UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 18, 1996
(Date of earliest event reported)
ENRON GLOBAL POWER & PIPELINES L.L.C.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13584 76-0456366
(State or other jurisdiction) (Commission File No.) (I.R.S. Employer
of 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
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 17, 1996, Enron Global Power & Pipelines L.L.C. ("EPP") entered
into a Purchase Agreement among Enron Holding Company L.L.C., Enron
International Inc. and EPP to acquire from wholly owned subsidiaries of Enron
Corp. ("Enron") (i) all of the outstanding share capital 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. The acquisition of
this interest, which was pursuant to the Purchase Right Agreement dated as of
November 15, 1994, between Enron and EPP (the "Purchase Right Agreement"),
closed on June 18, 1996. The transaction was approved by the independent
Oversight Committee of the Board of Directors of EPP.
The Project is a 185-megawatt, oil-fired, barge-mounted facility which
provides electricity under a 20-year contract to the government-owned
Corporacion Dominicana de Electricidad, which provides electric distribution
services to the Dominican Republic. EPP anticipates that the Project will
continue to operate as an electricity generating plant and related facilities.
The amount of the consideration was determined in accordance with the
Purchase Right Agreement, which has been filed as Exhibit 10.1 to EPP's Annual
Report on Form 10-K for year ended December 31, 1994. The aggregate purchase
price for the interest in the Project was approximately $50,000,000, which sum
was paid by EPP to the Enron affiliates by EPP issuing 1,928,178 common shares
of EPP to the Enron affiliates, based on the average closing price of EPP
common shares on the New York Stock Exchange for a period of 20 trading days
prior to the completion of the acquisition. The common shares so issued
constitute approximately 7.9% of EPP's common shares issued and outstanding
after giving effect to the transaction. As a result thereof, Enron currently
owns indirectly approximately 59% of the outstanding common shares of EPP.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
It is impracticable for the Registrant to provide the financial
statements required to be provided by this Item at this time, however, the
Registrant shall provide the required statements under cover of an amendment to
this Current Report on Form 8-K/A as soon as practicable, but in any event not
later than September 3, 1996.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION.
It is impracticable for the Registrant to provide the pro forma
financial statements required to be provided by this Item at this time,
however, the Registrant shall provide the required statements under cover of an
amendment to this Current Report on Form 8-K/A as soon as practicable, but in
any event not later than September 3, 1996.
(C) EXHIBITS.
10.1 Purchase Agreement dated as of June 17, 1996, among Enron International
Inc., Enron Holdings Company L.L.C. and EPP.
<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.
Date: July 3, 1996 By: /s/ Paula H. Rieker
Paula H. Rieker
Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. METHOD OF FILING
10.1 Purchase Agreement dated as of June 17, Filed herewith
1996, among Enron International Inc., electronically
Enron Holdings Company L.L.C. and EPP.
PURCHASE AGREEMENT
AMONG
ENRON HOLDING COMPANY L.L.C.
ENRON INTERNATIONAL INC.
AND
ENRON GLOBAL POWER & PIPELINES L.L.C.
JUNE 17, 1996
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and entered into as of
June 17, 1996 by and among Enron Holding Company L.L.C., a Delaware limited
liability company ("EHC"), Enron International Inc., a Delaware corporation
("EI"), and Enron Global Power & Pipelines L.L.C., a Delaware limited liability
company.
WHEREAS, EHC is the record and beneficial owner of 52% of the issued and
outstanding shares of common capital stock of Enron Dominican Republic Ltd., a
Cayman Islands company ("Enron DR"); EI is the record and beneficial owner of
48% of the issued and outstanding shares of common capital stock of Enron DR;
and such shares (the "Enron DR Shares") represent all of the ownership interest
in Enron DR; and
WHEREAS, EHC is the record and beneficial owner of 52% of the issued and
outstanding shares of common capital stock of Enron Dominican Republic
Operations Ltd., a Cayman Islands company ("Enron Operations"); EI is the
record and beneficial owner of 48% of the issued and outstanding shares of
common capital stock of Enron Operations; and such shares (the "Enron
Operations Shares") represent all of the ownership interest in Enron
Operations; and
WHEREAS, Enron DR and Enron Operations own general and limited partner
interests representing a 50% interest in Smith\Enron Cogeneration Limited
Partnership, a Turks and Caicos Islands limited partnership (the
"Partnership"), and a 50% interest in Smith/Enron O&M Limited Partnership, a
Turks and Caicos Islands limited partnership (the "O&M Partnership"); and
WHEREAS, EHC and EI are the owners of the right to receive 52% and 48%,
respectively, of the Guarantee Fees (as defined below) and any repayment of the
Overrun Loans (as defined below); and
WHEREAS, Enron Corp., a Delaware corporation ("Enron"), and Enron Global
Power & Pipelines L.L.C. are parties to a Purchase Right Agreement dated as of
November 15, 1994 (the "Purchase Right Agreement") pursuant to which Enron
agreed to cause EHC and EI to offer to sell and transfer to EPP (as defined
herein) the Enron DR Shares, the Enron Operations Shares, the right to receive
Guarantee Fees and the right to receive repayment of the Overrun Loans
(collectively, the "Ownership Interest"); and EHC and EI have offered the
Ownership Interest pursuant to the Purchase Right Agreement; and
WHEREAS, EPP desires to evidence its acceptance of the offer of the
Ownership Interest by EHC and EI and, subject to the satisfaction of the
conditions to EPP's obligations as herein set forth, to purchase and pay for
the Ownership Interest, so that following such purchase EPP will own, directly
or indirectly, 100% of the issued and outstanding capital stock of Enron DR and
Enron Operations and all of the right to receive the Guarantee Fees and
repayment of the Overrun Loans;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and covenants herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
CERTAIN DEFINED TERMS
1.1 TERMS USED AS DEFINED IN PURCHASE RIGHT AGREEMENT. Capitalized
terms used in this Agreement and the schedules hereto and not defined herein
are used as defined in the Purchase Right Agreement or the Company Agreement
(as defined below). As used in this Agreement, the following terms have the
following meanings:
"Acquired Shares" has the meaning assigned in Section 2.1 of this
Agreement.
"Agreement" has the meaning assigned in the initial paragraph hereof.
"Arbitrating Engineer" has the meaning assigned in Section 2.2(g) of this
Agreement.
"Arbitrating Engineer's Report Remedies" has the meaning assigned in
Section 2.2(g) of this Agreement.
"CDE" means Corporacion Dominicana de Electricidad, an autonomous
institution of the Government.
"CDE Adjustment" means the reduction, if any, in the distributions from
the Partnership to the Enron Partners arising from the difference between (a)
the CDE April Invoice and (b) the CDE April Invoice Payment Amount, but not
more than $1,592,217.50 in the aggregate.
"CDE April Invoice" means (i) the disputed April 1996 invoice in the
amount of $2,753,512 (relating to the shut-down of the Project) from the
Partnership to CDE and (ii) an existing dispute between the Partnership and CDE
relating to fuel costs in the amount of $430,923.
"CDE April Invoice Payment Amount" means the amounts, if any, received
from CDE (or the Government or another Government Institution) in respect of
the CDE April Invoice from Closing Date until December 15, 1996, together with
interest thereon (using the interest rate actually charged by the Partnership
to CDE in respect of such disputed invoice amounts).
"Claim" has the meaning assigned in Section 4.4 of this Agreement.
"Closing" has the meaning assigned in Section 5.1 of this Agreement.
"Closing Date" has the meaning assigned in Section 5.1 of this Agreement.
"Company Agreement" means the Amended and Restated Limited Liability
Company Agreement of Enron Global Power & Pipelines L.L.C. dated as of November
15, 1994.
"Debt Service Agreement" means the Base Debt Service Reserve
Reimbursement Agreement dated as of December 15, 1994 between the Partnership
and Enron.
"Determination Date" means the date as of which the parties make the
calculations required by Section 2.2(d), which Determination Date will be
December 31, 1997, except that if on December 31, 1997 any party to this
Agreement believes that Remedy or Replacement Costs may be incurred thereafter
or that Recoveries may occur thereafter, such party, by notice to the other
parties, may elect to postpone the Determination Date to December 31, 1998
(and, to the extent, but only to the extent, on December 31, 1998 litigation,
arbitration or other pending legal action exists to determine entitlement to,
or the amount of any Recovery, a similar right to elect to postpone the
Determination Date will apply on such December 31 and each December 31
thereafter until the first December 31 after such litigation, arbitration or
other pending legal action is finally determined or settled; PROVIDED, HOWEVER,
the Determination Date will not occur until the settlement or final
determination of the litigation described in subparts (b), (c), (d), if any, or
(g) of the definition of Remedy or Replacement Costs).
"Distribution Loans" has the meaning given it in Section 2.2(h) of this
Agreement.
"Distribution Reductions" has the meaning assigned in Section 2.2(e).
"EHC" has the meaning assigned in the initial paragraph of this
Agreement.
"EI" has the meaning assigned in the initial paragraph of this Agreement.
"Enron" has the meaning assigned in the recitals to this Agreement.
"Enron DR" has the meaning assigned in the recitals to this Agreement.
"Enron DR Partner Pledge Agreement" means the Partner Pledge Agreement
(Limited Partner) dated as of July 25, 1995, as amended, between Enron DR and
Citibank, N.A., as Collateral Agent.
"Enron DR Shares" has the meaning assigned in the recitals to this
Agreement.
"Enron Operations" has the meaning assigned in the recitals to this
Agreement.
"Enron Operations Partner Pledge Agreement" means the Partner Pledge
Agreement (General Partner) dated as of July 25, 1995, as amended, between
Enron Operations and Citibank, N.A., as Collateral Agent.
"Enron Operations Shares" has the meaning assigned in the recitals to
this Agreement.
"Enron Parties" means Enron and any Enron Subsidiary.
"Enron Partners" has the meaning assigned in the Partnership Agreement.
"Enron Subsidiary" means any direct or indirect wholly owned subsidiary
of Enron.
"EPCC" means Enron Power Construction Corp.
"EPP" means Enron Global Power & Pipelines L.L.C. and any subsidiary or
affiliate thereof designated by Enron Global Power & Pipelines L.L.C.
"EPP Financial Statements" has the meaning assigned in Section 3.2(c) of
this Agreement.
"Equity Registration" has the meaning assigned in Section 2.2(h) of this
Agreement.
"Equity Registration Effect" means the effect, if any, on the net present
value of the Ownership Interest as of the Closing Date, attributable to the
failure to obtain Equity Registration of the Partnership's ownership of the
Project or the O&M Partnership's interest as operator thereof, if applicable,
on or before December 31, 1996, determined as provided in Section 2.2(h).
"Excess Overrun Loans" means, at any time, the amount of principal and
interest on Overrun Loans made to the Partnership to cover costs and expenses
incurred for Remedy or Replacement Costs (and, in the case of any Excess
Overrun Loan outstanding at the Closing Date, for Guarantee Fees, interest
during construction and certain other expenses) less the amount thereof repaid
with the proceeds from Recoveries or otherwise in accordance with the terms of
such Overrun Loans.
"Financial Statements" has the meaning assigned in Section 3.1(i) of this
Agreement.
"GE" means General Electric Company.
"Government" means the Government of the Dominican Republic.
"Government Institution" means CDE or another autonomous institution,
agency or instrumentality of, or corporation or other legal person created by
or under the auspices of, the Government.
"Guarantee Fees" means the 4% per annum fee payable pursuant to the Debt
Service Agreement and the 1.5% fee payable pursuant to the Reimbursement
Agreement.
"Hotel" means Hotelera del Atlantico, S. A.
"IFC" means International Finance Corporation, an international
organization established by Articles of Agreement among its member countries.
"IFC Investment Agreement" means the Investment Agreement between the
Partnership and IFC dated November 1, 1994, as amended.
"Indemnified Party" and "Indemnifying Party" have the respective meanings
assigned in Section 4.4 of this Agreement.
"Independent Engineer" has the meaning given it in the Sponsor Support
Agreement.
"Independent Engineer's Report" means the final report of the Independent
Engineer to be delivered to EHC by EPP as described in Section 2.2(g).
"Independent Engineer's Report Remedies" shall have the meaning set forth
in Section 2.2(g).
"Interim Interest" means interest calculated at 14 percent per annum on
(i) the actual number of days and the net amounts by which actual distributions
from the Partnership to EPP exceed distributions for the same period in the
Model offset by (ii) the actual number of days and the net amounts by which
distributions in the Model exceed actual distributions from the Partnership to
EPP. Interim Interest shall be calculated only if the timing of Recoveries and
Excess Overrun Loans impact distributions declared and paid by the Partnership.
"Market Price" at a given date means the average closing price per share
of Common Shares of EPP reported at the close of trading on the New York Stock
Exchange for the 20 trading days immediately preceding the second trading day
prior to such date.
"Model" means the financial model agreed to by EHC, EI and EPP containing
the assumptions used to calculate the Offer Price. The Model shall assume that
(a) the Outstanding Overrun Loans are outstanding at the Closing Date, (b) no
Excess Overrun Loans are outstanding at the Closing Date, (c) neither the
Partnership nor the Project is subject to taxation by the Government, and (d)
all payments from CDE are made in full when due.
"Net Change" means the sum of (a) the increase or decrease in the output
cell titled "EGPP NPV" in the Model that results from the adjustments in the
Model referred to in Section 2.3(a) and (b) Interim Interest thereon from the
Closing Date to the date the Net Change is paid.
"Net Tax Change" means the increase or decrease in the output cell titled
"EGPP NPV" in the Model that results from the adjustments in the Model referred
to in Section 2.3(b), not to exceed an aggregate of $9.5 million.
"Offer Price" has the meaning assigned in Section 2.1 of this Agreement.
"O&M Contract" means the Administrative Services and Operation and
Maintenance Agreement dated as of March 1, 1994, between the Partnership and
the O&M Partnership.
"O&M Partnership" has the meaning assigned in the recitals to this
Agreement.
"O&M Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the O&M Partnership, dated as of March 1, 1994, as
amended, by and among Smith Cogeneration Dominicana, Inc., a Turks and Caicos
Islands corporation, Smith Cogeneration International, Inc., a British Virgin
Islands corporation, Enron Reserve I B.V., a Dutch corporation and Atlantic
Commercial Finance B.V., a Dutch corporation.
"Outstanding Overrun Loans" has the meaning assigned in Section 2.1 of
this Agreement.
"Overrun Loans" means all loans made by Enron Partners or their
affiliates pursuant to Section 4.4 of the Partnership Agreement.
"Ownership Interest" has the meaning set forth in the recitals to this
Agreement.
"Ownership Maintenance Agreement" has the meaning assigned in Section
5.2(b)(iii) of this Agreement.
"Partnership" has the meaning assigned in the recitals to this Agreement.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of December 15, 1994, by and
among Smith Cogeneration Dominicana, Inc., a Turks and Caicos Islands
corporation, Smith Cogeneration International, Inc., a British Virgin Islands
corporation, Enron Reserve I B.V., a Dutch corporation, and Atlantic Commercial
Finance B.V., a Dutch corporation, as amended by Amendment No. 1 to the Amended
and Restated Agreement of Limited Partnership of the Partnership, dated
effective April 30, 1996, by and among Enron DR, Enron Operations, Smith
Cogeneration Dominicana, Inc., Smith Cogeneration International, Inc., and
Smith Dominicana Holding Limited Partnership, a Cayman Islands limited
partnership.
