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: August 18, 1997
(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
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<S> <C> <C>
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or Identification No.)
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organization)
333 CLAY STREET, SUITE 1800
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number,
including area code: (713) 853-6220
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ITEM 5. OTHER EVENTS
On August 18, 1997, Enron Global Power & Pipelines L.L.C. ("EPP") entered into
an Agreement and Plan of Merger with Enron Corp. ("Enron") and Enron
International Merger L.L.C. (the "Agreement"), as more fully described in the
Agreement, which is filed as Exhibit 2.1 hereto and is incorporated by
reference herein and in the press release of EPP dated August 18, 1997, which
is filed as Exhibit 99.1 hereto.
The Agreement contemplates the merger of a subsidiary of Enron with and into
EPP in a transaction whereby the shareholders of EPP other than Enron and
entities controlled by Enron would receive Enron common stock having a market
value (based on the average trading price of Enron common stock for a 20
trading day period prior to the completion of the merger) of $35 per share.
The merger is conditioned upon the approval of (i) a majority of the common
shares of EPP outstanding and (ii) a majority of the EPP common shares held by
persons other than Enron and entities controlled by Enron present and voted at
the shareholders meeting to be called to vote upon the merger.
The merger is anticipated to become effective in the fourth quarter of 1997.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(c) Exhibits
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger among Enron Corp.,
Enron International Merger L.L.C. and EPP dated
August 18, 1997
99.1 Press release dated August 18, 1997
<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: August 22, 1997 By: /S/ KURT S. HUNEKE
Kurt S. Huneke
President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER
2.1 Agreement and Plan of Merger among Enron Corp., Enron International
Merger L.L.C. and Enron Global Power & Pipelines L.L.C. dated as of
August 18, 1997.
99.1 Press release dated August 18, 1997.
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
ENRON CORP.,
ENRON INTERNATIONAL MERGER L.L.C.
AND
ENRON GLOBAL POWER & PIPELINES L.L.C.
AUGUST 18, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE MERGER
1.1 The Merger 1
1.2 Closing Date 2
1.3 Consummation of the Merger 2
1.4 Effects of the Merger 2
1.5 Company Agreement 2
1.6 Directors and Officers 2
1.7 Conversion of Securities 2
1.8 Exchange of Certificates; Fractional Shares 3
1.9 Taking of Necessary Action; Further Action 4
ARTICLE II REPRESENTATION AND WARRANTIES
2.1 Representations and Warranties
of Enron and Merger Sub 4
2.2 Representations and Warranties of EPP 7
ARTICLE III COVENANTS OF EPP PRIOR TO THE EFFECTIVE TIME
3.1 Proxy and Information Statement 8
3.2 Meeting or Consent of Holders
of Common Shares of EPP 8
ARTICLE IV COVENANTS OF ENRON PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Enron Pending the Merger 8
4.2 Registration Statement 8
4.3 Stock Exchange Listing 9
ARTICLE V ADDITIONAL AGREEMENTS
5.1 Filings; Consents; Reasonable Efforts 9
5.2 Expenses 9
5.3 Post-Effective Time Mailing 9
5.4 EPP Stock Options 10
5.5 Indemnification 10
ARTICLE VI CONDITIONS
6.1 Conditions of Obligation to Each Party
to Effect the Merger 12
6.2 Additional Conditions to Obligations of Enron 13
6.3 Additional Conditions to Obligations of EPP 13
ARTICLE VII MISCELLANEOUS
7.1 Termination 14
7.2 Effect of Termination 15
7.3 Amendments 16
7.4 Waiver 16
7.5 Nonsurvival of Representations, Warranties
and Agreements 16
7.6 Public Statements 16
LIST OF DEFINED TERMS
Agreement..................................................1
Enron......................................................1
Merger Sub.................................................1
EPP........................................................1
Merger.....................................................1
Common Share...............................................1
Enron Common Stock.........................................1
Delaware Law...............................................2
Surviving Company..........................................2
Closing....................................................2
Closing Date...............................................2
Effective Time.............................................2
Company Agreement..........................................2
Exchange Ratio.............................................3
Enron Material Effect......................................5
Commission.................................................6
Securities Act.............................................6
Exchange Act...............................................6
Enron Commission Filings...................................7
Enron Subsidiaries.........................................7
DLJ........................................................8
Financial Advisor..........................................8
Registration Statement.....................................9
Proxy Statement............................................9
Proxy/Registration Statement...............................9
Oversight Committee.......................................10
EPP Options...............................................11
Enron Options.............................................11
Indemnitees...............................................11
Indemnification Agreements................................11
Public Shareholders.......................................13
Fairness Opinion..........................................14
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of the 18th day of August,
1997 (the "AGREEMENT"), is among Enron Corp., an Oregon corporation
("ENRON"), Enron International Merger L.L.C., a newly-formed Delaware
limited liability company and a wholly-owned subsidiary of Enron ("MERGER
SUB"), and Enron Global Power & Pipelines L.L.C., a Delaware limited
liability company ("EPP").
RECITALS:
The Board of Directors of EPP has determined that a business
combination to be effected by means of a merger of Merger Sub with and into
EPP (the "MERGER") is in the best interests of EPP and its shareholders and
has approved and adopted this Agreement and recommended approval and
adoption of this Agreement by the shareholders of EPP.
The Board of Directors of Enron has determined that the business
combination to be effected by means of the Merger is in the best interests
of Enron and its shareholders and has approved and adopted this Agreement.
Upon the terms and subject to the conditions of this Agreement, Merger
Sub will merge with and into EPP and EPP will be the Surviving Company, and
pursuant thereto, each issued and outstanding common share of EPP ("COMMON
SHARE") not owned directly or indirectly by Enron will be converted into
the right to receive shares of common stock, no par value, of Enron ("ENRON
COMMON STOCK").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties
hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with Section 18-209 of the
Delaware Limited Liability Company Act and all other applicable provisions
of the laws of the State of Delaware ("DELAWARE LAW"), at the Effective
Time (as defined in Section 1.3) Merger Sub shall be merged with and into
EPP. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and EPP shall continue as the surviving company (sometimes
referred to herein as the "SURVIVING COMPANY"), and all the properties
(real, personal and mixed), rights, privileges, powers and franchises of
EPP and Merger Sub shall vest in the Surviving Company, without any
transfer or assignment having occurred, and all debts, liabilities and
duties of EPP and Merger Sub shall attach to the Surviving Company, all in
accordance with Delaware Law.
