EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
CLASS A CUMULATIVE PERPETUAL INCREASING DIVIDEND
PREFERRED STOCK
OF
EEX CAPITAL INC.
_________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
_________________________
EEX Capital Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the
State of Delaware, certifies that pursuant to the authority
contained in Article 4 of its Certificate of Incorporation (the
"Certificate of Incorporation") and in accordance with the
provisions of Section 151 of the General Corporation Law of the
State of Delaware, the Board of Directors of the Corporation by
unanimous written consent dated September 25, 1997 duly approved
and adopted the following resolution which resolution remains in
full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the
Board of Directors by its Certificate of Incorporation, the Board
of Directors does hereby designate, create, authorize and provide
for the issue of Class A Cumulative Perpetual Increasing Dividend
Preferred Stock (the "Class A Preferred Stock"), par value $0.001
per share, with a liquidation preference of $1,000.00 per share,
consisting of 150,000 shares, having the following voting powers,
preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions
thereof as follows:
1. Certain Definitions.
Unless the context otherwise requires, the terms
defined in this Section 1 shall have, for all purposes of this
resolution, the meanings herein specified (with terms defined in
the singular having comparable meanings when used in the plural):
Additional Costs. The term "Additional Costs" shall
have the meaning assigned to it in the Subscription Agreement.
Affiliate. The term "Affiliate" shall mean with
respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. For
purposes of the foregoing definition, "control" means the direct
or indirect ownership of more than 50% of the outstanding capital
stock or other equity interests having ordinary voting power.
Affiliate Transaction. The term "Affiliate
Transaction" shall have the meaning set forth in Section 7(n)
below.
Business Day. The term "Business Day" shall mean a day
other than a Saturday, a Sunday, any federal holiday or any day
on which dealings in U.S. dollar deposits are not carried out in
the London interbank market.
Capital Lease Obligation. The term "Capital Lease
Obligation" shall mean, with respect to EEX or any Subsidiary of
EEX, the obligations of such Person to pay rent or other amounts
under a lease of (or other agreement conveying the right to use)
real and/or personal property which obligations are required to
be classified and accounted for as a liability for a capital
lease on a balance sheet of such Person in accordance with GAAP
and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof.
Capital Stock. The term "Capital Stock" shall mean (i)
in the case of a corporation, corporate stock, (ii) in the case
of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a
partnership, partnership interests (whether general or limited)
and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
Change of Control. The term "Change of Control" shall
mean the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of the
Exchange) Act of 35% or more of the outstanding shares of voting
stock of EEX.
Change of Control Offer. The term "Change of Control
Offer" shall have the meaning set forth in Section 6(a) below.
Change of Control Payment. The term "Change of Control
Payment" shall have the meaning set forth in Section 6(a) below.
Change of Control Payment Date. The term "Change of
Control Payment Date" shall have the meaning set forth in Section
6(d)(ii) below.
Common Stock. The term "Common Stock" shall mean all
shares now or hereafter authorized of any class of common stock
of the Corporation, including the common stock, par value $100.00
per share, and any other stock of the Corporation, howsoever
designated, authorized after the Initial Issue Date, that have
the right (subject always to prior rights of any class or series
of preferred stock) to participate in the distribution of the
assets and earnings of the Corporation without limit as to per
share amount.