"Pre-Closing Conditions" means conditions with respect to physical
components of the Project existing prior to the Closing Date.
"Project" means the approximately 185 MW electric power plant constructed
by the Partnership in or near Puerto Plata in the Dominican Republic, together
with all the property, structures, vessels, machinery, equipment and spare
parts that are owned by the Partnership and are part thereof or used or useful
in connection therewith.
"Project Tax" means any tax provided for by Dominican law as in effect
at the Closing Date upon the income from the operations of the Project or of
the Partnership, or the O&M Partnership, if applicable, or any tariff, impost,
fine or other penalty provided for by Dominican law as in effect at the Closing
Date and measured by reference to the income from the operations of the Project
or of the Partnership, or the O&M Partnership, if applicable, in each such case
to the extent (but only to the extent) the amount of any tax thereby imposed is
not passed through to, and reimbursed in full by, a Government Institution or
any private party purchasing the power from the Project and, in each case from
the date the tax is imposed on the Partnership or the Project or the O&M
Partnership, if applicable.
"Purchase Right Agreement" has the meaning assigned in the recitals to
this Agreement.
"Recoveries" means proceeds received by the Partnership from insurance
carriers or from any settlements or warranties effected with contractors or
others, including, without limitation, GE, EPCC and the Hotel, (a) in respect
of Remedy or Replacement Costs, and (b) in respect of business interruptions or
other occurrences or circumstances (and costs and expenses associated
therewith) relating to the Project prior to the Closing Date and, to the
extent such Recoveries do not relate to Overrun Loans (but only to such
extent), net to the interest of the Enron Partners.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
February 28, 1996 among the Partnership, Enron, Enron Development Corp. and
Smith Cogeneration Dominicana, Inc.
"Remedy or Replacement Costs" means (a) the costs and expenses for which
loans may be made by Enron Partners or their affiliates pursuant to Section
4.4(e)(i) or (iii) of the Partnership Agreement, to the extent such costs and
expenses are not included in the Model as agreed to on the Closing Date, (b)
the costs and expenses described in the Sponsor Support Agreement of which
Enron and Enron Operations have agreed to arrange for the payment or for which
they have agreed to make loans to the Partnership, PROVIDED, HOWEVER, that the
amount of such costs and expenses constituting Remedy or Replacement Costs is
subject to the dollar limits set forth in the Definition of Maximum Funding
Amount in the Sponsor Support Agreement (other than the dollar limitation
applicable to the Remedy or Replacement Cost described in subpart (b) of the
definition of Maximum Funding Amount, which shall not be so limited); (c) any
costs, expenses or liabilities arising from the existing litigation brought by
a local Puerto Plata landowner seeking damages for environmental damages
approximating $150,000; (d) any costs, expenses or liabilities resulting
directly from any legal action or arbitral proceeding arising after the Closing
Date, but only to the extent such costs, expenses or liabilities relate to
periods prior to the Closing Date, in respect of complaints made to
representatives of the Partnership prior to the Closing Date by an organized
group of local Costambar, Puerto Plata residents regarding emissions damage
alleged to have been caused by the Project and which have been described to the
representatives of the Oversight Committee; (e) the costs of any repair or
replacement of any physical component of the Project occurring after the
Closing Date and prior to the date of delivery (or deemed date of delivery) of
the Independent Engineer's Report, but which relate to Pre-Closing Conditions,
but only to the extent such costs are actually incurred prior to the delivery
date (or deemed delivery date) of the Independent Engineer's Report; (f) any
Independent Engineer's Report Remedies (PROVIDED, THAT, if there is an
Arbitrating Engineer, the Arbitrating Engineer's Report Remedies shall be
included rather than the Independent Engineer's Report Remedies); and (g) any
costs, expenses or liabilities arising from the litigation styled JAMES R.
BROWN AND VALERIE BROWN V. GE POWER SYSTEMS, ET AL., Cause No. A0154860 pending
in the 58th District Court of Jefferson County, Texas.
"Sponsor Support Agreement" means the Sponsor Support Agreement dated as
of April 30, 1996 among Enron DR, Enron and IFC.
"Tax Determination Date" shall mean November 30, 1997.
"Termination Date" has the meaning given in Section 5.3(a) of this
Agreement.
"Withheld Distribution" has the meaning given it in Section 2.2(h) of
this Agreement.
ARTICLE II
PURCHASE AND SALE OF OWNERSHIP INTEREST
2.1 PURCHASE AND SALE OF OWNERSHIP INTEREST. Subject to the
satisfaction of the conditions set forth in Section 5.2, in consideration of
the Offer Price, on the Closing Date EHC and EI will sell, transfer, convey and
deliver to EPP, and EPP will purchase and accept from EHC and EI, the Ownership
Interest, as evidenced by (i) the delivery of certificates evidencing the Enron
DR Shares and the Enron Operations Shares, duly endorsed by EHC and EI or
accompanied by stock powers (or comparable instruments) duly executed by EHC
and EI and in proper form for transfer and (ii) an instrument of assignment
acceptable to EPP conveying to EPP the right to receive (A) repayment of the
Overrun Loans, and (B) the Guarantee Fees (unless EPP is provided with other
satisfactory evidence of the transfer to Enron DR of the right to receive the
Guarantee Fees prior to the Closing). The consideration for the purchase and
sale of the Ownership Interest on the Closing Date will be $50,000,000.00, plus
accrued and unpaid interest on the Outstanding Overrun Loans (as defined below)
to the Closing Date (the "Offer Price"), which is calculated in part on the
basis of an aggregate of $10,772,757.48 principal amount of Overrun Loans being
outstanding at the Closing Date (together with interest thereon from time to
time outstanding, the "Outstanding Overrun Loans"). Enron Global Power &
Pipelines L.L.C. will pay the Offer Price by issuance on the Closing Date to
EHC and EI (in proportion to their respective ownership interests in Enron DR
and Enron Operations) of Common Shares that have a Current Market Price equal
to the Offer Price. The Common Shares evidencing the Offer Price will be
comprised 21% of Restricted Common Shares and 79% of Common Shares that are not
Restricted Common Shares (collectively, the "Acquired Shares"), as evidenced by
the delivery of original issue certificates representing the Acquired Shares.
One percent of the Acquired Shares will be Special Restricted Common Shares and
will be included as part of the 21% Restricted Common Shares. All of the
Restricted Common Shares will be issued to EHC. Any fractional share will be
rounded up to the nearest whole share.
2.2 ADDITIONAL AGREEMENTS. (a) Enron's obligation under the Sponsor
Support Agreement is a Shareholder Commitment that will be assumed by EPP on
the Closing Date. EPP agrees that such obligation will be discharged through
the making of Overrun Loans to the Partnership, such loans to be made by EPP or
Enron Operations after the Closing Date (and, except to the extent necessary to
avoid default under any Project Document, shall be made no more often than
monthly and no earlier in any month than the sixteenth day thereof). EPP also
agrees that even if the Sponsor Support Agreement is terminated, EPP or Enron
Operations will make Overrun Loans to the Partnership from the Closing Date to
the Determination Date to cover Remedy or Replacement Costs (except to the
extent that the proceeds from Recoveries are used by the Partnership to pay
such Remedy or Replacement Costs).
(b) EHC agrees that it, Enron or another Enron Subsidiary will advance
to EPP any amounts necessary to fund the Overrun Loans described in Section 2.2
(a). Each advance shall be evidenced by a note, each for an amount equal to
the aggregate amount of the advance (the "Excess Overrun Note"). The Excess
Overrun Note shall bear the same terms, including events of default, interest
rate and dates of payment of installments of interest and principal, as the
related Overrun Loan made by EPP to the Partnership and such other terms as EHC
and EPP shall agree, and shall provide for payment by EPP when, as and to the
extent payments are received by EPP from the Partnership with respect to the
related Overrun Loans, of principal, interest and any related costs.
(c) EPP agrees (i) to pay (A) each Excess Overrun Note when due in
accordance with the terms and conditions thereof, and (B) when received by EPP,
to EHC, the amount of any payment in respect of Excess Overrun Loans not
represented by an Excess Overrun Note, and (ii) that it will not permit the
Partnership to settle any dispute with GE, EPCC or the Hotel regarding any
Remedy or Replacement Cost without the consent of EHC and EI.
(d) As of the Determination Date, the Model shall be adjusted to
reflect the amount and timing of Excess Overrun Loans and the amount and timing
of Recoveries plus interest earned (at an assumed rate of 14%) or saved as a
result of such Recoveries (but excluding any amount thereof used to repay
Overrun Loans), and the Net Change will be calculated in accordance with
Section 2.3(a). If the Net Change is positive, Enron Global Power & Pipelines
L.L.C. will pay the absolute value of the Net Change by issuance to EHC and EI
(in proportion to their respective ownership interests in Enron DR and Enron
Operations immediately prior to the Closing) of Common Shares that have a
Market Price at the Determination Date equal to the Net Change. Of such
shares, 21% will be Restricted Common Shares and 79% will be Common Shares that
are not Restricted Common Shares. One percent of such Common Shares will be
Special Restricted Common Shares and will be included as part of the 21%
Restricted Common Shares. All of the Restricted Common Shares will be issued
to EHC. Any fractional share will be rounded up to the nearest whole share.
If the Net Change is negative, EHC and EI will pay EPP cash in the amount of
the absolute value of such Net Change (in proportion to their respective
ownership interests in Enron DR and Enron Operations immediately prior to the
Closing).
(e) As of the Determination Date, EHC and EPP shall negotiate in good
faith for a period of thirty days to determine the extent, if any, by which the
sum of (i) the amount of distributions from the Partnership and (ii)
undistributed net income of the Partnership have been reduced as a result of
lost profits attributable to Pre-Closing Conditions (the "Distribution
Reduction"). If after 30 days EHC and EPP are unable to agree on the amount of
such Distribution Reduction, EHC and EEC shall submit the matter to the
Independent Engineer, who shall determine the amount of such Distribution
Reduction by determining the portion of the amount by which distributions are
less than those reflected in the Model which it is more probable than not were
lost profits caused by Pre-Closing Conditions, and the Independent Engineer's
determination of such Distribution Reduction shall be final and binding on all
parties hereto.
(f) As of the Tax Determination Date, the Model shall be adjusted to
reflect (i) the amount of Project Tax imposed upon the Partnership or the
Project and the O&M Partnership, to the extent applicable, in respect of
periods prior to the Closing Date and from the Closing Date to the Tax
Determination Date, (ii) interest on the reduction in dividends attributable to
amounts of Project Tax paid prior to the Tax Determination Date and (C) the
assumption that Project Tax, if any, continues to be paid from and after the
Tax Determination Date at the same average rate, and the Net Tax Change will be
calculated in accordance with Section 2.3(b). If the Net Tax Change is
positive, unless otherwise agreed between EHC and EPP, EPP will pay the
absolute value of the Net Tax Change by issuance to EHC and EI (in proportion
to their respective ownership interests in Enron DR and Enron Operations
immediately prior to the Closing) of Common Shares that have a Market Price at
the Tax Determination Date equal to the Net Tax Change. Of such shares, 21%
will be Restricted Common Shares and 79% will be Common Shares that are not
Restricted Common Shares. One percent of such Common Shares will be Special
Restricted Common Shares and will be included as part of the 21% Restricted
Common Shares. All of the Restricted Common Shares will be issued to EHC. Any
fractional share will be rounded up to the nearest whole share. If the Net Tax
Change is negative, EHC and EI will pay EPP cash in the amount of absolute
value of such Net Tax Change (in proportion to their respective ownership
interests in Enron DR and Enron Operations immediately prior to the Closing).
(g) On or before the 40th day following the Closing Date, EPP shall
cause the Independent Engineer's Report to be delivered to EHC. In the event
the Independent Engineer's report is not delivered by such date, it shall be
deemed for all purposes hereunder to have been delivered on such day and to
recommend no repair or replacement to any physical component of the Project
other than those set forth in the draft of the Independent Engineer's Report
delivered prior to the Closing Date to EHC and EPP. In the event the
Independent Engineer's Report is delivered on or before the 40th day following
the Closing Date, EHC and EPP shall negotiate in good faith to determine which,
if any, of the repairs or replacements to specific physical components of the
Project recommended in the Independent Engineer's Report are attributable to
Pre-Closing Conditions and as to the level of repairs or replacements necessary
to address the problems set forth in the Independent Engineer's Report (the
"Independent Engineer's Report Remedies"). If within 30 days after the date of
delivery of the Independent Engineer's Report EHC and EPP are unable to agree
on the Independent Engineer's Report Remedies, EHC and EEC shall submit the
matter to Aptech, or, if such firm declines to undertake such engagement,
another independent engineering firm acceptable to EHC and EPP (the
"Arbitrating Engineer"), who shall determine the portion of the recommended
repairs and replacements to specific physical components of the Project the
necessity for which it is more probable than not was caused by Pre-Closing
Conditions, and the level of repairs or replacements necessary, in the
Arbitrating Engineer's judgment, to address such problems, and the Arbitrating
Engineer's determination of such matters (the "Arbitrating Engineer's Report
Remedies") shall be final and binding on all parties hereto.
(h) (i) From and after the Closing Date and until December 31, 1996,
EHC shall use reasonable good faith efforts to secure registration
of the Partnership's equity ownership of the Project and, to the
extent applicable, of the O&M Partnership's interest as operator
thereof, under the Foreign Investment Law of the Dominican Republic
with the Central Bank of the Dominican Republic ("Equity
Registration"), and EPP shall cooperate in all respects with such
efforts, including by using its best efforts to cause the
Partnership or the O&M Partnership, if applicable, to execute and
deliver any required documents or certifications necessary or
advisable in EHC's reasonable opinion to secure such registration
and/or by using its best efforts to cause its employees and
representatives or employees or representatives of the Partnership,
or the O&M Partnership, at the reasonable request of EHC, to travel
to the Dominican Republic in order to assist in securing such
Equity Registration. EHC shall bear and pay all costs and expenses
related to its efforts to secure Equity Registration, including
fees and expenses of counsel, filing fees and the actual out-of-
pocket expenses of any employees and representatives of EPP, the
Partnership or the O&M Partnership assisting in securing such
registration at EHC's request.
(ii) In the event Equity Registration is not secured by the date
on which the next regular distribution from the Partnership, or to
the extent applicable, the O&M Partnership, is declared (on or
after December 15, 1996) and if, as a result of the failure to
secure Equity Registration, such distribution or distributions may
not be made to Enron DR and Enron Operations, EHC shall loan (the
"Distribution Loan") to Enron DR the amount of any such
distributions to the extent (but only to the extent) of amounts
which cannot be distributed to Enron DR and Enron Operations (the
"Withheld Distributions"), against the grant by Enron DR of a first
and prior security interest in the Withheld Distributions, and
Enron DR shall take all such action requested by EHC as shall be
necessary or advisable in EHC's opinion, including registration of
such security interest on the books of the Partnership or the O&M
Partnership, if applicable, as may be necessary to perfect in EHC a
valid first and prior perfected security interest in such Withheld
Distributions to the maximum extent permitted by law. The
Distribution Loan shall be discharged by the payment, when received
by Enron DR, of the Withheld Distributions, together with any
earnings thereon received by or payable to the Partnership or the
O& M Partnership, if applicable (in respect of the Enron Partners'
interest in the Partnership or the O&M Partnership), during the
period from the date of declaration of the Withheld Distributions
to the date of receipt thereof by Enron DR, but shall not otherwise
bear any interest.