1.2 CLOSING DATE. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Enron,
1400 Smith Street, Houston, Texas 77002, as soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI or at such
other time and place and on such other date as Enron, Merger Sub and EPP
shall agree; provided, that the closing conditions set forth in Article VI
shall have been satisfied or waived at or prior to such time. The date on
which the Closing occurs is herein referred to as the "CLOSING DATE."
1.3 CONSUMMATION OF THE MERGER. As soon as practicable on the
Closing Date, the parties hereto will cause the Merger to be consummated by
filing with the Secretary of State of Delaware a certificate of merger in
such form as required by, and executed in accordance with, the relevant
provisions of Delaware Law. The "EFFECTIVE TIME" of the Merger as that
term is used in this Agreement shall mean such time as the certificate of
merger is duly filed with the Secretary of State of Delaware or at such
later time (not to exceed 90 days from the date the certificate is filed)
as is specified in the certificate of merger pursuant to the agreement of
Enron, Merger Sub and EPP.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of Delaware Law.
1.5 COMPANY AGREEMENT. The Amended and Restated Limited Liability
Company Agreement of EPP (the "COMPANY AGREEMENT"), as in effect
immediately prior to the Effective Time, shall be the limited liability
company agreement of the Surviving Company and thereafter shall continue to
be its limited liability company agreement until amended as provided
therein and pursuant to Delaware Law.
1.6 DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Company
at and after the Effective Time, each to hold office in accordance with the
Company Agreement of the Surviving Company, and the officers of Merger Sub
immediately prior to the Effective Time shall be the officers of the
Surviving Company at and after the Effective Time, in each case until their
respective successors are duly elected or appointed and qualified.
1.7 CONVERSION OF SECURITIES. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Enron, EPP, Merger Sub or their shareholders:
(a) Each EPP Common Share issued and outstanding immediately
prior to the Effective Time, other than any EPP Common Share which
remains outstanding and unchanged pursuant to Section 1.7(b), shall be
converted into the right to receive a number of shares of Enron Common
Stock calculated by dividing (x) $35.00 by (y) the Average Daily Price
of the Enron Common Stock, with the result rounded down to the nearest
ten thousandth (the "EXCHANGE RATIO"). As used herein, the "Average
Daily Price of the Enron Common Stock" means the average of the
closing prices, regular way, per share of the Enron Common Stock as
reported on the New York Stock Exchange Composite Tape during the 20
consecutive trading days ending on the day prior to the Closing Date;
provided, however, that no fractional shares of Enron Common Stock
shall be issued, and, in lieu thereof, a cash payment shall be made in
accordance with Section 1.8(d) hereof.
(b) Each Common Share owned by Merger Sub, Enron or any direct or
indirect wholly-owned subsidiary of Enron immediately prior to the
Effective Time shall remain outstanding and unchanged and no payment
shall be made with respect thereto.
(c) Each common share of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one
Common Share of EPP.
1.8 EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES.
(a) As soon as practicable after the Effective Time, each holder
of a certificate that prior thereto represented Common Shares and who
is entitled to receive Enron Common Stock upon consummation of the
Merger shall be entitled, upon surrender thereof to Enron or its
transfer agent, to receive in exchange therefor, as applicable, a
certificate or certificates representing the number of whole shares of
Enron Common Stock into which the EPP Common Share so surrendered
shall have been converted as aforesaid, in such denominations and
registered in such names as such holder may request. Each holder of
EPP Common Shares who would otherwise be entitled to a fraction of a
share of Enron Common Stock shall, upon surrender of the certificates
representing such shares held by such holder to Enron or its transfer
agent, be paid an amount in cash in accordance with the provisions of
Section 1.8(d). Until so surrendered and exchanged, each certificate
that prior to the Effective Time represented Common Shares shall
represent solely the right to receive Enron Common Stock and cash in
lieu of fractional shares, if any. Unless and until any such
certificates shall be so surrendered and exchanged, no dividends or
other distributions payable to the holders of Enron Common Stock of
record as of any time on or after the Effective Time shall be paid to
the holders of such certificates that prior to the Effective Time
represented Common Shares; provided, however, that, upon any such
surrender and exchange of such certificates, there shall be paid to
the record holders of the certificates issued and exchanged therefor
the amount, without interest thereon, of dividends and other
distributions, if any, that theretofore were declared and became
payable to holders of record of Enron Common Stock at or after the
Effective Time with respect to the number of whole shares of Enron
Common Stock issued to such holder.
(b) All shares of Enron Common Stock issued upon the surrender
for exchange of certificates that prior to the Effective Time
represented Common Shares in accordance with the terms hereof
(including any cash paid pursuant to Section 1.8(d)) shall be deemed
to have been issued in full satisfaction of all rights pertaining to
such Common Shares. If, after the Effective Time, certificates which
prior to the Effective Time represented Common Shares are presented to
the Surviving Company for any reason, they shall be canceled and
exchanged as provided in this Article I.
(c) If any certificate for shares of Enron Common Stock is to be
issued in a name other than that in which the certificate surrendered
in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange shall have paid to Enron or its transfer
agent any transfer or other taxes required by reason of the issuance
of a certificate for shares of Enron Common Stock in any name other
than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Enron or its transfer agent that
such tax has been paid or is not payable.
(d) No fraction of a share of Enron Common Stock shall be issued,
but in lieu thereof each holder of EPP Common Shares who would
otherwise be entitled to a fraction of a share of Enron Common Stock
shall, upon surrender of the certificate formerly representing EPP
Common Shares held by such holder to Enron or its transfer agent, be
paid an amount in cash equal to the value of such fraction of a share
based upon the Average Daily Price of the Enron Common Stock. No
interest shall be paid on such amount. All EPP Common Shares held by
a record holder shall be aggregated for purposes of computing the
number of shares of Enron Common Stock to be issued pursuant to this
Article I and cash in lieu of fractional shares payable hereunder.