Debt. The term "Debt" shall mean for EEX and its
Subsidiaries (except the Corporation and MIStS Issuer), the sum
of the following (without duplication): (i) all obligations for
borrowed money or evidenced by bonds, debentures, mandatorily
redeemable preferred stock with maturities before the Revolving
Credit Termination Date (as defined in the EEX Credit Agreement),
notes or other similar instruments (excluding interest, fees and
charges); (ii) all obligations in respect of bankers'
acceptances, unreimbursed drawings on letters of credit, surety
or other bonds; (iii) all Capital Lease Obligations; (iv) all
Operating Lease Obligations; (v) all financial guaranties in
respect of Indebtedness of unconsolidated Affiliates and
unrelated Persons; (vi) all obligations secured by a Lien on any
asset, whether or not such Indebtedness is assumed, but excluding
obligations secured by Liens permitted by Sections 9.02(c), (e),
(f), (h), (i), (j), (k) and (l) of the EEX Credit Agreement;
(vii) all production payments in connection with oil and gas
properties; and (viii) all Indebtedness of Special Entities (as
defined in the EEX Credit Agreement) to the extent the
Corporation or any Subsidiary is liable for such Indebtedness and
is reflected on the consolidated balance sheet of EEX or any
Subsidiary; provided, however, such term shall not include
Permitted Subordinated Debt.
Debt to Capital Ratio. The term "Debt to Capital
Ratio" shall have the meaning set forth in Section 5(b) below.
Default. The term "Default" shall mean an Event of
Default or an event which with notice or lapse of time or both
would be an Event of Default.
Dividend. The term "Dividend" shall mean any dividend
payable in accordance with Section 2(a) below.
Dividend Payment Date. The term "Dividend Payment
Date" shall have the meaning set forth in Section 2(a) below.
Dividend Period. The term "Dividend Period" shall mean
the period from, and including, the Initial Issue Date to, but
not including, the first Dividend Payment Date and thereafter,
each period from, and including, the preceding Dividend Payment
Date to, but not including the next Dividend Payment Date.
EEX. The term "EEX" shall mean Enserch Exploration,
Inc., a Texas corporation.
EEX Capital Subordinated Note. The term "EEX
Capital Subordinated Note" means the subordinated promissory note
made by the Corporation in favor of MIStS Issuer, reevidencing
$75.0 million of Indebtedness, dated as of September 29, 1997.
EEX Capital Subordination Agreement. The term "EEX
Capital Subordination Agreement" shall mean the subordination
agreement dated as of September 29, 1997 issued by the MIStS
Issuer in favor of the administrative agent and the lenders under
the EEX Credit Agreement and subordinating the EEX Capital
Subordinated Note and the Guaranty Agreement to the "Superior
Indebtedness" (as defined in such subordination agreement.)
EEX Credit Agreement. The term "EEX Credit Agreement"
shall mean that certain Credit Agreement dated as of May 1, 1995
among EEX, as borrower, The Chase Manhattan Bank, as
Administrative Agent, and the lenders signatory thereto, as
amended by First Amendment dated September 19, 1996, and Second
Amendment dated June 27, 1997, and as modified by that certain
letter from EEX to the Administrative Agent and in effect on the
Closing Date together with such amendments thereto as may be
adopted in accordance therewith and consented to by the Majority
Holders.
EEX LLC. The term "EEX LLC" means EEX Capital L.L.C.,
a Delaware limited liability company that was merged with and
into EEX Preferred pursuant to the Merger, with EEX Preferred
being the surviving corporation and renamed EEX Capital Inc.
EEX Preferred. The term "EEX Preferred" means EEX
Preferred Capital Inc., a Delaware corporation now known as EEX
Capital Inc., into which EEX LLC was merged pursuant to the
Merger.
EEX Subordinated Note. The term "EEX Subordinated
Note" means the subordinated promissory note made by EEX in favor
of the Corporation reevidencing $150.0 million of Indebtedness,
dated as of September 29, 1997.
EEX Subordination Agreement. The term "EEX
Subordination Agreement" shall mean the subordination agreement
dated as of September 29, 1997 issued by the Corporation in favor
of the administrative agent and the lenders under the EEX Credit
Agreement and subordinating the EEX Subordinated Note to the
"Superior Indebtedness" (as defined in such subordination
agreement.)
Engagement Letter. The term "Engagement Letter" shall
mean that certain engagement letter agreement by and among UBS,
EEX, EEX Preferred, EEX LLC and MIStS Issuer, dated as of
September 24, 1997, as modified by letter agreement dated
September 29, 1997.