(iii) If Equity Registration has not been obtained by October 1,
1996, EHC and EPP shall negotiate in an attempt to agree upon the
Equity Registration Effect or other appropriate protections to be
afforded to EPP because of the failure to secure Equity
Registration. If no agreement thereon has been reached by December
1, 1996, on that date the question as to the amount, if any, of the
Equity Registration Effect shall be submitted for determination by
an internationally recognized investment banking firm acceptable to
EHC and EPP, whose determination of the Equity Registration Effect
shall be based on the assumptions used in the Model, changed only
to reflect the anticipated effect (as determined by such investment
banking firm) on such assumptions of the failure to secure Equity
Registration, and shall be binding upon all parties hereto. Prior
to December 1, 1996, EHC and EPP shall negotiate in an attempt to
agree on the text of the question to be submitted to such
investment banking firm or, if they are unable to so agree, the
issue shall be submitted on the basis of the description and
definitions contained herein. The decision of such investment
banking firm shall be rendered as promptly as possible, but in any
event no later than January 3, 1997. The fees and expenses of such
investment banking firm will be divided equally between EHC and
EPP.
(iv) If the Equity Registration Effect is positive, EPP will pay
EHC and EI cash in the amount of the Equity Registration Effect (in
proportion to their respective ownership interests in Enron DR and
Enron Operations immediately prior to the Closing). If the Equity
Registration Effect is negative, EHC and EI will pay EPP cash in
the absolute value of the amount of such Equity Registration Effect
(in proportion to their respective ownership interests in Enron DR
and Enron Operations immediately prior to the Closing).
(i) EPP and EHC acknowledge that the Partnership has been negotiating
on behalf of Enron Fuels International, Inc. ("EFI") to secure CDE's consent to
an amendment of EFI's existing fuel supply agreement with the Partnership
which, if effected, is expected to result in the payment to the Partnership by
EFI of approximately $3 million, none of which amount is reflected in the
Model. EPP agrees to pay, or cause to be paid, to EHC and EI (in proportion to
their respective ownership interests in Enron DR and Enron Operations
immediately prior to the Closing), when received from the Partnership, any of
such amount received in respect of the Enron Partners' interest in the
Partnership.
(j) As soon as practicable after December 15, 1996, but in no event
more than five business days thereafter, EHC will pay EPP cash in the amount of
the CDE Adjustment. From and after December 15, 1996, EPP will pay, or cause
to be paid, to EHC upon receipt from the Partnership, any amounts received by
the Enron Partners in respect of the CDE April Invoice, including any interest
thereon received by the Partnership.
2.3 NET CHANGE AND NET TAX CHANGE. (a) The Net Change will be
calculated as of the Determination Date by adjusting the Model to reflect (i)
the amount of Excess Overrun Loans outstanding on the Determination Date and
the amount of Recoveries not used to repay such Excess Overrun Loans (plus
interest earned or saved as a result of such Recoveries), and (ii) the
assumption that all Excess Cost Overrun Loans are made, and any Recoveries
credited, as of the sixteenth day of the month in which they are actually
received and (iii) any Distribution Reduction. The calculation of the Net
Change shall be completed as soon following the Determination Date as the
information necessary to make the necessary computations becomes available, but
in any event no later than the 45th day following the Determination Date.
(b) The Net Tax Change will be calculated as of the Tax
Determination Date by adjusting the Model to reflect (i) the amount of Project
Tax imposed upon the Partnership or the Project, or the O&M Partnership, if
applicable (net of any available credits or other benefits) in respect of
periods (1) prior to the Closing Date and (2) from the Closing Date to and
including November 30, 1997, (ii) payment of interest on the amounts by which
distributions have been reduced by reason of Project Tax actually paid during
the period specified in (i), and (iii) the assumption that Project Tax
continues to be paid at the same average rate after the Tax Determination Date.
The calculation of the Net Tax Change shall be completed as soon following the
Tax Determination Date as the information necessary to make the necessary
computations becomes available, but in any event no later than the 45th day
following the Tax Determination Date.
(c) Any issuance of Common Shares or cash payment pursuant to Section
2.2 (d) will be completed within five days following the calculation of the Net
Change hereunder. Any issuance of Common Shares or cash payment pursuant to
Section 2.2(f) shall be completed within five days following the determination
of the Net Tax Change as provided in Section 2.2(f). Any issuance of Common
Shares or cash payment pursuant to Section 2.2(h) shall be completed within
five days following the determination of the Equity Registration Effect as
provided in Section 2.2(h). EHC and EI will be required to make the same
representations with respect to such Common Shares as each has made with
respect to the Acquired Shares in this Agreement. Such Common Shares will be
subject to the same restrictions on resale, and the certificates therefor will
bear the same restrictive legend, as the Acquired Shares.
(d) If EHC, EI and EPP cannot agree on the Net Change or the Net Tax
Change hereunder, they will retain Arthur Andersen LLP's Houston office to make
the determination of Net Change or Net Tax Change in accordance with this
Section 2.3, and Arthur Andersen LLP shall be provided with a copy of, or
electronic media containing, the Model. Arthur Andersen LLP's determination of
the Net Change and the Net Tax Change will be final and binding on EHC, EI and
EPP.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF EHC. EHC hereby represents and
warrants to EPP that:
(a) ORGANIZATION OF EHC AND EI. EHC is a limited liability
company duly organized, validly existing and in good standing under the
laws of the state of Delaware and has all requisite corporate or similar
power and authority to own, lease, operate and otherwise hold all of its
properties and assets and to carry on its business as presently conducted
and as proposed to be conducted and is duly qualified to do business 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 would not have a material adverse effect on Enron DR,
Enron Operations, the Partnership, the O&M Partnership or the Ownership
Interest. EI is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware and has all
requisite corporate power and authority to own, lease, operate and
otherwise hold all of its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted and is
duly qualified to do business 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 would not have a
material adverse effect on Enron DR, Enron Operations, the Partnership,
the O&M Partnership or the Ownership Interest.
(b) ORGANIZATION OF ENRON DR AND ENRON OPERATIONS. Each of Enron
DR and Enron Operations is a company duly organized, validly existing and
in good standing under the laws of the Cayman Islands and has all
requisite corporate power and authority to own, lease, operate and
otherwise hold all of its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted and is
duly qualified to do business 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 would not have a
material adverse effect on the Partnership, the O&M Partnership or the
Ownership Interest.
(c) ORGANIZATION OF THE PARTNERSHIP AND THE O&M PARTNERSHIP.
Each of the Partnership and the O&M Partnership is a partnership duly
formed and validly existing under the laws of the Turks and Caicos
Islands and has all requisite partnership power and authority to own,
lease, operate and otherwise hold all of its properties and assets and to
carry on its business as presently conducted and as proposed to be
conducted and is duly qualified to do business 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
would not have a material adverse effect on the Ownership Interest.
.
(d) PREEMPTIVE RIGHTS. Except as set forth in any of the Project
Documents (i) there are no preemptive rights or other rights to subscribe
for or to purchase any capital stock of Enron DR or Enron Operations or
any limited or general partner interests in the Partnership or the O&M
Partnership and (ii) there are no restrictions upon the voting or
transfer (other than restrictions upon transfer imposed under applicable
securities laws) of the capital stock of Enron DR or Enron Operations or
the limited or general partner interests of Enron DR or Enron Operations
in the Partnership or the O&M Partnership.
(e) LIENS, ETC. The Ownership Interest is being conveyed by EHC
and EI to EPP free of material liens or other material rights or material
encumbrances (other than as disclosed in the Project Documents).
(f) TITLE TO PROPERTIES. The Partnership is the lawful owner of
all material properties, rights of way and assets that constitute the
Project, free and clear of all material liens, encumbrances and security
interests, except as disclosed in and permitted by the Project Documents
or as would not have a material adverse effect on the Partnership or the
Ownership Interest. The O&M Partnership is the lawful owner of all of its
rights under the O&M Agreement, free and clear of all material liens,
encumbrances and security interests, except as disclosed in and permitted
by the Project Documents or as would not have a material adverse effect
on the O&M Partnership or the Ownership Interest.
(g) CERTAIN DISCLOSURES. EHC has delivered to the Oversight
Committee true and correct copies of all Project Documents for the
Project. There are no Project Document Violations by an Enron Party (or,
to EHC's knowledge, any other party) under the Project Documents.
Schedule 3.1(g) to this Agreement contains a complete list of all Project
Documents. EHC has disclosed in writing to the Oversight Committee all
pending (or, to its knowledge, threatened) claims by or against Third
Parties or for violations of Law that could reasonably be expected to
have a material adverse effect on the Ownership Interest. There are no
material contracts to which the Partnership, the O&M Partnership, Enron
DR or Enron Operations is a party or by which any of them are bound other
than the Project Documents.
(h) INFORMATION. The copies of written materials that EHC has
delivered to or made available to the Oversight Committee constitute
accurate copies of the originals thereof, and the files and records that
EHC has delivered to or made available to the Oversight Committee
constitute all material written factual information in the possession of
Enron or its affiliates concerning Enron DR, Enron Operations, the
Partnership, the O&M Partnership or the Project. It is understood that
EHC makes no representation regarding any information in such files
obtained from third parties. Enron is not aware of any fact, matter or
circumstance that has not been disclosed to the Oversight Committee that
does or may render any such materials, files, records, or other
information untrue, inaccurate, or misleading in any material respect or
the disclosure of which would be material to the decision by the
Oversight Committee to accept, on behalf of EPP, the Offer of the
Ownership Interest. If any dispute arises as to whether or not any
matter was orally disclosed to the Oversight Committee, EHC will have the
burden of proving that such matters were in fact so disclosed.
(i) FINANCIAL STATEMENTS. EHC has heretofore furnished EPP with
the following financial statements (the "Financial Statements"):
(i) the unaudited balance sheet of the Enron DR dated March
31, 1996, and the related statement of income and undistributed
earnings for the three month period ending March 31, 1996.
(ii) the unaudited balance sheet of the Enron DR dated
December 31, 1995, and the related statement of income and
undistributed earnings for the twelve month period ending December
31, 1995.
(iii) the unaudited balance sheet of Enron Operations dated
March 31, 1996, and the related statement of income and
undistributed earnings for the three month period ending March 31,
1996.
(iv) the unaudited balance sheet of Enron Operations dated
December 31, 1995, and the related statement of income and
undistributed earnings for the twelve month period ending December
31, 1995.
(v) the audited balance sheet of the Partnership as of
December 31, 1995, and the related statement of income and
undistributed earnings for the twelve month period ending December
31, 1995;
(vi) the unaudited balance sheet of the Partnership as of
March 31, 1996, and the related statement of income and
undistributed earnings for the three month period ending March 31,
1996;
(vii) the unaudited balance sheet of the O&M Partnership
dated December 31, 1995, and the related statement of income and
undistributed earnings for the twelve month period ending December
31, 1995; and
(viii) the unaudited balance sheet of the O&M Partnership
dated March 31, 1996, and the related statement of income and
undistributed earnings for the three month period ending March 31,
1996.
The Financial Statements present fairly the financial condition, results
of operations and cash flows of the entities purported to be shown
thereby at the dates and for the periods indicated and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. Except as disclosed
in writing to the Oversight Committee of EPP, since March 31, 1996 there
has not been any material adverse change in the business, financial
condition or results of operations of Enron DR, Enron Operations, the
Partnership or the O&M Partnership. Since March 31, 1996, neither Enron
DR nor Enron Operations has declared or paid any dividend or made any
other distribution to its shareholder.
(j) CAPITALIZATION.
(i) The Enron DR Shares are the only issued and outstanding
shares of capital stock of Enron DR and are validly issued, fully
paid and nonassessable and were not issued in violation of the
preemptive rights of any person. Enron DR owns, beneficially and
of record, a 49% limited partner interest in each of the
Partnership and the O&M Partnership, and each such limited partner
interest has been validly issued and is fully paid and was not
issued in violation of the preemptive rights of any person. The
Enron Operations Shares are the only issued and outstanding shares
of capital stock of Enron Operations and are validly issued, fully
paid and nonassessable and were not issued in violation of the
preemptive rights of any person. Enron Operations owns,
beneficially and of record, a 1% general partner interest in each
of the Partnership and the O&M Partnership, and each such general
partner interest has been validly issued and was not issued in
violation of the preemptive rights of any person.
(ii) There are not now any outstanding options, warrants,
rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock or limited
or general partner interests or other equity interests of Enron DR,
Enron Operations, the Partnership or the O&M Partnership, or
contracts, understandings or arrangements to which Enron DR, Enron
Operations, the Partnership or the O&M Partnership is a party, or
by which any of them is or may be bound, to issue additional shares
of its capital stock or limited or general partner interests or
other equity interests or options, warrants, or rights to subscribe
for, or securities or rights convertible into or exchangeable for,
any additional shares of its capital stock or limited or general
partner interests, or other equity interests.
(iii) None of Enron DR, Enron Operations, the Partnership,
and the O&M Partnership owns any capital stock, general or limited
partner interests, joint venture interests or other equity
interests, except as set forth in clause (i) of this Section
3.1(j). The Partnership has, and has had, no business or assets
other than the development, financing, acquisition, construction,
operation and ownership of the Project as contemplated by the
Project Documents. The O&M Partnership does not have, and has not
had, any business or assets other than the business of performing
services to the Partnership under the O&M Contract. None of Enron
DR or Enron Operations has, or has had, any business or assets
other than the ownership of the equity interests set forth in
clause (i) of this Section 3.1(j).
(iv) EHC has no substantial assets on the date hereof other
than the Ownership Interest, its ownership interest in EPP and
promissory notes in the amount of $55 million payable by Enron. On
the Closing Date EHC will have no substantial assets other than its
ownership interest in EPP and promissory notes payable by Enron to
EHC in an amount at least equal to 10% of the aggregate capital
contributions to EPP. EHC has no substantial liabilities.
(k) OVERRUN LOANS AND GUARANTEE FEES. EHC and EI own 52% and 48%,
respectively, of the right to receive repayment of the Overrun Loans and
the right to receive the Guarantee Fees. The outstanding principal
amount owing on the Overrun Loans reflected in the Model is equal to the
outstanding amount thereof on the date hereof.