(e) None of Enron, Merger Sub or EPP or their transfer agents
shall be liable to a holder of the Common Shares for any amount
properly paid to a public official pursuant to applicable property,
escheat or similar laws.
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION. The parties hereto
shall take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If,
at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Company with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of EPP or Merger Sub,
such parties shall direct their respective officers, directors and managers
to take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF ENRON AND MERGER SUB. Enron
and Merger Sub hereby jointly and severally represent and warrant to EPP
that:
(a) AUTHORIZATION AND VALIDITY OF AGREEMENT. Enron and Merger
Sub are duly organized, validly existing and in good standing under
the laws of the jurisdiction in which they are chartered or organized
and have all requisite corporate or limited liability company power
and authority, and have been duly authorized by all necessary
regulatory approvals and orders to own, lease and operate their
respective assets and properties and to carry on their respective
businesses as now being conducted other than such regulatory approvals
and orders the failure to obtain which would not, when taken together
with all other such failures, have a material adverse effect on the
financial condition, results of operation or business of Enron and its
consolidated subsidiaries, taken as a whole (an "ENRON MATERIAL
EFFECT"), and are duly qualified and in good standing to do business
in each jurisdiction in which the nature of their respective business
or the ownership or leasing of their respective assets and properties
makes such qualification necessary, other than in such jurisdictions
where the failure to be so qualified and in good standing would not
have an Enron Material Effect. Enron and Merger Sub have all
requisite corporate or limited liability company power and authority
to enter into this Agreement and to perform their obligations
hereunder. The execution and delivery by Enron and Merger Sub of this
Agreement and the consummation by each of them of the transactions
contemplated hereby have been duly authorized by all necessary
corporate or limited liability company action. This Agreement has
been duly executed and delivered by Enron and Merger Sub and is the
valid and binding obligation of Enron and Merger Sub, enforceable
against Enron and Merger Sub in accordance with its terms.
(b) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH ENRON OR MERGER SUB IS A PARTY. Neither the
execution and delivery of this Agreement nor the performance by Enron
or Merger Sub of its obligations hereunder, nor the consummation of
the transactions contemplated hereby by Enron and Merger Sub, will (i)
conflict with the charter or bylaws of Enron or the Limited Liability
Company Agreement of Merger Sub; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, violate any provision of
law applicable to Enron or Merger Sub; (iii) except for (A)
requirements of federal or state securities laws, (B) requirements of
notice filings in such foreign jurisdictions as may be applicable, and
(C) the filing of a certificate of merger by Merger Sub in accordance
with Delaware Law, require any consent or approval of, or filing with
or notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Enron or Merger Sub; or (iv)
require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with
notice or lapse of time or both, would constitute a default) under, or
permit the termination of any provision of, or result in the creation
or imposition of any lien upon any properties, assets or business of
Enron or Merger Sub under, any note, bond, indenture, mortgage, deed
of trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment or any order, judgment or
decree to which Enron or Merger Sub is a party or by which Enron or
Merger Sub or any of its or their assets or properties is bound or
encumbered, except (A) those that have already been given, obtained or
filed, and (B) those that, in the aggregate, would not have an Enron
Material Effect.
(c) COMMISSION FILINGS; FINANCIAL STATEMENTS. Enron and Merger
Sub have filed all reports, registration statements and other filings,
together with any amendments required to be made with respect thereto,
required by the Securities and Exchange Commission (the "COMMISSION")
under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"). All reports, registration statements and other documents
(including all notes, exhibits and schedules thereto and documents
incorporated by reference therein) filed by Enron with the Commission
since January 1, 1992, through the date of this Agreement, together
with any amendments thereto, are sometimes collectively referred to as
the "ENRON COMMISSION FILINGS." Enron has heretofore delivered to EPP
copies of the Enron Commission Filings. As of the respective dates of
their filing with the Commission, the Enron Commission Filings
complied in all material respects with, and any reports, registration
statements and other documents (including all notes, exhibits and
schedules thereto and documents incorporated by reference therein)
filed by Enron with the Commission after the date hereof will comply
in all material respects with, applicable provisions of the Securities
Act, the Exchange Act and the rules and regulations of the Commission
thereunder, and did not contain (or, in the case of documents filed by
Enron with the Commission after the date hereof, will not contain) any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
Each of the consolidated financial statements (including any
related notes or schedules) included in the Enron Commission Filings
was prepared, and the consolidated financial statements (including any
related notes or schedules) to be included in any reports,
registration statements and other documents filed by Enron with the
Commission after the date hereof will be prepared, in accordance with
generally accepted accounting principles applied on a consistent basis
(except as may be noted therein or in the notes or schedules thereto)
and complied in all material respects with all applicable rules and
regulations of the Commission. Such consolidated financial statements
fairly present (or, in the case of the consolidated financial
statements included in filings by Enron with the Commission after the
date hereof, will fairly present) the consolidated financial position
of Enron and its consolidated subsidiaries (the "ENRON SUBSIDIARIES")
as of the dates thereof and the results of operations, cash flows and
changes in shareholders' equity for the periods then ended (subject,
in the case of the unaudited interim financial statements, to normal
year-end audit adjustments on a basis comparable with past periods).
(d) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. Since December 31, 1996, except as
contemplated by this Agreement or as disclosed in the Enron Commission
Filings, Enron and the Enron Subsidiaries have conducted their
business only in the ordinary and usual course, and there has not been
any material adverse change in the financial condition, results of
operations or business of Enron and the Enron Subsidiaries, taken as a
whole, or any condition, event or development that reasonably may be
expected to result in any such material adverse change.