Equity Interests. The term "Equity Interests" shall
mean Capital Stock and all warrants, options or other rights to
acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
Event of Default. The term "Event of Default" shall
mean (i) an "Event of Default" as defined in the EEX Credit
Agreement, (ii) failure by the Corporation to pay any scheduled
Dividend on the Preferred Securities or any fee or other amount
owing to UBS or any of the Holders pursuant to the Transaction
Documents on or within 30 days after the same is due,
(iii) failure by the Corporation to cause either the merger of
MIStS Issuer with and into the Corporation or the redemption of
all of the Class A Preferred Stock and all of the Preferred
Interests on the Required Merger Date, (iv) failure by the
Corporation to make any Change of Control redemption within the
time periods specified in Section 6 hereof, (v) a Prohibited
Issuance, (vi) the occurrence of a Voting Rights Trigger Event,
(vii) breach of any other provision of this Certificate of
Designations or of the other Transaction Documents, as in effect
on the date hereof or as subsequently modified which is not cured
within 60 days (except that breach of the covenants described in
Sections 12.1 and 13.1 of the Subscription Agreement shall not be
entitled to any such cure period) and (viii) any representation
or warranty on the part of EEX or any Subsidiary of EEX in any
Transaction Document shall prove to have been false or misleading
in any material respect when made, deemed made or furnished.
Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
Executive Officer. The term "Executive Officer" shall
mean any officer of the Corporation that would be deemed to be an
"executive officer" within meaning of the rules and regulations
of the Securities and Exchange Commission.
Fee Letter. The term "Fee Letter" shall mean that
certain fee letter agreement by and among UBS, EEX, EEX
Preferred, EEX LLC and MIStS Issuer, dated as of September 24,
1997, as modified by letter agreement dated September 29, 1997.
GAAP. The term "GAAP" shall mean generally accepted
accounting principles in the United States of America in effect
from time to time.
Governmental Authority. The term "Governmental
Authority" shall mean any nation or government, any state or
other political subdivision thereof and any Person exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Government Securities. The term "Government
Securities" shall mean direct obligations of, or obligations
guaranteed by, the United States of America for the payment of
which obligations or guarantee the full faith and credit of the
United States of America is pledged.
Guarantee. The term "Guarantee" shall mean a guarantee
(other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of
all or any part of any Indebtedness.
Guaranty Agreement. The term "Guaranty Agreement"
shall mean that certain Amended and Restated Guaranty Agreement,
dated as of September 29, 1997 issued by EEX in favor of MIStS
Issuer guaranteeing the obligations of the Corporation to MIStS
Issuer under the EEX Capital Subordinated Note, as the same may
be further amended, modified or supplemented from time to time
with the consent of the Majority Holders.
Holder. The term "Holder" shall mean the record holder
of one or more shares of Class A Preferred Stock, as shown on the
books and records of the Corporation.
Indebtedness. The term "Indebtedness" of a Person
shall mean such Person's (i) obligations for borrowed money,
whether or not evidenced by a bond, note or similar instrument,
(ii) obligations representing the deferred purchase price of
property other than accounts payable arising in the ordinary
course of such Person's business on terms customary in the trade,
(iii) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments,
(v) Capital Lease Obligations, (vi) obligations for which such
Person is obligated pursuant to a Guarantee or pursuant to a
letter of credit, (vii) Hedging Obligations, and (viii)
Mandatorily Redeemable Obligations.
Initial Issue Date. The term "Initial Issue Date"
shall mean the date that shares of Class A Preferred Stock are
first issued by the Corporation.
Junior Securities. The term "Junior Securities" shall
mean any class of stock ranking junior to the Class A Preferred
Stock as to the payment of dividends and as to rights in
liquidation, dissolution or winding up of the affairs of the
Corporation.
Lien. The term "Lien" shall mean any interest in
Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not
limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security
purposes.