(l) AUTHORIZATION AND VALIDITY OF AGREEMENT; NO CONFLICT. EHC
and EI have all necessary corporate or similar power and authority to
enter into this Agreement and to perform their respective obligations
hereunder, and the execution, delivery and performance hereof by each of
them has been duly and validly authorized by all necessary corporate or
similar action. This Agreement has been duly executed and delivered by
EHC and EI and constitutes the legal, valid and binding obligation of
each of them, enforceable against each of them in accordance with its
terms, except as such enforceability 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
enforceability is considered in a proceeding in equity or at law). The
conveyance of the Ownership Interest will not (i) conflict with or result
in a breach of, give rise to any preferential purchase right under, or
require any consent which has not been obtained under, any Project
Document or applicable Law (to the extent the failure to obtain the same
could reasonably be expected to have a material adverse effect on the
Ownership Interest), (ii) result in the creation or imposition of any
lien or encumbrance on any of the property of the Partnership or the O&M
Partnership or (iii) with the passage of time or the giving of notice or
both, or the taking of any other action by a third party, have any of the
effects listed in clauses (i) and (ii) of this sentence.
(m) INVESTMENT PURPOSE. Each of EHC and EI is acquiring the
Acquired Shares for its own account and not with a view to a sale or
distribution thereof in violation of any securities laws, and each of EHC
and EI has no present intention of selling or distributing any of the
Acquired Shares in violation of any securities laws. EHC and EI agree
that the certificates representing the Acquired Shares will bear an
appropriate legend referring to restrictions on transfers thereof except
in compliance with the registration provisions of applicable state and
federal securities laws or pursuant to applicable exemptions therefrom.
(n) REGULATORY MATTERS.
(i) None of Enron, any Enron Subsidiary, Enron DR, Enron
Operations, the Partnership and the O&M Partnership is an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(ii) None of Enron, any Enron Subsidiary, Enron DR, Enron
Operations, the Partnership and the O&M Partnership is a "holding
company" or a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as
amended, and the rules and regulations promulgated thereunder.
(o) BROKERS AND FINDERS. None of Enron, any Enron Subsidiary,
Enron DR, Enron Operations, the Partnership or the O&M Partnership has
retained any broker, finder, or similar intermediary who might be
entitled to a fee or commission from Enron DR, Enron Operations, the
Partnership, the O&M Partnership or EPP, or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
sale of the Ownership Interest pursuant to this Agreement.
(p) COMPLIANCE WITH LAW. Each of, Enron DR, Enron Operations,
the Partnership and the O&M Partnership has complied with all applicable
Laws and obtained or applied for all applicable licenses, permits,
approvals and authorizations of all governmental authorities, except in
each case as would not have a material adverse effect on the assets,
business, financial condition or results of operations of Enron DR, Enron
Operations, the Partnership or the O&M Partnership.
(q) LITIGATION. Except as previously disclosed in writing to the
Oversight Committee, there is no litigation, arbitration or governmental
proceeding pending or, to the knowledge of Enron, threatened against
Enron DR, Enron Operations, the Partnership or the O&M Partnership, or
their respective partners, officers or directors in their capacities as
such, in which an unfavorable ruling, decision or finding would have a
material adverse effect on the Project, the Ownership Interest, Enron DR,
Enron Operations, the Partnership or the O&M Partnership.
(r) TAXES. Each of Enron DR, Enron Operations, the Partnership
and the O&M Partnership has filed all federal, state and foreign income
tax returns that have been required and has paid all taxes indicated by
said returns and all assessments received by it, except for such taxes as
are being contested in good faith by appropriate proceedings and for
which it has established adequate reserves.
(s) DIVIDENDS OR OTHER DISTRIBUTIons. Since March 31, 1996
neither Enron DR nor Enron Operations has declared or paid any dividend
or other distribution, and neither will declare or pay any dividend or
other distribution prior to the Closing Date.
3.2 REPRESENTATIONS AND WARRANTIES OF EPP. Enron Global Power &
Pipelines L.L.C. hereby represents and warrants to EHC and EI that:
(a) AUTHORIZATION AND VALIDITY OF AGREEMENT; NO CONFLICT. Enron
Global Power & Pipelines L.L.C. has all necessary power and authority to
enter into this Agreement, to issue to EHC and EI the Acquired Shares and
Common Shares, if any, that may be issued pursuant to Section 2.2 and to
perform its other obligations hereunder, and the execution, delivery and
performance hereof by Enron Global Power & Pipelines L.L.C. have been
duly and validly authorized by all necessary company action. This
Agreement has been duly executed and delivered by Enron Global Power &
Pipelines L.L.C. and constitutes the legal, valid and binding obligation
of Enron Global Power & Pipelines L.L.C., enforceable against Enron
Global Power & Pipelines L.L.C. in accordance with its terms, except as
such enforceability 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 enforceability is
considered in a proceeding in equity or at law). The issuance of the
Acquired Shares and Common Shares, if any, that may be issued pursuant to
Section 2.2 will not (i) conflict with or result in a breach of, give
rise to any preferential purchase right under, or require any consent
which has not been obtained under, any material agreement to which Enron
Global Power & Pipelines L.L.C. is a party or applicable Law (to the
extent the failure to obtain the same could be reasonably expected to
have a material adverse effect on Enron Global Power & Pipelines L.L.C.
or the Acquired Shares or such Common Shares), (ii) result in the
creation or imposition of any lien or encumbrance on any of the property
of Enron Global Power & Pipelines L.L.C. or (iii) with the passage of
time or the giving of notice or both, or the taking of any other action
by a third party, have any of the effects listed in clauses (i) and (ii)
of this sentence. The Acquired Shares and Common Shares, if any, that
may be issued pursuant to Section 2.2, upon issuance in accordance with
this Agreement, will be validly issued and outstanding and not subject to
any preemptive, preferential or other similar rights. Such shares, upon
issuance in accordance with this Agreement, will be fully paid and,
except to the extent specified in Section 18-607(b) of the Delaware
Limited Liability Company Act and except to the extent specified in
Section 4.01(d) of the Company Agreement with respect to Special
Restricted Common Shares, nonassessable.
(b) INVESTMENT PURPOSE. EPP is acquiring the Ownership Interest
for its own account and not with a view to a sale or distribution thereof
in violation of any securities laws, and EPP has no present intention of
selling or distributing any of the Ownership Interest in violation of any
securities laws. Enron Global Power & Pipelines L.L.C. agrees that the
certificates representing the Enron DR Shares and the Enron Operations
Shares will bear an appropriate legend referring to restrictions on
transfers thereof except in compliance with the registration provisions
of applicable state and federal securities laws or pursuant to applicable
exemptions therefrom.
(c) EPP FINANCIAL STATEMENTS. EPP has heretofore furnished EHC
with the following financial statements (the "EPP Financial Statements"):
(i) the audited balance sheet of Enron Global Power &
Pipelines L.L.C. dated December 31, 1995, and the related
statements of income, cash flows and equity for the twelve month
period ending December 31, 1995; and
(ii) the unaudited balance sheet of Enron Global Power &
Pipelines L.L.C. dated March 31, 1996, and the related statement of
income, cash flows and equity for the three month period ending
March 31, 1996.
The EPP Financial Statements present fairly the financial condition,
results of operations and cash flows of the entities purported to be
shown thereby at the dates and for the periods indicated and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated. Except
as disclosed in writing to EHC, since March 31, 1996 there has not been
any material adverse change in the business, financial condition or
results of operations of EPP.
ARTICLE IV
CERTAIN COVENANTS
4.1 INDEMNITY. (a) EPP agrees that effective as of the Closing
Date, (i) EPP will assume the Shareholder Commitments described in
Schedule 4.1 to this Agreement and (ii) indemnify and hold harmless EHC
and EI and the related persons (as such term is defined in Section 4.4
hereof) of either of them against such Shareholder Commitments.
(b) In connection with the Shareholder Commitment described in
paragraph 1 of Schedule 4.1, EHC and EI are entitled to receive
Guarantee Fees from the Partnership of 4% per annum. As noted in Section
2.1, either (i) at the Closing EHC and EI will assign to EPP, or (ii)
prior to the Closing Enron will assign to Enron DR, the right to receive
such Guarantee Fees. Upon payment by EPP of any indemnity payment under
this Section 4.1 with respect to the Shareholder Commitment described in
paragraph 1 of Schedule 4.1, Enron will assign to EPP its reimbursement
rights with respect to such payment under the Debt Service Agreement.
(c) Upon payment by EPP of any indemnity payment under this
Section 4.1 with respect to the Shareholder Commitment described in
paragraph 2 of Schedule 4.1, Enron will assign to EPP its reimbursement
rights with respect to such payment under the Tax Indemnity Reimbursement
Agreement dated as of December 15, 1994 between Enron and the
Partnership.
(d) In connection with the Shareholder Commitment described in
paragraph 3 of Schedule 4.1, EHC and EI are entitled to receive Guarantee
Fees from the Partnership of 1.5% per annum. As noted in Section 2.1,
either (i) at the Closing EHC and EI will assign to EPP or (ii) prior to
the Closing Enron will assign to Enron DR, the right to receive such
Guarantee Fees. Upon payment by EPP of any indemnity payment under this
Section 4.1 with respect to the Shareholder Commitment described in
paragraph 3 of Schedule 4.1, Enron will assign to EPP its reimbursement
rights with respect to such payment under the Reimbursement Agreement.
(e) Upon payment by EPP of any indemnity payment under this
Section 4.1 with respect to the Shareholder Commitment described in
paragraph 4 of Schedule 4.1, Enron will assign to EPP its reimbursement
rights with respect to such payment under the Reimbursement Agreement.
4.2 NON-LIABILITY OF EHC AND EI FOR LIABILITIES OF ENRON DR, ENRON
OPERATIONS AND OTHER PERSONS. EPP warrants and covenants that, upon transfer of
the Ownership Interest pursuant to this Agreement, EHC and EI and the related
persons (as such term is defined in Section 4.4 hereof) of either of them will
have no liability or obligation to EPP (except for liabilities and obligations
under this Agreement) or any third party with respect to the debts and
liabilities of Enron DR, Enron Operations, the Partnership or the O&M
Partnership, whether incurred before or after the date hereof, and EPP hereby
agrees to indemnify and hold harmless EHC and EI and the related persons (as
such term is defined in Section 4.4 hereof) of either of them against any such
liability or obligation.
4.3 MAINTENANCE OF PARTNERSHIP TAX STATUS. EPP will take such action
as may be required from time to time to maintain the classification of the
Partnership and the O&M Partnership as partnerships for U.S. federal tax
purposes; provided, however, that EPP will not be required to take any action
to comply with any classification requirement that may be imposed after the
date of this Agreement.
4.4 INDEMNIFICATION. Each of EHC and Enron Global Power & Pipelines
L.L.C. (each an "Indemnifying Party") hereby agrees to indemnify, defend and
hold harmless the other, its directors, officers, and employees, its controlled
and controlling persons and persons under common control, and their respective
directors, officers and employees (collectively "related persons," provided
that related persons of EHC shall exclude Enron Global Power & Pipelines
L.L.C., persons controlled by it and the directors, officers and employees of
Enron Global Power & Pipelines L.L.C. and such persons in their capacities as
such, and related persons of Enron Global Power & Pipelines L.L.C. shall
exclude EHC and its related persons), from and against all Claims (as
hereinafter defined) asserted against, resulting to, imposed upon or incurred
by such party or such party's related persons (an "Indemnified Party"),
directly or indirectly, by reason of, arising out of, or resulting from (a) the
inaccuracy or breach of any representation or warranty of the Indemnifying
Party contained in or made pursuant to this Agreement or (b) the breach of any
covenant of the Indemnifying Party contained in or made pursuant to this
Agreement. The term "Claim" will mean (i) all debts, liabilities and
obligations; (ii) all losses, damages, costs and expenses including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys' fees and expenses; and (iii)
all demands, claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments, whether or
not ultimately determined to be valid.
4.5 DEFENSE OF THIRD PARTY CLAIMS. In the event any Claim is asserted
against any Indemnified Party by a third party, the Indemnified Party will with
reasonable promptness notify the Indemnifying Party of such Claim; provided
that failure to give such notice will not relieve the Indemnifying Party of its
obligations under this Article IV unless the Indemnifying Party is actually and
materially prejudiced thereby. Pursuant to its defense obligation provided in
this Section 4.5, the Indemnifying Party will employ counsel satisfactory to
the Indemnified Party and will take such other steps as are reasonably
necessary or appropriate to defend the Indemnified Party against such Claim.
4.6 PRESERVATION OF RECORDS. Enron Global Power & Pipelines L.L.C.
agrees that (a) for five years after the Closing Date (or, if longer, through
the end of any applicable statute of limitations of any relevant jurisdiction),
it will preserve the corporate, financial and other books and records of Enron
DR, Enron Operations, the Partnership and the O&M Partnership and will in each
case furnish to Enron reasonable access thereto in the event Enron or any of
its affiliates needs information therefrom in order to comply with any
accounting, financial reporting, auditing, tax reporting, regulatory filing or
other requirement to which it is subject.
4.7 RELEASE FROM LIABILITY. Enron Global Power & Pipelines L.L.C.
agrees to use reasonable efforts to obtain the release of Enron and its related
persons from the Shareholder Commitments assumed by EPP pursuant to Section
4.1.
ARTICLE V
CLOSING
5.1 CLOSING DATE AND PLACE. The Closing Date will be June 17, 1996, or
such date thereafter as may be agreed between the parties hereto, but not later
than June 18, 1996. The closing of the purchase and sale of the Ownership
Interest (the "Closing") will take place in the offices of EPP. At the
Closing, the consideration specified in Section 2.1 will be delivered.
5.2 CONDITIONS.
(a) The obligations of each of EHC, EI and EPP to consummate the
sale of the Ownership Interest will be subject to the satisfaction or
waiver by such party of the following conditions:
(i) the Designated Closing Conditions shall have been
satisfied (except that the truth of EHC's representations and
warranties will not be a condition to the obligations of EHC and
EI);
(ii) that there shall be no more than $1,013,427.15
aggregate principal amount of Excess Overrun Loans outstanding; and
(iii) there shall have been no Recoveries other than those
used to repay Excess Overrun Loans or reflected in the Model.
(b) The obligations of EHC and EI to consummate the sale of the
Ownership Interest will be subject to the satisfaction or waiver by EHC
and EI of the following further conditions:
(i) EPP shall have received a fairness opinion that meets
the requirements of Section 7.06 of the Company Agreement;
(ii) the representations and warranties of EPP in this
Agreement shall be true and correct on and as of the Closing Date;
and
(iii) EPP shall have executed and delivered to Enron an
agreement in the form of Schedule 5.2(b) to this Agreement (the
"Ownership Maintenance Agreement").
(c) The obligation of EPP to consummate the purchase and sale of
the Ownership Interest shall be subject to the satisfaction or waiver by
such party of the following further conditions:
(i) EPP shall have received opinions of counsel to EHC and
EI reasonably acceptable to the Oversight Committee as to the
matters set forth in Schedule 5.2(c) to this Agreement.
(ii) EPP shall have received a fairness opinion satisfactory
to the Oversight Committee meeting the requirements of Section 7.06
of the Company Agreement and stating that the acquisition by EPP of
the Ownership Interest is fair to the public shareholders of EPP
from a financial point of view; and
(iii) Enron shall have executed and delivered to EPP the
Ownership Maintenance Agreement.
5.3 FAILURE TO MEET CLOSING CONDITIONS.
(a) If all conditions set forth in Section 5.2(a) are not satisfied or
waived by 11:59 p.m. Central Time on June 18, 1996 (the "Termination Date"),
this Agreement may be terminated by either party by notice to the other.