(e) CAPITALIZATION. The authorized capital stock of Enron and
the number of shares of each class or series of capital stock
outstanding are as set forth in the Enron Commission Filings, other
than issuances of Enron Common Stock in the ordinary course of
business in an aggregate immaterial amount since the most recent Enron
Commission Filing containing information regarding capitalization. All
of the issued and outstanding shares of the capital stock of Enron are
validly issued, fully paid and nonassessable and free of preemptive
rights. Except as disclosed in the Enron Commission Filings or grants
of options and commitments in the ordinary course of business covering
in the aggregate an immaterial amount of shares of Enron Common Stock
since the date of the most recent Enron Commission Filing containing
information regarding options and commitments in respect of capital
stock, as of the date hereof there are no outstanding subscriptions,
options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating Enron
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock or other voting securities of
Enron or obligating Enron to grant, extend or enter into any such
arrangement or commitment.
(f) BROKERS AND FINDERS. Except for the fees and expenses
payable to Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), which fees are reflected in its agreement with Enron (a copy
of which has been delivered to EPP), Enron has not entered into any
contract, arrangement or understanding with any person or firm which
may result in the obligation of Enron to pay any finder's fees,
brokerage or agent commissions or other like payment in connection
with the transactions contemplated hereby. Except for the fees and
expenses paid or payable to DLJ, there are no claims for payment by
Enron of any investment banking fees, finder's fees, brokerage or
agent commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
(g) INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
2.2 REPRESENTATIONS AND WARRANTIES OF EPP. EPP hereby represents and
warrants to Enron and Merger Sub that:
(a) BROKERS AND FINDERS. Except for the fees and expenses
payable to Dillon, Read & Co. Inc. (the "FINANCIAL ADVISOR"), which
fees are reflected in its agreement with EPP (a copy of which has been
delivered to Enron), EPP has not entered into any contract,
arrangement or understanding with any person or firm which may result
in the obligation of EPP to pay any finder's fees, brokerage or agent
commissions or other like payment in connection with the transactions
contemplated hereby. Except for the fees and expenses paid or payable
to the Financial Advisor, there are no claims for payment by EPP of
any investment banking fees, finder's fees, brokerage or agent
commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE III
COVENANTS OF EPP PRIOR TO THE EFFECTIVE TIME
3.1 PROXY AND INFORMATION STATEMENT. Promptly after the date of this
Agreement, EPP shall cooperate with Enron in preparing for filing by Enron
with the Commission under the Securities Act a Registration Statement on
Form S-4 (the "REGISTRATION STATEMENT"), and shall cooperate with Enron in
preparing and shall file under the Exchange Act a proxy or information
statement with respect to the consent solicitation or meeting of holders of
Common Shares of EPP referred to in Section 3.2 (the "PROXY STATEMENT," and
together with the Registration Statement, the "PROXY/REGISTRATION
STATEMENT"). Subject to the fiduciary duty of the Board of Directors of
EPP under Delaware Law, the Proxy Statement shall contain the
recommendation of the Board of Directors of EPP that the shareholders of
EPP vote or consent to approve and adopt this Agreement. EPP will advise
Enron promptly in writing if prior to the Effective Time it shall obtain
knowledge of any facts that would make it necessary to amend or supplement
the Proxy Statement (or the Registration Statement of which the Proxy
Statement is a part) in order to make the statements therein, in light of
the circumstances under which they were made, not misleading or to comply
with applicable law.
3.2 MEETING OR CONSENT OF HOLDERS OF COMMON SHARES OF EPP. Subject
to the fiduciary duty of the Board of Directors of EPP under Delaware Law,
EPP shall promptly take all action reasonably necessary in accordance with
Delaware Law and the EPP Company Agreement to solicit from the holders of
its Common Shares consents to this Agreement and the Merger or to call a
meeting of holders of its Common Shares to consider and vote upon the
adoption and approval of this Agreement and the Merger.
ARTICLE IV
COVENANTS OF ENRON PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY ENRON PENDING THE MERGER. Enron covenants
and agrees that, from the date of this Agreement until the Effective Time,
unless EPP shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement, the business of Enron and the Enron
Subsidiaries shall be conducted only in, and Enron and the Enron
Subsidiaries shall not take any action except in, the ordinary course of
business.
4.2 REGISTRATION STATEMENT. Promptly after the date of this
Agreement, Enron will file the Registration Statement with the Commission
under the Securities Act with respect to the offering, sale and delivery of
the shares of Enron Common Stock to be issued pursuant to the Merger; and
Enron will use its reasonable efforts to cause such Registration Statement
to become effective as soon as practicable after filing. Enron agrees that
the Registration Statement will comply as to form in all material respects
with the requirements of the Securities Act and the Exchange Act and the
respective rules and regulations adopted thereunder, and will not contain
any untrue statement of any material fact or omit to state any material
fact required to be stated therein or necessary to make the statements made
therein not misleading. Enron will advise EPP in writing if prior to the
Effective Time it shall obtain knowledge of any fact that would, in its
opinion, make it necessary to amend or supplement the Registration
Statement in order to make the statements therein not misleading or to
comply with applicable law.
4.3 STOCK EXCHANGE LISTING. Enron shall use all reasonable efforts
to cause the shares of Enron Common Stock to be issued in the Merger or
upon exercise of the Enron Options granted pursuant to Section 5.4 to be
approved for listing on the New York Stock Exchange, subject to official
notice of issuance, prior to the Closing Date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FILINGS; CONSENTS; REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, EPP and Enron shall (i) make all necessary
filings with respect to the Merger and this Agreement under the Securities
Act, the Exchange Act and applicable blue sky or similar securities laws
and shall use all reasonable efforts to obtain required approvals and
clearances with respect thereto; (ii) obtain all consents, waivers,
approvals, authorizations and orders required in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Merger; and (iii) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
5.2 EXPENSES. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense, except that (i) expenses incurred in connection with printing and
mailing the Registration Statement and the Proxy Statement shall be shared
equally by Enron and EPP, and (ii) all fees and expenses payable to the
Financial Advisor and all legal fees and expenses incurred by the Oversight
Committee of the Board of Directors of EPP (the "OVERSIGHT COMMITTEE")
shall be paid by Enron; PROVIDED, HOWEVER, that if this Agreement shall
have been terminated pursuant to Section 7.1 as a result of the willful
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement, such breaching party shall pay the
costs and expenses of the other parties in connection with the transactions
contemplated by this Agreement.