Liquidation Preference. The term "Liquidation
Preference" shall mean (i) $1,000.00 per share of Class A
Preferred Stock or (ii) $1,000.00 per share of Preferred
Interests.
LLC Agreement. The term "LLC Agreement" shall mean the
second amended and restated limited liability company agreement
of MIStS Issuer L.L.C., dated as of September 29, 1997.
Majority Holders. The term "Majority Holders" shall
mean a majority in aggregate liquidation preference of the
Holders of the Preferred Securities.
Mandatorily Redeemable Obligation. The term
"Mandatorily Redeemable Obligation" shall mean, with respect to
any Person, an obligation of such Person or any of its
Subsidiaries to the extent that it is redeemable, payable or
required to be purchased or otherwise retired or extinguished (a)
at a fixed or determinable date, whether by operation of a
sinking fund or otherwise, (b) at the option of any Person other
than such Person or such Subsidiary, or (c) upon the occurrence
of a condition not solely within the control of such Person or
such Subsidiary, such as a redemption required to be made out of
future earnings.
Material Adverse Effect. The term "Material Adverse
Effect" shall mean any material and adverse change in the
financial condition, business or results of operations of EEX and
its Subsidiaries taken as a whole which makes EEX unable to
perform its obligations under the Guaranty Agreement or the EEX
Subordinated Note.
Merger Notice. The term "Merger Notice" shall mean a
notice issued by UBS in accordance with the letter agreement
dated September 29, 1997, requiring MIStS Issuer to merge with
and into the Corporation, with the Corporation being the
servicing corporation.
MIStS Issuer. The term "MIStS Issuer" shall mean MIStS
Issuer L.L.C., a Delaware limited liability company, the common
membership interests of which are wholly owned by the
Corporation.
MIStS Issuer Voting Rights Trigger Event. The term
"MIStS Issuer Voting Rights Trigger Event" shall have the meaning
ascribed to "Voting Rights Trigger Event" in the LLC Agreement.
Obligations. The term "Obligations" shall mean any
principal, interest, penalties, fees (including, but not limited
to, reasonable fees and expenses of counsel), indemnifications,
reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
Officer's Certificate. The term "Officer's
Certificate" shall mean a certificate signed on behalf of the
Corporation by an officer of the Corporation who must be the
Chief Executive Officer, the Chief Financial Officer, the
Treasurer or the principal accounting officer of the Corporation
that meets the requirements of Section 9 hereof.
Operating Lease Obligations. The term "Operating Lease
Obligations" shall mean, as to the Corporation or any Subsidiary,
the obligations of such person to pay rent or other amounts under
a lease of (or other agreement conveying the right to use) real
and/or personal property which obligations are not required to be
classified and accounted for as a liability for a capital lease
on a balance sheet of such Person and, for purposes of this
Certificate of Designations, the amount of such obligations shall
be the discounted present value of the lease payments, discounted
in the same manner a capital lease would be discounted according
to GAAP.
Parity Securities. The term "Parity Securities" shall
mean any class or series of stock of the Corporation authorized
after the Initial Issue Date that is entitled to receive payment
of dividends and to receive assets upon liquidation, dissolution
or winding up of the affairs of the Corporation on a parity with
the Class A Preferred Stock.
Paying Agent. The term "Paying Agent" shall mean the
Corporation until such time, if any, as an additional or other
Paying Agent is appointed pursuant to Section 8(c).
Permits. The term "Permits" shall mean such material
permits, licenses, franchises, consents, approvals and
authorizations of Governmental Authorities as are necessary to
own, lease and operate the Corporation's Properties and to
conduct its business as presently conducted.
Permitted Subordinated Debt. The term "Permitted
Subordinated Debt" shall mean Indebtedness of EEX or a Subsidiary
owing to EEX or another Subsidiary subordinated to the "Superior
Indebtedness" (as such term is defined in the Subordination
Agreements) on terms substantially similar to the terms set forth
in the Subordination Agreements.