(b) If all conditions set forth in Section 5.2(b) are not satisfied or
waived by EHC and EI by the Termination Date, this Agreement may be terminated
by EHC or EI by notice to EPP.
(c) If all conditions set forth in Section 5.2(c) are not satisfied or
waived by EPP by the Termination Date, this Agreement may be terminated by EPP
by notice to EHC and EI.
(d) Upon any termination in accordance with this Section 5.3, (i) none
of the parties will have any liability to any other party (except for any
liability arising from the breach of this Agreement prior to the such
termination) and (ii) the rights of Enron (or the applicable Enron Party, as
such term is defined in the Purchase Right Agreement) to sell or dispose of the
Ownership Interest will be governed by Section 2.02(f) of the Purchase Right
Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 ARBITRATION. With respect to any dispute pursuant to this
Agreement as to which no form of dispute resolution is set forth herein, the
parties hereto agree to submit to arbitration in the City of Houston, Texas any
dispute arising out of this Agreement under the Commercial Arbitration Rules of
the American Arbitration Association. The parties agree that any such dispute
shall be submitted to three arbitrators selected from the panel of arbitrators
of the American Arbitration Association. The parties further agree that they
will abide by and perform any award rendered by the arbitrators and that a
judgment of a court having jurisdiction may be entered upon the award.
6.1 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the substantive law of Texas without giving effect to the
principles of conflicts of law thereof.
6.2 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which will be an original, but all of which together will constitute one and
the same agreement. This Agreement may be executed by any party by facsimile
to the other parties of an executed signature page hereof, to be followed as
promptly as practicable by delivery of a manually executed signature page.
6.3 SURVIVAL. The representations, warranties and covenants herein
will survive the transfer and sale of the Ownership Interest hereunder.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ENRON HOLDING COMPANY L.L.C.
By
Name:
Title:
ENRON INTERNATIONAL INC.
By
Name:
Title:
ENRON GLOBAL POWER &
PIPELINES L.L.C.
By Name:
Title:
-1-
<PAGE>
SCHEDULE 3.1(G)
TO PURCHASE AGREEMENT
PROJECT DOCUMENTS
I.PARTNERSHIP DOCUMENTS
A.Amended and Restated Agreement of Limited Partnership of SECLP
dated as of December 15, 1994
B.Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of Smith/Enron Cogeneration Limited Partnership, dated
effective as of April 30, 1996
C.Amended and Restated Agreement of Limited Partnership of the
Smith/Enron O&M Limited Partnership ("Smith O&M") dated as of March
1, 1994
D.Assignment of Partnership Interest and Assumption Agreement
between Atlantic Commercial Finance B.V. and Enron Dominican
Republic Operations Ltd.
E.Admission Agreement by Enron Dominican Republic Operations Ltd.
F.Assignment of Partnership Interest and Assumption Agreement
between Enron Reserve I B.V. and Enron Dominican Republic
Operations Ltd.
G.Admission Agreement by Enron Dominican Republic Operations Ltd.
H.Undertaking by Enron Dominican Republic Operations Ltd.
I.Undertaking by Enron Dominican Republic Ltd.
J.Agreement Among Partners among Enron Dominican Republic
Operations Ltd., Enron Dominican Republic Ltd., Smith Cogeneration
Dominicana, Inc., Smith Cogeneration International, Inc. and Smith
Dominicana Holding Limited Partnership, dated effective as of
April 30, 1996
II.OPERATION DOCUMENTS
A.Administrative Services and Operation and Maintenance Agreement
between Smith O&M and SECLP dated as of March 1, 1994
B.Amendment No. 1 to the Administrative Services and Operation and
Maintenance Agreement, dated effective as of April 30, 1996
C.Technical Services Agreement between Smith/Enron O&M and Enron
Power Operating Company dated as of March 1, 1994
D.First Amendment to Technical Services Agreement between
Smith/Enron O&M and Enron Power Operating Company dated as of
December 15, 1994
E.Construction Completion Agreement between Enron Power
Construction Company ("EPCC") and SECLP dated as of September 16,
1994
F.Construction Contract between General Electric Company and SECLP
G.Independent Engineer's Contract between Stone & Webster
Management Consultants, Inc. and Morgan Stanley & Co., Inc. dated
as of May 2, 1994
H.
-2-
<PAGE>
Letter Agreement between Stone & Webster Management
Consultants, Inc. and IFC, dated May 1, 1994
I.Foreign Exchange Services Contract between Citibank, N.A. and
SECLP (English translation) dated as of April 15, 1994
J.Foreign Exchange Services Contract between Banco Popular
Dominicano and SECLP (English translation) dated as of April 29,
1994
K.Foreign Exchange Services Contract between Banco BHD, S.A. and
SECLP (English translation) dated as of November 11, 1994
L.Foreign Exchange Services Contract between Banco Nacional de
Cr<e'>dito, S.A. and SECLP (English translation) dated as of
November 15, 1994
M.Fuel Oil Supply Agreement (No. 6 Fuel Oil) between Enron Fuels
International, Inc. and SECLP dated as of September 15, 1994
N.Fuel Oil Supply Agreement (No. 2 Fuel Oil) between Enron Fuels
International, Inc. and SECLP dated as of September 15, 1994
O.Letter Agreement between Enron Fuels International, Inc. and
SECLP dated as of November 3, 1994
P.Guaranty Agreement (No. 6 Fuel Oil) by Enron Corp. in favor of
SECLP dated as of September 15, 1994
Q.Guaranty Agreement (No. 2 Fuel Oil) by Enron Corp. in favor of
SECLP dated as of September 15, 1994
R.Electric Energy Supply and Sales Contract among Corporacion
Dominicana de Electricidad, the Government of the Dominican
Republic and SECLP (English translation) dated as of July 26, 1993
S.Amendment to Electric Energy Supply and Sales Contract (English
translation) dated as of November 2, 1993
T.Amendment No. 2 and Consent to Assignment of Electric Energy
Supply and Sales Contract (English translation) dated as of
November 1, 1994
U.Letter Agreement between SECLP and Corporacion Dominicana de
Electricidad modifying Amendment No. 2 and Consent to Assignment of
Electric Energy Supply and Sales Contract regarding dates of
payment for energy dated as of November 4, 1994.
V.Letter of Credit Agreement between SECLP and the Government of
the Dominican Republic dated as of 1993
W.Irrevocable Standby Letter of Credit Number 23611628 (D.R. Letter
of Credit)
III.Investment Agreement between Smith/Enron Cogeneration Limited
Partnership ("SECLP") AND INTERNATIONAL FINANCE CORPORATION ("IFC") AND
LOAN AGREEMENT WITH ENRON CORP.
A.Investment Agreement between SECLP and IFC dated as of
November 1, 1994
B.Amendment No. 1 to Investment Agreement between SECLP and IFC
dated as of December 15, 1994
C.Accounts and Disbursement Agreement between SECLP and Citibank,
N.A. dated as of December 15, 1994
D.Equity Contribution Agreement among Enron Reserve I B.V.,
Atlantic Commercial Finance B.V., Smith Cogeneration Dominicana,
Inc., and Smith Cogeneration International, Inc. dated as of
December 15, 1994
E.Share Retention Agreement among SECLP, Enron Reserve I B.V.,
Atlantic Commercial Finance-B.V., Smith Cogeneration Dominicana,
Inc. and IFC dated as of November 1, 1994
F.Security Agreement between SECLP and Citibank, N.A. dated as of
November 1, 1994
G.Partner Pledge Agreement of Enron Dominican Republic Operations
Ltd. dated as of July 25, 1995
H.Partner Pledge Agreement of Enron Dominican Republic Ltd. dated
as of July 25, 1995
I.Partner Pledge Agreement between Smith Cogeneration Dominicana,
Inc. and Citibank, N.A. dated as of December 15, 1994
J.Partner Pledge Agreement between Smith Cogeneration
International, Inc. and Citibank, N.A. dated as of December 15,
1994
K.Tax Indemnity Reimbursement Agreement between SECLP and Enron
Corp. dated as of December 15, 1994
L.Base Debt Service Reserve Reimbursement Agreement between SECLP
and Enron Corp. dated as of December 15, 1994
M.First Priority Naval Mortgage on the Smith/Enron I dated as of
December 22, 1994
N.Certificate of Registration evidencing First Priority Naval
Mortgage on the Smith/Enron I
O.First Priority Land Mortgage in favor of IFC on Parcel 386 dated
as of December 19, 1994
P.Certificate Title of Parcel 386
Q.First Priority Land Mortgage in favor of IFC on Parcel 215-A-120-
Sub-47-Mod. dated as of December 19, 1994
R.Certificate Title of Parcel 215-A-120-Sub-47-Mod.
S.Irrevocable Standby Letter of Credit Number 23611628 by Citibank,
N.A. to SECLP dated as of May 6, 1994.
T.Chattel Mortgage Agreement dated as of December 16, 1994
U.Certification of Inscription of Chattel Mortgage dated as of
December 19, 1994
V.Consent and Agreement (Construction Completion Agreement) between
Enron Power Construction Company and Citibank, N.A.
W.Consent and Agreement (System Supply Contract) between General
Electric Company, SECLP and Citibank, N.A.
X.Consent and Agreement (O&M Agreement) between Smith/Enron O&M
Limited Partnership and Citibank, N.A.
Y.Consent and Agreement (Fuel Oil Supply Agreements) between Enron
Fuels International, Inc. and Citibank, N.A.
Z.First Priority Naval Mortgage on the Smith/Enron II
27.Certificate of Registration evidencing First Priority Naval
Mortgage on the Smith/Enron II
IV.US $50,000 B LOAN FINANCING
A.US $15,000,000 Participation Agreement between Internationale
Nederlanden Bank ("ING") and IFC dated as of February 7, 1995
B.US $35,000,000 Participation Agreement between ING and IFC dated
as of February 7, 1995
C.Amendment No. 2 to Investment Agreement between IFC and SECLP
dated as of February 7, 1995
D.Amendment No. 1 to Guaranty Agreement by Enron Corp. in favor of
Citibank N.A. as collateral agent dated as of December 15, 1994
E.Supplemental B Loan Agreement among Enron Corp., IFC, SECLP and
the Collateral Agent dated as of February 7, 1995
F.Amendment No. 1 to Accounts and Disbursement Agreement between
SECLP and the Collateral Agent dated as of February 7, 1995
G.Amendment No. 1 to the First Priority Naval Mortgage on the
Smith/Enron I; Certificate of Preliminary Inscription dated as of
February 7, 1995
H.First Priority Land and Chattel Mortgages on Land Parcels
Nos. 215 and 386 dated as of February 6, 1995
I.Mandate Letter among IFC, ING, SECLP and Enron Development Corp.
dated as of February 15, 1995
V.US $32,000,000 B LOAN FINANCING
A.Participation Agreement between ABN Amro Bank N.V. ("ABN Amro
Bank") and IFC for US $5,000,000 dated as of May 22, 1995
B.Participation Agreement between Credit Lyonnais and IFC for US
$5,000,000 dated as of May 22, 1995
C.Participation Agreement between Dresdner Bank AG, New York Branch
and Grand Cayman Branch ("Dresdner Bank") and IFC for US $5,000,000
dated as of May 22, 1995
D.Participation Agreement between Nederlandse Financierings -
Maatschappij Voor Ontwikkelingslanden N.V. ("FMO") and IFC for US
$12,000,000 dated as of May 22, 1995
E.Participation Agreement between Mees Pierson N.V. ("Mees
Pierson") and IFC for US $5,000,000 dated as of May 22, 1995
F.Amendment No. 3 to Investment Agreement between SECLP and IFC
dated as of May 22, 1995
G.Amendment to First Priority Land Mortgage in favor of IFC on
Parcel 386 dated as of June 1, 1995
H.Amendment to First Priority Land Mortgage in favor of IFC on
Parcel 215-A-120-Sub-47-Mod. dated as of June 1, 1995
I.Authorization to Register Land Mortgages (IFC) dated as of
June 1, 1995
J.Deed of Title on Parcel 386 issued by Title Registry Office,
Puerto Plata
K.Deed of Title on Parcel 215-A-120-Sub.-47-Mod. issued by Title
Registry Office, Puerto Plata
L.Amendment to Chattel Mortgage dated as of June 1, 1995
M.Certificate of Filing of Amendment to Chattel Mortgage
N.Ratification on behalf of SECLP of all previous mortgages dated
as of June, 1995
O.Second Amendment to First Priority Naval Mortgage on
Smith/Enron I dated as of May 23, 1995
P.Certificate issued by Consulate of Panama as to the Preliminary
Registration of Second Amendment to the First Priority Naval
Mortgage on Smith/Enron I
Q.Amendment to Term Sheet for IFC B Loan registered with the
Central Bank of the Dominican Republic dated as of May 22,1995
R.Power of Attorney of Enron Reserve I B.V. appointing Richard A.
Lammers
S.Power of Attorney of SECLP authorizing execution of Naval
Mortgages
VI.US $20,000 LOAN AGREEMENT WITH COMMONWEALTH DEVELOPMENT CORPORATION
A.Loan Agreement between SECLP and Commonwealth Development
Corporation ("CDC") dated as of June 8, 1995
B.Amendment No. 2 to Accounts and Disbursement Agreement between
SECLP and Citibank, N.A. dated as of June 8, 1995
C.Amendment No. 1 to Equity to Contribution Agreement among Enron
Reserve I B.V., Atlantic Commercial Finance B.V., Smith
Cogeneration Dominicana, Inc. and Smith Cogeneration
International, Inc. dated as of June 8, 1995
D.Amendment No. 1 to Share Retention Agreement among SECLP, Enron
Reserve I B.V., Atlantic Commercial Finance B.V., Smith
Cogeneration Dominicana, Inc. and the IFC dated as of June 8,
1995
E.Amendment No. 1 to Security Agreement between SECLP and Citibank,
N.A. dated as of June 8, 1995
F.Amendment No. 1 to Partner Pledge Agreement between Smith
Cogeneration Dominicana, Inc. and Citibank, N.A. dated as of
June 8, 1995
G.Amendment No. 1 to Partner Pledge Agreement between Smith
Cogeneration International, Inc. and Citibank, N.A. dated as of
June 8, 1995
H.Amendment No. 1 to Tax Indemnity Reimbursement Agreement between
SECLP and Enron Corp. dated as of June 8, 1995
I.Amendment No. 1 to Base Debt Service Reserve Reimbursement
Agreement between SECLP and Enron Corp. dated as of June 8, 1995
J.Amendment No. 4 to Investment Agreement between SECLP and the
IFC dated as of June 8, 1995
K.Second Priority Panamanian Naval Mortgage on the Smith/Enron I
dated as of June 22, 1995
L.Certificate issued by the Panama Consulate as to the preliminary
registration of the Second Priority Panamanian Naval Mortgage
M.Power of Attorney of SECLP authorizing execution of Second
Priority Panamanian Naval Mortgage
N.Land Mortgages on Parcel 386 and Parcel 215-A-120-Subd.-47 dated
as of June 22, 1995
O.Enron Corp.'s Partial Release of Mortgage on Parcel 386 and
Parcel 215-A-120-Subd.-47 dated as of June 22, 1995
P.Deeds of Title issued by Title Registry Office, Puerto Plata
dated as of June 5, 1995
Q.Term Sheet for CDC Loans dated as of June 16, 1995
VII.DM $15,000,000 Loan Agreement with DEG - Deutsche Investitions-und
ENTWICKLUNGSGESELLSCHAFT MBH ("DEG)
A.Loan Agreement between SECLP and DEG dated as of July 27,1995
B.Amendment No. 5 to Investment Agreement between SECLP and IFC
dated as of August 31, 1995
C.Amendment No. 3 to Accounts and Disbursement Agreement between
SECLP and Citibank, N.A., as Collateral Agent dated as of
August 31, 1995
D.Third Priority Naval Mortgage on Smith/Enron I in favor of
Citibank, N.A., as Agent, dated as of September 7, 1995
E.Certificate issued by Consulate of Panama as to the preliminary
registration of the Third Priority Naval Mortgage on Smith/Enron I
F.Second Priority Naval Mortgage on Smith/Enron II dated as of
September 7,1995
G.Certificate issued by Consulate of Panama as to the preliminary
registration of the Second Priority Naval Mortgage on Smith/Enron
II
H.Shared First Priority Land Mortgage on Parcel 386 dated as of
September 8,1995
I.Shared First Priority Land Mortgage on Parcel 215-A-1209-Sub-47-
Mod dated as of September 8, 1995
J.Enron Corp.'s Partial Release of Mortgage on Parcel 386 dated as
of September 8, 1995
K.Enron Corp.'s Partial Release of Mortgage on Parcel 215-A-120-
Sub-47-Mod
L.Deed of Title on Parcel 386 issued by Title Registry Office,
Puerto Plata dated as of September 11, 1995
M.Deed of Title on Parcel 215-A-120-Sub-47-Mod issued by Title
Registry Office, Puerto Plata dated as of September 11, 1995
N.Power of Attorney of Enron Dominican Republic Operations Ltd.