5.3 POST-EFFECTIVE TIME MAILING. As soon as practicable following
the Effective Time, Enron will cause to be mailed to each holder of
certificates that represented EPP Common Shares immediately prior to the
Effective Time, at such holder's address as it appears on EPP's share
transfer records, a letter of transmittal and other information advising
such holder of the consummation of the Merger along with information and
instructions to enable such holder to effect the exchange of share
certificates as contemplated by Article I of this Agreement.
5.4 EPP STOCK OPTIONS. EPP covenants and agrees to use its best
efforts to take all action necessary to provide for the exchange of the
outstanding options to purchase shares of Enron Common Stock held by
employees or directors of EPP ("EPP OPTIONS") as described in this
Section 5.4. Subject to the consummation of the Merger and effective at
the Effective Time, all then outstanding EPP Options shall be canceled in
exchange for the number of options to purchase shares of Enron Common Stock
(the "ENRON OPTIONS") calculated by multiplying (x) the number of shares
covered by EPP Options by (y) the Exchange Ratio. The exercise price per
share of the Enron Options shall be calculated by dividing (i) the exercise
price per share of the EPP Options by (ii) the Exchange Ratio. The Enron
Options will maintain the same vesting provisions (other than vesting
provisions dependent upon the financial performance of EPP, which shall be
revised as determined by the Compensation Committee of the Board of
Directors of Enron) and exercise term as, and shall otherwise have terms
substantially similar to, the EPP Options; PROVIDED, HOWEVER, that upon
consummation of the Merger the Enron Options held as a result of the Merger
by officers, directors and employees of EPP who are involuntarily
terminated by Enron or one of its subsidiaries on the date of the Effective
Time will become 100% vested. All outstanding options to purchase Common
Shares of EPP held by Enron shall be canceled upon consummation of the
Merger. Enron covenants and agrees to issue the Enron Options, to reserve
and make available for issuance upon exercise of the Enron Options all
shares of Enron Common Stock covered thereby and to amend its Registration
Statement on Form S-8, if required, or file a new registration statement to
cover the additional shares of Enron Common Stock subject to Enron Options,
if required.
5.5 INDEMNIFICATION.
(a) EXISTING INDEMNITIES. Enron agrees that all rights to
indemnification now existing or hereafter arising in favor of
"INDEMNITEES" (such term to have the same meaning herein as defined in
the Company Agreement) as provided in the Company Agreement as in
effect on the date hereof or pursuant to other agreements (including
the Indemnification Agreements between EPP and certain current and
former officers and directors of EPP (the "INDEMNIFICATION
AGREEMENTS")) in effect on the date hereof shall survive the Merger
and shall continue in full force and effect for a period of not less
than six years from the Effective Time, PROVIDED that, if any claim is
asserted or made within such six-year period, all rights to
indemnification in respect of any such claim shall continue until
final disposition of any and all such claims. Consistent with the
foregoing, for a period of at least six years from the Effective Time,
the limited liability company agreement of the Surviving Company shall
contain the provisions with respect to indemnification set forth in
the Company Agreement, which provisions shall not be amended, repealed
or otherwise modified during such six-year period in any manner that
would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were Indemnitees.
(b) ENRON INDEMNITY. To the fullest extent permitted by
applicable law, Enron will, for a period of six years from and after
the Effective Time, indemnify and hold harmless each Indemnitee with
respect to all acts and omissions occurring before the Effective Time
that are based on or arise out of the Indemnitee's service to EPP in
his capacity as such, including all acts or omissions in connection
with this Agreement and the Merger, to the extent provided by
whichever of the following is most favorable to the Indemnitee: (i)
any Indemnification Agreement or any other indemnification policy,
practice, contract or other arrangement that EPP has with its
directors at the date of this Agreement (copies of which have
previously been furnished to Enron), (ii) indemnification provisions
in Enron's then-existing certificate of incorporation or bylaws and
(iii) any other then-existing indemnification policy, practice,
contract or other arrangement that Enron has with its directors.
(c) INSURANCE. From and after the date hereof and for six years
from the Effective Time, Enron or the Surviving Company, as the case
may be, shall maintain (and Enron shall cause the Surviving Company to
maintain, if not maintained by Enron) continuously in effect
directors' and officers' liability insurance covering those persons
who are currently covered by Enron's directors' and officers'
liability insurance policy applicable to officers and directors of EPP
for actions taken or omissions occurring at or prior to the Effective
Time on terms that in the aggregate are not less favorable to such
persons than the terms of such current insurance coverage; PROVIDED
that Enron or the Surviving Company may substitute therefor policies
of at least the same coverage containing terms that are no less
advantageous with respect to matters occurring at or prior to the
Effective Time to the extent such liability insurance can be
maintained annually at a cost to Enron or the Surviving Company not
greater than 200 percent of the current annual premiums for the
policies currently maintained by Enron for its directors' and
officers' liability insurance applicable to the officers and directors
of EPP; PROVIDED FURTHER, that if such insurance cannot be so
maintained or obtained at such cost, Enron or the Surviving Company
shall maintain or obtain a policy providing the best coverage
available, as determined by the Board of Directors of Enron, for a
premium not exceeding 200 percent of the current annual premiums of
Enron for its directors' and officers' liability insurance applicable
to the officers and directors of EPP. In addition, the Surviving
Company shall reasonably compensate (and Enron shall cause the
Surviving Company to reasonably compensate) any current or former
director or officer of EPP for his time required to be spent when not
a full-time employee of Enron or any subsidiary entity controlled by
Enron, as the case may be, in connection with any third-party
litigation or other proceeding arising out of this Agreement or the
transactions contemplated hereby.
