letter agreement but not heretofore paid shall be
prorated on a daily basis through [the Closing Date]/[if the
Closing fails to occur on or before July 31, 1996, as a
result of any delay attributable to the Seller, through July
31, 1996] and paid to the Seller in accordance with such
letter agreement on the date such payment would be required
to be made under such letter agreement. The Seller and EPCA
hereby agree and acknowledge that, upon compliance by EPCA
with the immediately preceding sentence, the Seller shall
have no further right to the receipt of any fees payable
under such letter agreement and that from and after the date
hereof neither the Seller nor EPCA shall have any other
further rights or obligations under such letter agreement;
provided, however, that (a) the proviso in Section 3 of such
letter agreement shall remain in effect as it relates to any
payments made by EPCA to the Seller under such letter
agreement and (b) the provisions of Section 5 of such letter
agreement shall survive such termination with respect to any
claims, demands, causes of action, costs, losses,
liabilities, expenses, or judgments brought against any
Indemnified Party (as defined in such letter agreement) to
the extent such claim, demand, cause of action, cost, loss,
liability, expense, or judgment relates to any period prior
to the date hereof.
ARGENTINA PRIVATE DEVELOPMENT
TRUST
COMPANY LIMITED
By:
_______________________________________
Name:
_____________________________________
Title:
______________________________________
Agreed to and Accepted:
ENRON PIPELINE COMPANY -
ARGENTINA S.A.
By: ____________________________________
Name: __________________________________
Title: ___________________________________
3
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.
1. DEFINED TERMS 2
2. OPTION 5
3. NOTES 6
4. ENRON CIESA ACQUISITION RIGHT 9
5. REPRESENTATIONS AND WARRANTIES; COVENANTS 10
6. CONDITIONS TO BORROWING 11
7. DEFAULTS 12
8. SET-OFF; SHARING 14
9. LIMITATION OF LIABILITY 14
10. RIGHTS CUMULATIVE, NO WAIVER 14
11. NOTICES AND COMMUNICATIONS 15
12. REIMBURSEMENT OF EXPENSES 15
13. EXECUTION, AMENDMENTS, BINDING EFFECT AND ASSIGNMENTS
15
14. ENTIRE CONTRACT 16
15. CLOSING DOCUMENTS 16
16. GOVERNING LAW 16
17. SEVERABILITY 16
18. NO THIRD PARTY BENEFICIARY 16
19. CONFIDENTIALITY 17
EXHIBIT "A" GUARANTEE AGREEMENT 19
EXHIBIT "B" PROMISSORY NOTE 25
EXHIBIT "C" TERMS PURSUANT TO WHICH CIESA INTEREST
MUST BE OFFERED TO EPP PURSUANT TO SECTION 4(B)(ii)28
EXHIBIT "D" NOTICE AND COMMUNICATION 29
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.
"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.
"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.
"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.
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.
(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, 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;
(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.
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.
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 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.
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
051nat.doc
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 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. 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.
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 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
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:
SCHEDULE OF LOANS
Amou O
Principa nt of utstandi
Date of l Amount Principa ng
Loans Interest of Loan l Paid Unpaid
Rate or Principa
Prepaid l
Balance
EXHIBIT exhibit Project (ii)
"C" are used Descript will
as ion may apply.
TERMS defined be
PURSUANT in the omitted 7.
TO WHICH Purchase from the Section
CIESA Right Offer. 2.06 -
INTEREST Agreemen Enron
MUST BE t, and 4. Offer will
OFFERED referenc Period - have the
TO EPP e to as obligati
PURSUANT sections specifie on to
TO are to d in offer
SECTION sections Section the
4(B)(ii) of the 4(B)(ii) interest
Purchase . to EPP
The Right even
offer Agreemen 5. though
pursuant t.. Section it is an
to 2.02(b) Exempt
Section 1. - EPP Interest
4(B)(ii) Section will .
must be 2.01(b) have an
made in - Acceptan
a manner Project ce
similar Scope Period
to an and of 15
Offer Project days
under Descript after
the ion may receipt
Purchase be of the
Right omitted Offer.
Agreemen from Pre-
t of an Offer 6.
interest Notice. Section
in an 2.02(g)
Eligible 2. - The
Project Section provisio
that is 2.01(c) ns
not a - relating
Designat Financia to
ed l Limited
Developm Projecti Recourse
ent ons may Financin
Project, be g will
except omitted not be
as from Pre- applicab
provided Offer le, but
herein. Notice. the
Capitali requirem
zed 3. ents of
terms Section Section
used in 2.02(a) 2.02(g)(
this - i) and
EXHIBIT
"D"
NOTICE
AND
COMMUNIC
ATION
Notice No
to tice to
Enron: EHC:
Enro
Enron n
Corp. Holding
P.O. Box Company
1188 L.L.C.
Houston, 1400
Texas Smith
77251- Street
1188 Houston,
Attn: Texas
Treasure 77002
r Attn:
Facsimil Presiden
e No. t
(713) Facsimil
646-3422 e No.
(713)
646-6367
Noti
Notice ce to
to EPP: EPCA:
Enron Enron
Global Pipeline
Power & Company
Pipeline --
s L.L.C. Argentin
1400 a S.A.
Smith 1400
Street Smith
Houston, Street
Texas Houston,
77002 Texas
Attn: 77002
General Attn:
Counsel General
Facsimil Counsel
e No. Facsimil
(713) e No:
646-2371 646-2371