appointing Richard A. Lammers dated as of August 18, 1995
O.Power of Attorney of Enron Dominican Republic Operations Ltd.
appointing Edgar Pichardo dated as of August 18, 1995
P.Power of Attorney of SECLP authorizing Richard Lammers to execute
Naval Mortgages dated as of August 2, 1995
Q.Term Sheet for DEG Loan dated as of August 28, 1995
R.First Extension Letter amending Article 19(9) of Loan Agreement
to defer deadline for entry into Swap Agreement dated as of
August 30, 1995
S.Second Extension Letter amending Article 19(9) of Loan Agreement
to defer deadline for entry into Swap Agreement dated as of
August 8,1995
T.Swap Agreement between SECLP and IFC dated as of August 31, 1995
U.Swap Confirmation Letter from IFC to SECLP dated as of December
13, 1995.
VIII.US $3,000,000 IFC Subordinated Loan Participation of Nederlandse
Financierings - MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN N.V. ("FMO")
A.Participation Agreement between IFC and FMO dated as of
August 23, 1995
B.Amendment No. 4 to Investment Agreement between SECLP and IFC
dated as of August 23, 1995
C.Amendment to the Share Second Priority Land Mortgage on Parcel
386 dated as of August 25, 1995
D.Amendment to Shared Second Priority Land Mortgage on Parcel 215-
A-120-Sub-47-Mod dated as of August 25, 1995
E.Partial Release of Shared First Priority Land Mortgage on Parcel
386 dated as of August 25, 1995
F.Partial Release of Shared First Priority Land Mortgage on Parcel
215-A-120-Sub-47-Mod dated as of August 25, 1995
G.Deed of Title on Parcel 386 issued by Title Registry Office,
Puerto Plata dated as of August 25, 1995
H.Deed of Title on Parcel 215-A-120-Sub-47-Mod. issued by Title
Registry Office, Puerto Plata dated as of August 25, 1995
I.Amendment to Chattel Mortgage dated as of August 25, 1995
J.Certification of Registration of Amendment to Chattel Mortgage
K.Third Amendment to First Priority Naval Mortgage on Smith/Enron I
dated as of August 24, 1995
L.Certificate issued by Consulate of Panama as to the preliminary
registration of Third Amendment to First Priority Naval Mortgage on
Smith/Enron I
M.First Amendment to First Priority Naval Mortgage on Smith/Enron
II dated as of August 24, 1995
N.Certificate issued by Consulate of Panama as to the preliminary
registration of First Amendment to First Priority Naval Mortgage on
Smith/Enron II
O.Amendment to Amended and Restated Term Sheet for IFC Subordinated
Loan Participation (for registration with the Central Bank of the
Dominican Republic) dated as of August 23, 1995
P.Powers of Attorney of Enron Dominican Republic Operations Ltd.
appointing Richard A. Lammers and Edgar Pichardo dated as of
August 15, 1995
Q.Power of Attorney of Enron Dominican Republic Operations Ltd.
authorizing execution of Naval Mortgages dated as of August 15,
1995
IX.FINANCIAL - MARAD DOCUMENTS
A.Commitment to Guarantee Obligations by The United States of
America Under Title XI of the Merchant Marine Act, 1936, as
amended, Accepted by SECLP, Contract No. MA-13160, dated as of
February 28, 1996
B.Bond Purchase Agreement by SECLP dated as of February 28, 1996
C.Trust Indenture between SECLP and Fleet National Bank of
Connecticut dated as of February 28, 1996
D.Authorization Agreement, Contract No. MA-13161
E.Secretary's Supplemental Indenture dated ________ among SECLP,
Fleet National Bank of Connecticut and the United States of America
F.Security Agreement between SECLP and the Untied States of
America, Contract No. MA-13162, dated February 28, 1996
G.Promissory Note made by SECLP in favor of the United States of
America dated February 28, 1996
H.Naval Fleet Mortgage on the Smith/Enron I and Smith/Enron II,
Contract No. MA-13163, dated as of February 28, 1996 between SECLP
and the United States of America
I.Second Amended and Restated Intercreditor, Collateral Agency and
Collateral Sharing Agreement among IFC, CDC, DEG, the United States
of America and Citibank, N.A., Contract No. 13164, dated as of
February 26, 1996
J.Vessels Removal Guarantee between Enron Corp. and the United
States of America dated as of February 28, 1996
K.Agreement Concerning Compliance with Environmental Standards
between Enron Development Corp., Smith Cogeneration Dominicana,
Inc., the United States of America, Contract No. MA-13164, dated as
of February 28, 1996
L.Reimbursement Agreement among SECLP, Enron, Enron Development
Corp. and Smith Cogeneration Dominicana, Inc., dated as of
February 28, 1996
M.Power of Attorney for Enron Dominican Republic Ltd, appointing
Richard Lammers dated as of February 27, 1996
N.Term Sheet for United States Government Export Ship Financing
Bonds
O.Amendment No. 2 to Partner Pledge Agreement between Smith
Cogeneration Dominicana, Inc. and Citibank, N.A. dated as of
February 28, 1996
P.Amendment No. 2 to Partner Pledge Agreement between Smith
Cogeneration Dominicana, Inc. and Citibank, N.A. dated as of
February 28, 1996
Q.Amendment No. 1 to the Partner Pledge Agreement of Enron
Dominican Republic Operations Ltd. dated as of February 28, 1996
R.Amendment No. 1 to the Partner Pledge Agreement of Enron
Dominican Republic Ltd. dated as of February 28, 1996
S.Shared First Priority Land Mortgage in favor of MARAD on Parcel
386 dated as of February 29, 1996
T.Shared First Priority Land Mortgage in favor of MARAD on Parcel
215-A-120-Sub-47-Mod dated as of February 29, 1996
U.Cancellation of Shared First Priority Land Mortgage in favor of
Enron Corp. on Parcel 386 dated as of February 29, 1996
V.Cancellation of Shared First Priority Land Mortgage in favor of
Enron Corp. on Parcel 215-A-120-Sub-47-Mod dated as of February 29,
1996
W.Reduction of Shared First Priority Land Mortgage in respect of
IFC B Loan on Parcel 386 dated as of February 29, 1996
X.Reduction of Shared First Priority Land Mortgage in respect of
IFC B Loan on Parcel 215-A-120-Sub-47-Mod dated as of February 29,
1996
Y.Reduction of Shared First Priority Land Mortgage in respect of
US$8 million CDC Loan on Parcel 386 dated as of February 29, 1996
Z.Reduction of Shared First Priority Land Mortgage in respect of
US$8 million CDC Loan on Parcel 215-A-120-Sub-47-Mod dated as of
February 29, 1996
27.Certificate of Registration of Naval Mortgage by the Consulate
of Panama on Smith/Enron I and II dated as of February 28, 1996
28.Deeds of Title issued by the Title Registry Office, Puerto Plata
29.Amendment No. 4 to Accounts and Disbursement Agreement dated as
of February 28, 1996
X.FINANCING - FACILITY COMPLETION DOCUMENTS
A.Amendment No. 5 to Accounts and Disbursement Agreement between
SECLP and Citibank, N.A. dated as of April 30, 1996
B.Amendment No. 6 to Investment Agreement between SECLP and IFC
dated as of April 30, 1996
C.Sponsor Support Agreement among Enron Dominican Republic
Operations Ltd., Enron Corp. and IFC dated April 30, 1996
D.Facility Completion Certificate from SECLP to IFC dated May 2,
1996
E.Guaranty Agreement by Enron Corp. in favor of Citibank, N.A.
dated April 30, 1996
F.Facility Completion Confirmation to SECLP from IFC dated May 2,
1996
XI.MISCELLANEOUS DOCUMENTS
A.Settlement Agreement with Hotelera del Atlantico S.A.
B.Partner Pledge Agreement of Smith Dominicana Holding Limited
Partnership, dated as of April 30, 1996
C.Letter of Credit increased to US$24MM
D.Release Letter by Smith Cogeneration International, Inc., Smith
Cogeneration Dominicana, Inc. and Smith Dominicana Holding Limited
Partnership in favor of Enron Dominican Republic Operations Ltd.
dated effective as of April 30, 1996
E.Letter from the Legal Advisor to the Executive Branch and General
Electric Company General Administrator to SECLP regarding the
payment plan for past due amounts dated as of April 18, 1996
F.Letter #5933 from the President of the Dominican Republic to the
Secretary of Finance authorizing the transfer of 27.5 million pesos
to SECLP dated as of April 19, 1996
G.Letter #5937 from the President of the Dominican Republic to the
General Administrator of the Corporacion Dominicana de Electricidad
regarding the payment to SECLP of US$4.5 million dated as of April
19, 1996
H.IFC letter to participants supporting SECLP payment arrangements
with Dominican Republic Government
XII.OTHER
1. Shareholder Commitments listed on Schedule 4.1 to the Purchase
Agreement of which this Schedule 3.1(g) forms a part
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SCHEDULE 4.1
TO PURCHASE AGREEMENT
SHAREHOLDER COMMITMENTS
1. All obligations of Enron arising under the Base Debt Service Reserve
Requirement Guaranty dated as of August 2, 1995 by Enron in favor of
Citibank, N.A.
2. All obligations of Enron arising under Section 2(c) of the Second Amended
and Restated Intercreditor, Collateral Agency and Collateral Sharing
Agreement among International Finance Corporation, Commonwealth
Development Corporation, DEG - Deutsche Investitions-und
Entwicklungsgesellschaft mbH, the United States of America and Citibank
N.A., Contract No. 13164, dated as of February 26, 1996.
3. All obligations of Enron arising under the Vessels Removal Guarantee
dated February 28, 1996 from Enron to the United States of America
represented by the Secretary of Transportation acting by and through the
Maritime Administrator.
4. All obligations of Enron Development Corp. under the Agreement Concerning
Compliance with Environmental Standards, dated as of February 28, 1996 by
Enron Development Corp., Smith Cogeneration Dominicana, Inc. and the
United States of America represented by the Secretary of Transportation
acting by and through the Maritime Administrator.
5. All obligations of Enron under the Sponsor Support Agreement dated as of
April 30, 1996 among Enron Operations, Enron and International Finance
Corporation.
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<PAGE>
SCHEDULE 5.2(B)
TO PURCHASE AGREEMENT
OWNERSHIP MAINTENANCE AGREEMENT
[Enron Corp. Letterhead]
June 17, 1996
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Attn: Chief Executive Officer
Re: Purchase Agreement (the "Purchase Agreement") dated as of June 17,
1996, among Enron Holding Company L.L.C., a Delaware limited
liability company ("EHC"), Enron International Inc., a Delaware
corporation ("EI"), and Enron Global Power & Pipelines L.L.C., a
Delaware limited liability company ("EPP")
Gentlemen:
As of the date hereof, EPP has purchased from EHC and EI, in accordance
with the Purchase Agreement, the stock of Enron DR and Enron Operations (as
defined in the Purchase Agreement), which in turn own in the aggregate 50% of
the partnership capital of Smith\Enron Cogeneration Limited Partnership, a
Turks and Caicos Islands limited partnership (the "Partnership"), and 50% of
the partnership capital of Smith/Enron O&M Limited Partnership, a Turks and
Caicos Islands limited partnership (the "O&M Partnership"). EHC and EI are
indirect subsidiaries of Enron Corp., a Delaware corporation ("Enron"). In
satisfaction of certain conditions to the obligation of EHC, EI and EPP to
consummate such purchase in accordance with the Purchase Agreement, Enron and
EPP hereby agree as follows:
1. Capitalized terms used but not defined in this letter agreement
shall have the meanings given such terms in the Purchase Agreement.
2. Enron hereby agrees that it will (a) at all times during any period
in which any of the IFC Loans, as such term is defined in the Investment
Agreement dated as of November 1, 1994 between the Partnership and IFC (the
"Notes"), are outstanding, maintain ownership, directly or indirectly through
wholly owned subsidiaries, of at least 50% of the outstanding EPP Common Shares
or (b) indemnify EPP and hold it harmless against, all Claims based on the
breach of any provision in any agreement requiring Enron to maintain a
specified ownership interest in the Partnership (collectively "Indemnified
Matters"), subject to the following conditions:
a. In the event any Claim is asserted against EPP, Enron DR, Enron
Operations, the Partnership or the O&M Partnership by a third
party, EPP will with reasonable promptness notify Enron of such
Claim; provided that failure to give such notice will not relieve
Enron of its obligations under this paragraph 2 unless Enron is
actually and materially prejudiced thereby.
b. Enron, by written notice to EPP, may elect to undertake, conduct
and control, through counsel of its own choosing and at its
expense, the settlement or defense with respect to any Indemnified
Matter. If Enron makes such an election, (i) EPP shall cooperate
in good faith with Enron in connection with such settlement or
defense, (ii) Enron shall not be liable for EPP's legal or other
expenses, other than reasonable costs of investigation,
subsequently incurred by EPP in connection with such settlement or
defense, and (iii) EPP shall have the right to employ its own
counsel in connection with such settlement or defense, but the fees
and expenses of such counsel shall be borne and paid by EPP.
c. Notwithstanding the provisions of paragraph 2.b. above, Enron shall
be liable for EPP's reasonable legal and other expenses in
connection with the settlement or defense with respect to an
Indemnified Matter if (i) the employment of counsel by EPP has been
authorized by Enron, (ii) EPP shall have reasonably concluded that
the interests of EPP and Enron may conflict in the conduct of such
settlement or defense (in which case Enron shall not have the right
to direct such settlement or defense on behalf of EPP), or (iii)
Enron shall not in fact have employed counsel in connection with
such settlement or defense proceeding or shall not have continued
to defend such proceeding with reasonable diligence. Enron
nevertheless may participate at its own expense in such settlement
or defense. Enron shall not be liable for the fees and expenses of
more than one counsel for EPP in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. EPP
shall not enter into any settlement with respect to any Indemnified
Matter without the prior written consent of Enron, which consent
shall not be withheld unreasonably. Enron shall not be liable for
any such settlement without such consent.
d. Enron shall not be obligated to indemnify EPP with respect to any
Indemnified Matter attributable to the negligence, gross
negligence, or willful or criminal misconduct of EPP.