(d) BENEFIT OF PROVISIONS. The provisions of this Section 5.5
are expressly for the benefit of the current and former directors and
officers of EPP, shall be enforceable by each of them, and shall
survive the consummation of the Merger. If the Surviving Company or
any of its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving entity
of such consolidation or merger, or (ii) transfers all of
substantially all of its properties and assets to any person, then,
and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Company assume the obligations
of the Surviving Company set forth in this Section 5.5.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS OF OBLIGATION TO EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) This Agreement shall have been approved and adopted by (i)
the requisite vote or consent of the shareholders of EPP, as may be
required by law and by the rules of the New York Stock Exchange and
(ii) the vote of the holders of a majority of the Common Shares held
by shareholders other than Enron or any subsidiary entity controlled
by Enron (the "PUBLIC SHAREHOLDERS") and voted at a special meeting of
shareholders called to vote on the Merger;
(b) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the Merger;
(c) The Registration Statement shall be effective on the Closing
Date, and all post-effective amendments filed shall have been declared
effective or shall have been withdrawn; and no stop order suspending
the effectiveness thereof shall have been issued and no proceedings
for that purpose shall have been initiated or, to the knowledge of the
parties, threatened by the Commission;
(d) Enron and EPP shall obtain any and all material permits,
approvals and consents of securities or blue sky commissions of any
jurisdiction, and of any other governmental body or agency, that
reasonably may be deemed necessary so that the consummation of the
Merger and the transactions contemplated thereby will be in compliance
with applicable laws, the failure to comply with which would have a
material adverse effect on the business, financial condition or
results of operations of Enron, the Surviving Company and their
subsidiaries, taken as a whole after consummation of the Merger;
(e) The shares of Enron Common Stock issuable upon consummation
of the Merger and the shares of Enron Common Stock issuable upon
exercise of any Enron Options shall have been approved for listing on
the New York Stock Exchange, subject to official notice of issuance;
(f) All approvals of private persons or entities, (i) the
granting of which is necessary for the consummation of the Merger or
the transactions contemplated in connection therewith and (ii) the
non-receipt of which would have a material adverse effect on the
business, financial condition or results of operations of Enron, the
Surviving Company and their subsidiaries, taken as a whole after the
consummation of the Merger, shall have been obtained;
(g) the Financial Advisor shall have delivered to the Oversight
Committee a written opinion to the effect that the consideration to be
paid to the Public Shareholders in connection with the Merger is fair
to the Public Shareholders from a financial point of view (the
"FAIRNESS OPINION"), and such opinion shall not have been withdrawn
or adversely modified; and
(h) the recommendation of the Oversight Committee made to the
Board of Directors of EPP shall not have been withdrawn or adversely
modified.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENRON. The obligation of
Enron to effect the Merger is, at the option of Enron, also subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of EPP contained in
Section 2.2 shall be accurate in all material respects as of the date
of this Agreement and as of the Closing Date as though such
representations and warranties had been made at and as of that time;
all of the terms, covenants and conditions of this Agreement to be
complied with and performed by EPP on or before the Closing Date shall
have been duly complied with and performed in all material respects;
and a certificate to the foregoing effect dated the Closing Date and
signed by the Chairman of the Board or President of EPP shall have
been delivered to Enron;
(b) Since the date of this Agreement, no material adverse change
in the financial condition, results of operations or business of EPP
and its subsidiaries, taken as a whole, shall have occurred, and EPP
and its subsidiaries shall not have suffered any damage, destruction
or loss materially adversely affecting the properties or business of
EPP and its subsidiaries, taken as a whole, and Enron shall have
received a certificate signed by the Chairman of the Board or
President of EPP dated the Closing Date to such effect; and
(c) Since the date of the Agreement, the Dow Jones Industrial
Average shall not have closed below 6000 for a period of more than
seven days in any ten consecutive trading day period.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF EPP. The obligation of
EPP to effect the Merger is, at the option of EPP, also subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Enron and Merger Sub
contained in Section 2.1 shall be accurate in all material respects as
of the date of this Agreement and as of the Closing Date as though
such representations and warranties had been made at and as of that
time; all the terms, covenants and conditions of this Agreement to be
complied with and performed by Enron on or before the Closing Date
shall have been duly complied with and performed in all material
respects; and a certificate to the foregoing effect dated the Closing
Date and signed by the Chairman of the Board, President or Executive
Vice President and Chief of Staff or any Senior Vice President of
Enron shall have been delivered to EPP;
(b) Since the date of this Agreement, no material adverse change
in the results of operations, financial condition or business of Enron
and the Enron Subsidiaries, taken as a whole, shall have occurred, and
Enron and the Enron Subsidiaries shall not have suffered any damage,
destruction or loss materially adversely affecting the properties or
business of Enron and the Enron Subsidiaries, taken as a whole, and
EPP shall have received a certificate signed by the Chairman of the
Board, President or Executive Vice President and Chief of Staff or any
Senior Vice President of Enron dated the Closing Date to such effect;
and
(c) EPP shall have received from counsel to Enron an opinion
dated the Closing Date covering the matters set forth in Exhibit A.
ARTICLE VII
MISCELLANEOUS
7.1 TERMINATION. This Agreement may be terminated and the Merger and
the other transactions contemplated herein may be abandoned at any time
prior to the Effective Time, whether prior to or after approval by the
holders of Common Shares of EPP:
(a) by mutual consent of Enron and EPP;
(b) by either Enron or EPP if the Merger has not been effected on
or before December 31, 1997, PROVIDED, HOWEVER, that this Agreement
may be extended by written notice of either Enron or EPP to a date not
later than March 31, 1998, if the Merger shall not have been
consummated as a direct result of Enron or EPP having failed by
December 31, 1997 to receive all required regulatory approvals or
consents with respect to the Merger;
(c) by Enron upon a breach of any covenant or agreement on the
part of EPP set forth in this Agreement, such that the conditions set
forth in Section 6.2(a) of this Agreement would be incapable of being
satisfied by March 31, 1998; provided that in any case, a willful
breach shall be deemed to cause such conditions to be incapable of
being satisfied for purposes of this Section 7.1(c);
(d) by EPP upon a breach of any representation, warranty,
covenant or agreement on the part of Enron or Merger Sub set forth in
this Agreement, or if any representation or warranty of Enron or
Merger Sub shall have become untrue, in either case such that the
conditions set forth in Section 6.3(a) of this Agreement would be
incapable of being satisfied by March 31, 1998; provided that in any
case, a willful breach shall be deemed to cause such conditions to be
incapable of being satisfied for purposes of this Section 7.1(d);
(e) by either Enron or EPP if a final, unappealable order of a
judicial or administrative authority of competent jurisdiction to
restrain, enjoin or otherwise prevent a consummation of this Agreement
or the transactions contemplated in connection herewith shall have
been entered;
(f) by Enron if (i) since the date of this Agreement there has
been a material adverse change in the results of operations, financial
condition or business of EPP and its subsidiaries, taken as a whole,
(ii) since the date of the Agreement, the Dow Jones Industrial Average
shall have closed below 6000 for a period of more than seven days in
any ten consecutive trading day period or (iii) there has been a
material breach of any covenant set forth in this Agreement by EPP
which breach has not been cured within 30 days following receipt by
EPP of notice of such breach;
(g) by EPP if (i) since the date of this Agreement there has been
a material adverse change in the results of operations, financial
condition or business of Enron and the Enron Subsidiaries, taken as a
whole, or (ii) there has been a material breach of any representation
or warranty or covenant set forth in this Agreement by Enron which
breach has not been cured within 30 days following receipt by Enron of
notice of such breach.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto,
any person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the
execution of this Agreement. Unless such termination shall be waived by
Enron, Merger Sub and EPP, this Agreement shall be terminated and the
Merger and the other transactions contemplated herein shall be terminated
if either the Fairness Opinion or the recommendation of the Oversight
Committee previously made to the EPP Board of Directors to approve this
Agreement shall have been withdrawn or adversely modified.