3. EPP hereby agrees that it will at all times during any period in
which any of the Notes are outstanding, maintain ownership, directly or
indirectly through controlled subsidiaries, of an aggregate 50% partner
interest in each of the Partnership and the O&M Partnership.
4. Enron hereby agrees that it will cause EHC at all times (i)(x) if
Equity Registration (as defined in the Purchase Agreement) is obtained by
October 1, 1996, the date such Equity Registration is obtained; (y) if Equity
Registration is not obtained by October 1, 1996 and the parties agree to "other
appropriate protections" pursuant to Section 2.2(h)(ii) of the Purchase
Agreement, the date of expiration of such protections; or (z) if such Equity
Registration is not obtained by October 1, 1996 and the parties do not agree to
"other appropriate protections," the earlier of (1) the date of payment to EPP
of the amount of the Equity Registration Effect (as finally determined pursuant
to Section 2.2(h)(i) of the Purchase Agreement) or (2) the date of the final
determination pursuant to Section 2.2(h)(iii) that the Equity Registration
Effect is either zero or payable by EPP, to maintain a net worth, computed on a
fair market value basis and excluding the Common Shares in EPP owned by EHC, at
least equal to the greater of (a) 10% of the aggregate capital contributions to
EPP and (b) $100,000,000, and (ii) thereafter until January 16, 2015 to
maintain a net worth, computed on a fair market value basis and excluding the
Common Shares in EPP owned by EHC, at least equal to the greater of (a) 10% of
the aggregate capital contributions to EPP and (b) $60,000,000.
Notwithstanding the foregoing, if (i) at the time any claim is made by EPP
against EHC under the Purchase Agreement, EHC's net worth is at least equal to
the amount specified in the immediately preceding sentence, and (ii) EHC's net
worth is reduced as a result of its payment of such claim, Enron will have no
obligation under this Agreement to restore EHC's net worth and will thereafter
be obligated to maintain EHC's net worth at an amount at least equal to the
amount required by the immediately preceding sentence less the amount of such
claim.
5. Enron agrees that it will perform the covenants required to be
performed by it set forth in Section 4.1(b)-(e) of the Purchase Agreement.
6. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.
Very truly yours,
ENRON CORP.
By:
Name:
Title:
Accepted and Agreed To:
ENRON GLOBAL POWER & PIPELINES L.L.C.
By:
Name:
Title:
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<PAGE>
SCHEDULE 5.2(c)
To Purchase Agreement
OPINIONS OF COUNSEL
[Hunter & Hunter Letterhead]
June 18, 1996
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Re: Purchase Agreement dated as of June 17, 1996, among Enron Holding Company
L.L.C., Enron International Inc. and Enron Global Power & Pipelines
L.L.C.
Dear Sirs,
We refer to the Purchase Agreement (the "Purchase Agreement") dated as of June
17, 1996, among Enron Holding Company L.L.C., a Delaware limited liability
company ("EHC"), Enron International Inc., a Delaware corporation ("EI") and
Enron Global Power & Pipelines L.L.C., a Delaware limited liability company
("EPP"), providing for the sale by EHC and EI of the issued Shares of Enron
Dominican Republic, Ltd., a Cayman Islands company ("Enron DR"), and Enron
Dominican Republic Operations, Ltd., a Cayman Islands company ("Enron
Operations"), to EPP. Capitalised terms used in this opinion and not otherwise
defined have the meanings given to them in the Purchase Agreement.
We have examined originals or telefax or other copies of the following (the
"Documents"):
(1) a copy as executed of the Purchase Agreement;
(2)(a) The Memorandum and Articles of Association of Enron DR (with all
amendments) as maintained at its registered office in the Cayman Islands;
(b) The Memorandum and Articles of Association of Enron Operations (with all
amendments) as maintained at its registered office in the Cayman Islands;
(c) The corporate records of Enron DR and Enron Operations at their
registered office in the Cayman Islands;
(d) Unanimous Written Resolutions of the Directors of Enron DR and Enron
Operations approving the transfer of the issued shares of Enron DR and
Enron Operations to EPP.
We have not examined the Purchase Right Agreement or any other Agreements or
documents referred to in the Purchase Agreement and this opinion is qualified
to the extent that such an examination would reveal any matter material hereto.
In giving this opinion we have relied upon the accuracy of the Certificate of a
Director of Enron DR and a Certificate of a Director of Enron Operations both
of which are dated June 17, 1996 without further verification. We have
assumed, without independent verification, the genuineness of all signatures,
authenticity of all documents submitted to us as originals and the conformity
with original documents of all documents submitted to us by telefax or as
copies or conformed copies.
On the basis of the foregoing and subject to qualifications below, we are of
the opinion that:
1. Each of Enron DR and Enron Operations is a company duly organized,
validly existing and in good standing under the laws of the Cayman Islands.
2. Except as set forth in the Documents, there are no outstanding
preemptive rights or other rights arising under Cayman Islands law to subscribe
for or to purchase any shares in Enron DR or Enron Operations.
3. The conveyance of the 100,020 issued Class A Ordinary Shares in the
capital of Enron DR (the "Enron DR Shares") and the 1,000 issued Ordinary
Shares in the capital of Enron Operations (the "Enron Operations Shares") to
EPP will not (i) conflict with or result in a breach of, give rise to any
preferential purchase right under, or require any consent which has not been
obtained under, any Document or any law of the Cayman Islands (to the extent
the failure to obtain the same could reasonably be expected to have a material
adverse effect on the Ownership Interest), (ii) result in the creation or
imposition of any lien or encumbrance on any of the property of Enron DR or
Enron Operations or (iii) with the passage of time or the giving of notice or
both, or the taking of any other action by a third party, have any of the
effects listed in clauses (i) and (ii) of this sentence.
4. The Enron DR Shares are the only issued and outstanding shares of
Enron DR and are validly issued, fully paid and nonassessable and were not
issued in violation of the preemptive rights of any person arising under Cayman
Islands law or the Documents. EHC and EI are registered in the Members'
Register of Enron DR as the holders of all of the outstanding shares of Enron
DR.
5. The Enron Operations Shares are the only issued and outstanding
shares of Enron Operations and are validly issued, fully paid and nonassessable
and were not issued in violation of the preemptive rights of any person arising
under Cayman Islands law or the Documents. EHC and EI are registered in the
Members' Register of Enron Operations as the holders of all of the outstanding
shares of Enron Operations.
6. There are not now any outstanding options, warrants, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any class
of capital stock of Enron DR or Enron Operations arising under Cayman Islands
law or the Documents.
The above opinions are subject to the following qualifications -
(a) The opinions in paragraphs 2 and 6 (and paragraphs (3)(ii) and 4
and 5 so far as they relate to preferential purchase rights or
preemptive rights) above relate to the general law of the Cayman
Islands and we express no opinion as the any particular agreement
or documents (other than the Documents) which may contain a right
to subscribe for or purchase or be preemptively offered as to any
Shares in Enron DR or Enron Operations or any warrants, options,
calls or commitments or rights convertible into shares of any class
of Enron DR or Enron Operations. However, the minute books of such
entities at their registered office in the Cayman Islands do not
indicate the existence of any such agreements or documents.
(b) With respect to the opinion in paragraph 4 above, on 1st March,
1996 Enron DR repurchased the 10 then outstanding unlimited
liability Class B Ordinary Shares in the capital of Enron DR from
B-Share Holdings Ltd., a Cayman Islands exempted company wholly
owned by Enron DR. There is no explicit Cayman Islands authority
for such a repurchase of an unlimited liability share. There are,
however, English common law authorities for such a repurchase and
generally English law authorities are of persuasive effect in the
Cayman Islands.
(c) With respect to the opinions in paragraphs 4 and 5 regarding shares
being fully paid and non-assessable, these are based solely on our
review of the corporate records at the registered office of Enron
DR and Enron Operations in the Cayman Islands without enquiry or
investigation into any underlying transactions.
We are practising in the Cayman Islands and do not purport to be experts on the
laws of any other jurisdiction, and we therefore express no opinion as to the
laws of any jurisdiction other than Cayman Islands law. This opinion is also
based upon the laws of the Cayman Islands in effect at the date hereof and is
given only as to the circumstances existing on the date hereof and known to us.
Except as specifically stated herein, we make no comment with regard to any
representations or warranties which may be made by any party in any of the
documents referred to above or otherwise.
This opinion is addressed to you and is solely for your benefit and that of
your legal advisors. You may give copies of this opinion to your legal
advisors who may rely on it as though it were also addressed to them. It may
not be relied upon by any other person without our prior written consent.
Yours faithfully,
HUNTER & HUNTER
per:____________________________
Rory Todd
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<PAGE>
[Misick & Stanbrook Letterhead]
June 18, 1996
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Re: Purchase Agreement dated as of June 17, 1996, among Enron Holding Company
L.L.C., Enron International Inc. and Enron Global Power & Pipelines
L.L.C.
Gentlemen:
We have acted as Turks & Caicos Islands counsel to Enron Holding Company
L.L.C., a Delaware limited liability company ("EHC"), and Enron International
Inc., a Delaware corporation ("EI"), in connection with the Purchase Agreement
("the Purchase Agreement") dated as of June 17, 1996, among EHC, EI and Enron
Global Power & Pipelines L.L.C., a Delaware limited liability company ("EPP"),
providing for the sale by EHC and EI of the stock of Enron Dominican Republic,
Ltd., a Cayman Islands company ("Enron DR") and Enron Dominican Republic
Operations, Ltd., a Cayman Islands company ("Enron Operations") to EPP.
Capitalized terms used in this opinion and not otherwise defined have the
meanings given to them in the Purchase Agreement.
In connection with this opinion, we have examined copies of the following
documents (the "Documents"):
(1) a copy as executed of the Purchase Agreement dated June 17, 1996;
(2) a copy as executed of the Amended and Restated Agreement of Limited
Partnership of Smith/Enron Cogeneration Limited Partnership, dated as of
December 15, 1994;
(3) a copy as executed of Amendment No. 1 to the Amended and Restated
Agreement of Limited Partnership of Smith/Enron Cogeneration Limited
Partnership, dated effective April 30, 1996; and
(4) a copy as executed of the Agreement of Limited Partnership of Smith/Enron
O&M Limited Partnership, dated as of March 1, 1994.
We also have examined and relied on corporate records, certificates of officers
of Enron DR and Enron Operations and such other documents and instruments as we
have deemed relevant and necessary as the basis for the opinions expressed
below. In our examination, we have assumed (i) the due authorization,
execution, and delivery of documents and instruments by all parties, (ii) the
legal capacity of all natural persons, (iii) the genuineness of all signatures,
(iv) the authenticity of all documents submitted to us as originals, and (v)
the conformity to the original documents of all documents submitted as copies.
As to factual matters not directly within our knowledge, we have relied solely
on and have assumed the genuineness and accuracy of statements made to us by
representatives of Enron DR, Enron Operations, the Partnership and the O&M
Partnership and by public officials, in each case without independent
investigation of those matters.
Based on the foregoing, and subject to the assumptions, qualifications, and
explanations set forth below, we are of the opinion that:
1. Each of the Partnership and the O&M Partnership is a limited
partnership duly formed and validly existing under the laws of the Turks &
Caicos Islands and has all requisite partnership power and authority to own,
lease, operate and otherwise hold all of its properties and assets and to carry
on its business as presently conducted and is duly qualified to do business 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 would not have a material adverse effect on the Partnership, the O&M
Partnership or the Ownership Interest.
2. There are no preemptive rights or other rights arising under Turks
& Caicos Islands law to subscribe for or to purchase any limited or general
partner interests in the Partnership or the O&M Partnership, and there are no
restrictions arising under Turks & Caicos Islands law upon the voting or
transfer of the limited or general partner interests of Enron DR or Enron
Operations in the Partnership or the O&M Partnership.
3. Enron DR and Enron Operations own interests in the partnership
capital of the Partnership of 49% and 1%, respectively. Such interests in the
Partnership are validly issued, fully paid and nonassessable and were not
issued in violation of the preemptive rights of any person arising under Turks
& Caicos Islands law or the Documents.
4. Enron DR and Enron Operations own interests in the partnership
capital of the O&M Partnership of 49% and 1%, respectively. Such interests in
the O&M Partnership are validly issued, fully paid and nonassessable and were
not issued in violation of the preemptive rights of any person arising under
Turks & Caicos Islands law or the Documents.
5. There are not now any outstanding options, warrants, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, any limited or
general partner interests, or other equity interest in the Partnership or the
O&M Partnership in each case arising under Turks & Caicos Islands law or the
Documents.
6. Enron Operations is one of two general partners of the Partnership
and the O&M Partnership.
7. The conveyance of the Ownership Interests will not (i) conflict
with or result in a breach of, give rise to any preferential purchase right
under, or require any consent which has not been obtained under, any Document
or any applicable Law of the Turks & Caicos Islands (to the extent the failure
to obtain the same could reasonably be expected to have a material adverse
effect on the Ownership Interest), (ii) result in the creation or imposition of
any lien or encumbrance on any of the property of Enron DR, Enron Operations,
the Partnership or the O&M Partnership under any Document or any applicable law
of the Turks & Caicos Islands, or (iii) with the passage of time or the giving
of notice or both, or the taking of any other action by a third party, have any
of the effects listed in clauses (i) and (ii) of this sentence.
8. The Enron DR Partner Pledge Agreement constitutes a direct and
valid lien on and perfected first priority security interest in all of the
Collateral (as defined in the Enron DR Partner Pledge Agreement) of the
Collateral Agent (as defined in the Enron DR Partner Pledge Agreement) for the
benefit of the Secured Parties (as defined in the Enron DR Partner Pledge
Agreement) under the IFC Investment Agreement, subject only to the exceptions
referred to therein.
9. The Enron Operations Partner Pledge Agreement constitutes a direct
and valid lien on and perfected first priority security interest in all of the
Collateral (as defined in the Enron Operations Partner Pledge Agreement) of the
Collateral Agent (as defined in the Enron Operations Partner Pledge Agreement)
for the benefit of the Secured Parties (as defined in the Enron Operations
Partner Pledge Agreement) under the IFC Investment Agreement, subject only to
the exceptions referred to therein.
The opinions set forth in the numbered paragraphs above are subject in
all respects to the following qualifications:
(a) Our firm includes attorneys who are licensed to practice in the
Turks & Caicos Islands, and for purposes of this opinion we do not
hold ourselves out at experts on, nor do we express any opinion as
to, the law of any jurisdiction other than the laws of the Turks &
Caicos Islands.
(b) The opinions expressed above are expressed as of the date of this
opinion only, and we assume no obligation to update or supplement
our opinions to reflect any fact or circumstances that may
hereafter come to our attention or any changes in law that may
occur or become effective after the date of this opinion.
This opinion is being furnished to you in connection with the
transactions contemplated by the Purchase Agreement and is solely for your
benefit, and no other person shall be entitled to rely hereon nor may this
opinion be quoted or otherwise referred to or furnished to any other person
without our prior written consent.
Very truly yours,
__________________________
Misick & Stanbrook
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<PAGE>
[Vinson & Elkins Letterhead]
June 18, 1996
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Re: Purchase Agreement dated as of June 17, 1996, among Enron Holding Company
L.L.C., Enron International Inc. and Enron Global Power & Pipelines
L.L.C.
Gentlemen,
We have acted as United States counsel to Enron Holding Company L.L.C., a
Delaware limited liability company ("EHC"), and Enron International Inc., a
Delaware corporation ("EI"), in connection with the Purchase Agreement ("the
Purchase Agreement") dated as of June 17, 1996, among EHC, EI and Enron Global
Power & Pipelines L.L.C., a Delaware limited liability company ("EPP"),
providing for the sale by EHC and EI of the stock of Enron Dominican Republic,
Ltd., a Cayman Islands company ("Enron DR") and Enron Dominican Republic
Operations, Ltd., a Cayman Islands company ("Enron Operations") to EPP.
Capitalized terms used in this opinion and not otherwise defined have the
meanings given to them in the Purchase Agreement.
In connection with this opinion, we have examined copies of the Purchase
Agreement and the Ownership Maintenance Agreement. We also have examined and
relied on such other documents and instruments as we have deemed relevant and
necessary as the basis for the opinions expressed below. In our examination,
we have assumed (i) the due authorization, execution, and delivery of documents
and instruments by all parties (which, in the case of EHC and EI, are the
subject of an opinion delivered to you by James V. Derrick, Jr., Senior Vice
President and General Counsel of Enron Corp.), (ii) the legal capacity of all
natural persons, (iii) the genuineness of all signatures, (iv) the authenticity
of all documents submitted to us as originals, and (v) the conformity to the
original documents of all documents submitted as copies. In connection with
the opinion expressed in paragraph 1 below, we have also assumed that (a) each
of Enron, EHC and EI is duly formed, validly existing, and in good standing
under the laws of the jurisdiction of its organization and (b) has full power
and authority to execute the Purchase Agreement or, in the case of Enron, the
Ownership Maintenance Agreement, and to enter into the transactions
contemplated thereby. As to factual matters not directly within our knowledge,
we have relied solely on and have assumed the genuineness and accuracy of
statements made to us by representatives of EHC and by public officials, in
each case without independent investigation of those matters.
Based on the foregoing, and subject to the assumptions, qualifications,
and explanations set forth below, we are of the opinion that:
1. The Purchase Agreement constitutes the legal, valid and binding
obligation of EHC and EI, enforceable against EHC and EI in accordance with its
terms, except as such enforceability 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 enforceability is considered
in a proceeding in equity or at law). The Ownership Maintenance Agreement
constitutes the legal, valid and binding obligation of Enron, enforceable
against Enron in accordance with its terms, except as such enforceability 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 enforceability is considered in a proceeding in equity or at law).
2. The conveyance of the Ownership Interest and the performance by
Enron of its obligations under the Ownership Maintenance Agreement will not,
including with the passage of time or the giving of notice or both, conflict
with or result in a breach of, give rise to any preferential purchase right
under, or require any consent which has not been obtained under, any Applicable
Law (to the extent the failure to obtain the same could reasonably be expected
to have a material adverse effect on the Ownership Interest).
3. None of EHC, EI, Enron DR, Enron Operations, the Partnership, or
the O&M Partnership is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
4. None of EHC, EI, Enron DR, Enron Operations, the Partnership, or
O&M Partnership is a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, and the rules and regulations promulgated thereunder.
The opinions set forth in the numbered paragraphs above are subject in
all respects to the following qualifications:
(a) Our firm includes attorneys who are licensed to practice in the
State of Texas, among other jurisdictions, and for purposes of this opinion we
do not hold ourselves out at experts on, nor do we express any opinion as to,
the law of any jurisdiction other than the law of the State of Texas and
applicable federal law of the United States of America.
(b) Our opinion in paragraph 1 is subject to the effect of
(i) bankruptcy, insolvency, reorganization, fraudulent transfer, or other
similar laws relating to or affecting creditors' rights generally (regardless
of whether considered in a proceeding in equity or at law), (ii) principles of
good faith, fair dealing, and reasonableness, (iii) general principles of
equity (regardless of whether considered in a proceeding in equity or at law),
including, without limitation, the possible unavailability of specific
performance, injunctive relief or other equitable remedies, and (v) the
unenforceability under certain circumstances of waivers and provisions imposing
penalties, forfeiture, late payment charges, or an increase in interest rate
upon delinquency in payment or the occurrence of any event of default. For
purposes of our opinion in paragraph 1 we have also assumed that the Purchase
Agreement does not contravene or contradict, and would not be rendered void,
invalid, or unenforceable under, the law of any jurisdiction other than the
United States of America or the State of Texas that may be applicable thereto
(including, without limitation, the laws of the Cayman Islands, the Dominican
Republic or the Turks & Caicos Islands) as contrary to the public policy of
such jurisdiction and that such opinion would not otherwise be adversely
affected by any laws of such jurisdiction that may be applicable thereto.
(c) For purposes of the opinion expressed in paragraph 2 above,
"Applicable Law" means any constitution, statute, code, regulation, rule of, or
any injunction, judgment, order, decree, ruling, charge, or other restriction
of general applicability of, any governmental authority of the United States or
of the State of Texas which in our experience is normally applicable to
transactions of the type provided for in the Purchase Agreement. The term
"Applicable Law" does not include, and expresses no opinion with regard to, (a)
antitrust laws or (b) state or federal securities laws.
(d) The opinions expressed above are expressed as of the date of this
opinion only, and we assume no obligation to update or supplement our opinions
to reflect any fact or circumstances that may hereafter come to our attention
or any changes in law that may occur or become effective after the date of this
opinion.
This opinion which is being furnished to you in connection with the
transactions contemplated by the Purchase Agreement and is solely for your
benefit, and no other person shall be entitled to rely hereon nor may this
opinion be quoted or otherwise referred to or furnished to any other person
without our prior written consent.
Very truly yours,
VINSON & ELKINS L.L.P.
-8-
<PAGE>
[Enron Letterhead]
June 18, 1996
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Re: Purchase Agreement dated as of June 17, 1996, among Enron Holding Company
L.L.C., Enron International Inc. and Enron Global Power & Pipelines
L.L.C.
As Senior Vice President and General Counsel of Enron Corp., a Delaware
corporation ("Enron"), I am familiar with the Amended and Restated Limited
Liability Company Agreement, as amended, of Enron Holding Company L.L.C., a
Delaware limited liability company ("EHC"), and the Certificate of
Incorporation and bylaws of Enron International Inc., a Delaware corporation
("EI"). This opinion is being furnished to you in connection with the Purchase
Agreement (the "Purchase Agreement") dated June 17, 1996 among EHC, EI and
Enron Global Power & Pipelines L.L.C., a Delaware limited liability company
("EPP"). Capitalized terms used but not defined herein are used as defined in
the Purchase Agreement.
Before rendering the opinions hereinafter set forth, I (or other
attorneys in the Enron Corp. legal department) examined the Purchase Agreement
and the Ownership Maintenance Agreement dated of even date herewith between
Enron and EPP (the "Ownership Maintenance Agreement"). I (or other attorneys
in the Enron Corp. legal department or the legal department of one or more of
Enron Corp's subsidiaries) also examined and relied upon original or
photostatic or certified copies of such corporate records, certificates of
officers of Enron Corp. Or one or more of its subsidiaries and of public
officials, and such agreements, documents, and instruments as I (or such
attorneys) deemed relevant and necessary as the basis for the opinions
hereinafter expressed. In such examination, I (or such attorneys) assumed the
genuineness of all signatures (other than those of Enron, EHC and EI) and the
authenticity of all documents submitted to me (or such attorneys) as originals
and the conformity to original documents of all documents submitted to me (or
such attorneys) as photostat or certified copies.
Based on the foregoing, and subject to the assumptions, qualifications
and explanations set forth herein, I am of the opinion that:
1. EHC is a limited liability company duly organized, validly existing
and in good standing under the laws of the state of Delaware and has all
requisite corporate or similar power and authority to own, lease, operate and
otherwise hold all of its properties and assets and to carry on its business as
presently conducted and is duly qualified to do business 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 would not
have a material adverse effect on Enron DR, Enron Operations, the Partnership,
the O&M Partnership or the Ownership Interest. Each of Enron and EI is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware.
2. Each of Enron DR, Enron Operations, the Partnership, and the O&M
Partnership is duly qualified to do business 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 would not have a
material adverse effect on Enron DR, Enron Operations, the Partnership, the O&M
Partnership or the Ownership Interest.
3. Each of EHC and EI has all necessary corporate or similar power and
authority to enter into the Purchase Agreement and to perform its obligations
thereunder, and the execution, delivery and performance thereof by each of EHC
and EI has been duly and validly authorized by all necessary corporate action.
The Purchase Agreement has been duly executed and delivered by EHC and EI.
Enron has all necessary corporate power and authority to enter into the
Ownership Maintenance Agreement and to perform its obligations thereunder, and
the execution, delivery and performance thereof by Enron has been duly and
validly authorized by all necessary corporate action. The Ownership
Maintenance Agreement has been duly executed and delivered by Enron.
4. Each of EHC and EI has all necessary corporate or similar power
and authority to convey, and has taken all necessary corporate or similar
action to authorize the conveyance of, the Ownership Interest to EPP. The
conveyance of the Ownership Interests will not (i) conflict with or result in a
breach of, give rise to any preferential purchase right under, or require any
consent which has not been obtained under, any Project Document (except to the
extent the failure to obtain the same could reasonably be expected to have a
material adverse effect on the Ownership Interest), (ii) result in the creation
or imposition of any lien or encumbrance on any of the property of Enron DR,
Enron Operations, the Partnership, or the O&M Partnership or (iii) with the
passage of time or the giving of notice or both, or the taking of any other
action by a third party, have any of the effects listed in clauses (i) and (ii)
of this sentence.
The opinions set forth above are subject in all respects to the following
qualifications:
(a) In rendering the opinion expressed in paragraph 4 above, neither I
nor any other attorney has made any examination of any accounting
or financial matters related to certain of the covenants contained
in certain documents to which Enron, EHC or EI may be subject or
any Project Document, and I express no opinion with respect
thereto.
(b) The opinions expressed herein are as of the date hereof only, and I
assume no obligation to update or supplement such opinions to
reflect any fact or circumstances that may hereafter come to my
attention or any changes in law that may hereafter occur or become
effective.
This opinion relates solely to matters of Texas and U.S. federal law and
the General Corporation Law of Delaware. This opinion is furnished in
connection with the transactions evidenced by the Purchase Agreement and
anticipated in connection therewith and may not be relied upon in connection
with any other transaction or by any person other than you; provided, however,
that Vinson & Elkins L.L.P., Misick & Stanbrook, and Hunter & Hunter may each
rely on this opinion for the purposes of rendering the opinions in connection
with Section 5.2(c) of the Purchase Agreement.
Very truly yours,
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<PAGE>
[Pellerano & Herrera Letterhead]
June 18, 1996
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Re: Purchase Agreement dated as of June 17, 1996, among Enron Holding Company
L.L.C., Enron International Inc. and Enron Global Power & Pipelines
L.L.C.
Gentlemen,
We have acted as Dominican Republic counsel to Enron Holding Company
L.L.C., a Delaware limited liability company ("EHC"), and Enron International
Inc., a Delaware corporation ("EI"), in connection with the Purchase Agreement
("the Purchase Agreement") dated as of June 17, 1996, among EHC, EI and Enron
Global Power & Pipelines L.L.C., a Delaware limited liability company ("EPP"),
providing for the sale by EHC and EI of the stock of Enron Dominican Republic,
Ltd., a Cayman Islands company ("Enron DR") and Enron Dominican Republic
Operations, Ltd., a Cayman Islands company ("Enron Operations") to EPP.
Capitalized terms used in this opinion and not otherwise defined have the
meanings given to them in the Purchase Agreement.
In connection with this opinion, we have examined copies of the Purchase
Agreement. We also have examined and relied on such other documents and
instruments as we have deemed relevant and necessary as the basis for the
opinions expressed below. In our examination, we have assumed (i) the due
authorization, execution, and delivery of documents and instruments by all
parties, (ii) the legal capacity of all natural persons, (iii) the genuineness
of all signatures, (iv) the authenticity of all documents submitted to us as
originals, and (v) the conformity to the original documents of all documents
submitted as copies.
Based on the foregoing, and subject to the assumptions, qualifications,
and explanations set forth below, we are of the opinion that:
1. The conveyance of the Ownership Interests will not (i) conflict
with or result in a breach of, give rise to any preferential purchase right
under, or require any consent which has not been obtained under, any Document
or any applicable Law of the Dominican Republic (to the extent the failure to
obtain the same could reasonably be expected to have a material adverse effect
on the Ownership Interest), (ii) result in the creation or imposition of any
lien or encumbrance on any of the property of Enron DR, Enron Operations the
Partnership or the O&M Partnership under the Purchase Agreement or any
applicable law of the Dominican Republic, or (iii) with the passage of time or
the giving of notice or both, or the taking of any other action by a third
party, have any of the effects listed in clauses (i) and (ii) of this sentence.
2. The Land Mortgage (as defined in the IFC Investment Agreement)
constitutes as security for the obligations identified therein (i) a valid
mortgage lien on all real property and interests in real property accurately
and specifically described in the Land Mortgage as being mortgaged thereby, and
(ii) a perfected security interest in all tangible property and fixtures
adequately described in the Land Mortgage as being mortgaged thereby to the
extent that laws of the Dominican Republic are applicable thereto. The Land
Mortgage contains sufficient terms and provisions to enable the Collateral
Agent (as defined in the IFC Investment Agreement) on behalf of the IFC to
foreclose the lien of the Land Mortgage pursuant to a judicial proceeding in
accordance with the laws of the Dominican Republic.
(a) The opinions set forth above are subject, as to
enforceability, to the effect of any applicable bankruptcy (including,
without limitation, preference and fraudulent conveyance), insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.
(b) The opinions expressed herein are expressed as of the date of
this opinion only, and we assume no obligation to update or supplement
such opinions to reflect any fact or circumstances that may hereafter
come to our attention or any changes in law that may occur or become
effective after the date of this opinion.
(c) This opinion is limited to the laws of the Dominican
Republic.
This opinion which is being furnished to you in connection with the
transactions contemplated by the Purchase Agreement and is solely for your
benefit, and no other person shall be entitled to rely hereon nor may this
opinion be quoted or otherwise referred to or furnished to any other person
without our prior written consent.
Very truly yours,
Luis R. Pellerano P.
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