7.2 EFFECT OF TERMINATION.
(a) Except as provided in Section 5.2 of this Agreement, in the
event of any termination of this Agreement pursuant to Section 7.1,
this Agreement shall be forthwith become void, there shall be no
liability on the part of Enron, any Enron Subsidiaries or EPP to the
other party and all rights and obligations of each party hereto shall
cease, except that nothing herein shall relieve any party of any
liability for (i) any breach of such party's covenants or agreements
contained in this Agreement, or (ii) any willful breach of such
party's representations or warranties contained in this Agreement.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at
any time prior to the Effective Time; PROVIDED, HOWEVER, that, after
approval of the Merger by the shareholders of EPP, no amendment, which
under applicable law may not be made without the approval of the
shareholders of EPP, may be made without such approval. This Agreement
may not be amended except by a written instrument signed by the parties
hereto, provided that after this Agreement has been approved and adopted by
the holders of Common Shares of EPP, this Agreement may be amended only as
may be permitted by applicable provisions of Delaware Law.
7.4 WAIVER. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto and (iii)
waive compliance by the other party with any of the agreements or
conditions contained herein. The waiver by any party hereto of any
condition or of a breach of another provision of this Agreement shall not
operate or be construed as a waiver of any other condition or subsequent
breach. The waiver by any party hereto of any of the conditions precedent
to its obligations under this Agreement shall not preclude it from seeking
redress for breach of this Agreement other than with respect to the
condition so waived. Any provision of this Agreement may be waived at any
time by the party that is, or whose shareholders are, entitled to the
benefits thereof. Any extension or waiver shall be valid only if set forth
in writing in an instrument signed by the party or parties to be bound
thereby.
7.5 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the terms of Article I, Article V
and this Article VII.
7.6 PUBLIC STATEMENTS. EPP and Enron agree to consult with each
other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by law or applicable stock
exchange policy.
7.7 ASSIGNMENT. This Agreement shall inure to the benefit of and
will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Except as set forth in
this Agreement, this Agreement shall not be assignable by the parties
hereto.
7.9 NOTICES. All notices, requests, demands, claims and other
communications which are required to be or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given
if (i) delivered in person or by courier, (ii) sent by telecopy or
facsimile transmission, answer back requested, or (iii) mailed, certified
first class mail, postage prepaid, return receipt requested, to the parties
hereto at the following addresses:
if to EPP: Enron Global Power & Pipelines L.L.C.
333 Clay Street, Suite 1800
Houston, Texas 77002
Attention: Chairman of the Board and Chairman
of the Oversight Committee
if to Enron: Enron Corp.
1400 Smith Street
Houston, Texas 77002-7369
Attention: Executive Vice President and Chief of
Staff
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.9. Such notices shall be
effective, (i) if delivered in person or by courier, upon actual receipt by
the intended recipient, (ii) if sent by telecopy or facsimile transmission,
when the answer back is received, or (iii) if mailed, upon the earlier of
five days after deposit in the mail and the date of delivery as shown by
the return receipt therefor.
7.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive law of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
7.10 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated.
7.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same agreement.
7.12 HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
7.13 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both oral and written, among the parties or any of them, with respect to
the subject matter hereof.
7.14 PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure solely to the benefit of each party hereto and, except as set
forth in Sections 5.4 and 5.5, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
7.15 OVERSIGHT COMMITTEE. Any (i) amendment, termination or waiver of
any condition of his Agreement by EPP, (ii) extension of the time for
performance of the obligations of Enron or Merger Sub hereunder or (iii)
other action to be taken by EPP's Board of Directors in connection with
this Agreement, shall require the approval of a majority of the members of
the Oversight Committee.
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 CORP.
By: /S/ EDMUND P. SEGNER, III
Name: Edmund P. Segner, III
Title: Executive Vice President and Chief of
Staff
ENRON GLOBAL POWER & PIPELINES L.L.C.
By: /S/ RODNEY L. GRAY
Name: Rodney L. Gray
Title: Chairman and Chief Executive Officer
ENRON INTERNATIONAL MERGER L.L.C.
By: /S/ RODNEY L. GRAY
Name: Rodney L. Gray
Title: Executive Vice President
371NAT.DOC
<PAGE>
EXHIBIT A - OPINION OF COUNSEL TO ENRON
(i) Enron is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Oregon and has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations hereunder and to carry on its business as now being conducted
as described in the Registration Statement; Merger Sub is a limited
liability company duly formed, validly existing and in good standing under
the laws of the State of Delaware and has all requisite limited liability
company power and authority to enter into this Agreement and perform its
obligations hereunder and to carry on its business as now being conducted
as described in the Registration Statement; and EPP is a limited liability
company duly formed, validly existing and in good standing under the laws
of the State of Delaware and has all requisite limited liability company
power and authority to enter into this Agreement and perform its
obligations hereunder and to carry on its business as now being conducted
as described in the Registration Statement.
(ii) the Agreement constitutes the legal valid and binding obligation
of each of Enron, Merger Sub and EPP, enforceable against each such party
in accordance with its terms, except (i) as such enforceability may be
limited by applicable 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), and (ii)
no opinion is expressed regarding the enforceability of provisions of the
Agreement providing for indemnification by Enron of any person for
violations of federal and state securities laws.
(iii) The certificate of merger prepared for filing with the Secretary
of State of Delaware complies in all material respects with the
requirements of Delaware Law, and upon filing of such certificate with the
Secretary of State of Delaware, the Merger will become effective in
accordance with the applicable provisions of Delaware Law.
(iv) The affirmative vote or consent of (i) the holders of a majority
of the outstanding Common Shares of EPP and (ii) a majority of the Common
Shares held by the Public Shareholders and voted at a special meeting of
shareholders called to vote on the Merger is the only vote or consent of
the holders of any class or series of shares of EPP necessary to approve
the Agreement and the Merger; the consent of the sole shareholder of Merger
Sub is the only vote or consent of the holders of any class or series of
the shares of Merger Sub necessary to approve the Agreement and the Merger;
and no vote or consent of the holders of any class or series of capital
stock of Enron is necessary to approve the Agreement and the Merger.
(v) All necessary corporate or limited liability company action on
the part of Enron, Merger Sub and EPP to approve the Agreement and the
Merger, and on the part of Enron for the issuance of shares of Enron Common
Stock to be delivered in connection with the Merger and the Enron Options,
has been validly taken.
(vi) The Registration Statement has become effective under the
Securities Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for such purpose have been initiated or are pending or
threatened by the Commission under the Securities Act.
(vii) The shares of Enron Common Stock to be delivered in connection
with the Merger and in connection with the Enron Options are duly
authorized and reserved for issuance and, when issued in accordance with
the terms and conditions of the Agreement or such Enron Options, will be
validly issued, fully paid and nonassessable.
(viii) None of Enron, Merger Sub or EPP is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(ix) Enron is a holding company exempt from regulation under the
Public Utility Holding Company Act of 1935 (other than Section 9(a)(2)
thereof) pursuant to Section 3(a)(1) thereof and Rule 2 thereunder.
<PAGE>
EXHIBIT 99.1
Carol Hensley
(713) 853-6498
ENRON CORP. AND ENRON GLOBAL POWER & PIPELINES AGREE
ON MERGER PROPOSAL; EPP DECLARES THIRD QUARTER DIVIDEND
FOR IMMEDIATE RELEASE: Monday, August 18, 1997
HOUSTON -- Enron Corp. and Enron Global Power & Pipelines L.L.C. (EPP)
jointly announced today that they have agreed to a merger whereby EPP
would become a wholly-owned subsidiary of Enron in a transaction in which
EPP shareholders would receive $35 per share in Enron common stock. The
transaction, which is expected to be completed in the fourth quarter of
1997, is subject to the approval of a majority of the shareholders of EPP
other than Enron.
On May 14, Enron and EPP announced that Enron had made an initial merger
proposal of $32 per share to EPP's Oversight Committee, which is
comprised of EPP's three outside board members, for evaluation with
assistance from outside legal and financial advisers. The $35 per share
merger price represents a 25 percent premium over the $28 trading price
for EPP shares one month prior to the original merger proposal. The
Oversight Committee has unanimously approved the $35 merger proposal.
EPP has approximately 26 million shares outstanding, of which 12.5
million are in the public market and the remaining 13.5 million are held
by Enron.
Enron expects to file shortly with the Securities and Exchange Commission
(SEC) a registration statement containing a prospectus/proxy statement
whereby the shares to be issued in the merger will be offered to EPP
shareholders. The exchange ratio will be determined by the average
closing price of Enron common stock 20 days prior to the day of final
closing, after shareholder and SEC approval.
In addition, the Board of Directors of EPP today declared a regular third
quarter dividend of $0.25 per share, payable September 15, 1997 to
shareholders of record August 29, 1997.
In terms of benefits, Enron and EPP management believe the proposed
merger:
+ provides EPP's shareholders with the opportunity to participate in all
of Enron's international activities across a broader spectrum of
geographical regions;
+ affords EPP shareholders the opportunity to participate in Enron's
worldwide infrastructure development and merchant activities;
+ integrates EPP's manpower, skills and expertise with those in the Enron
International organization;
+ permits the shareholders of both Enron and EPP to benefit from
administrative cost reductions arising from the integration of EPP into
Enron; and
+ simplifies the financial reporting structure of Enron.
Enron Global Power & Pipelines, majority owned by Enron, is traded on the
New York Stock Exchange under the ticker symbol, "EPP." EPP's assets
consist of interests in two power plants in the Philippines, power plants
in Guatemala and the Dominican Republic and natural gas pipeline systems
in Argentina and Colombia. EPP and Enron are parties to a purchase right
agreement that requires Enron to offer EPP ownership interests in
qualifying power and natural gas pipeline projects developed or acquired
by Enron outside the United States, Canada and Western Europe at prices
more favorable to EPP than those at which Enron would be permitted to
sell the projects to any third party.
Enron Corp., one of the world's largest integrated natural gas and
electricity companies with approximately $19 billion in assets, operates
one of the largest natural gas transmission systems in the world; is the
largest purchaser and marketer of natural gas and the largest non-
regulated marketer of electricity in North America; is a leading
participant in liberalized energy markets in the United Kingdom and the
Nordic Countries; markets natural gas liquids worldwide; manages the
largest portfolio of fixed-price natural gas risk management contracts in
the world; is among the leading entities arranging new capital to the
energy industry; owns a majority interest in Enron Oil & Gas Company, one
of the largest independent (non-integrated) exploration and production
companies in the United States; is one of the largest independent
developers and producers of electricity in the world; and is a major
supplier of solar and wind renewable energy worldwide. Enron's internet
address is www.enron.com and its common stock is traded under the ticker
symbol, "ENE."
##