Person. The term "Person" shall mean any individual,
corporation, company, limited liability company, voluntary
association, partnership, joint venture, trust, unincorporated
organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.
Preferred Interests. The term "Preferred Interests"
shall mean the Cumulative Perpetual Increasing Dividend Preferred
Interests of MIStS Issuer.
Preferred Securities. The term "Preferred Securities"
shall mean the Preferred Interests and the Class A Preferred
Stock.
Preferred Stock. The term "Preferred Stock" of any
Person, shall mean Capital Stock of such Person of any class or
series (however designated) that ranks prior, as to payment of
dividends or as to the distribution of assets upon any voluntary
or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class or series
of such Person.
Prohibited Issuance. The term "Prohibited Issuance"
shall mean issuance by EEX, the Corporation, MIStS Issuer or any
of their respective Subsidiaries of subordinated debt or equity
securities in violation of the provisions under Article V of the
Subscription Agreement, the proceeds of which are not used to
fully redeem the Preferred Securities.
Property. The term "Property" shall mean any interest
in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.
Record Date. The term "Record Date" shall have the
meaning set forth in Section 2(a) below.
Redemption Date. The term "Redemption Date" shall have
the meanings set forth in Section 4(c) below.
Redemption Price. The "Redemption Price" shall be the
Liquidation Preference plus (i) Additional Costs and (ii) accrued
and unpaid dividends to the date of redemption.
Required Merger Date. The term "Required Merger Date"
shall mean the first Dividend Payment Date occurring at least
thirteen (13) Business Days after receipt by the Corporation of a
Merger Notice.
Securities Act. The term "Securities Act" shall mean
the Securities Act of 1933, as amended.
Senior Debt. The term "Senior Debt" means the
principal (whether denominated as principal, monthly rental or
other notional quantity), premium, if any, and unpaid interest
on, and any reasonable fees or costs related to, (a) any Debt of
EEX and its Subsidiaries (other than the Corporation and MIStS
Issuer), whether outstanding on the date hereof or hereafter
created, which is incurred, assumed, or guaranteed in compliance
with the EEX Credit Agreement, unless in the instrument creating
or evidencing the same or pursuant to which the same is
outstanding it is provided that such indebtedness is not superior
in right of payment to the EEX Subordinated Note, and (b)
renewals, extensions, modifications and refundings of any such
Debt. For the avoidance of doubt, Debt which is created,
incurred, assumed, or guaranteed in violation of terms of the EEX
Credit Agreement shall not constitute Senior Debt, and Debt which
is created, incurred, assumed, or guaranteed in compliance with
the terms of the EEX Credit Agreement Debt shall at all times
constitute Senior Debt, notwithstanding any event or circumstance
which may subsequently occur which would constitute the creation,
incurrence, assumption or guarantee of such Debt at such time a
violation of the EEX Credit Agreement.
Senior Securities. The term "Senior Securities" shall
mean any class or series of Capital Stock of the Corporation
authorized after the Initial Issue Date ranking senior to the
Class A Preferred Stock in respect of the right to receive
dividends and in respect of the right to participate in any
distribution upon liquidation, dissolution or winding up of the
affairs of the Corporation.
Stock Registration Rights Agreement. The term " Stock
Registration Rights Agreement" shall mean the registration
rights, agreement dated as of September 29, 1997, between, the
Corporation and the Placement Agent on behalf of UBS, pursuant to
which the Class A Preferred Stock is required to be registered
for public sale.
Subordinated Notes. The term "Subordinated Notes"
means, collectively, the EEX Capital Subordinated Note and the
EEX Subordinated Note.
Subordination Agreements. The term "Subordination
Agreements" means, collectively, the EEX Capital Subordination
Agreement and the EEX Subordination Agreement.
Subscription Agreement. The term "Subscription
Agreement" shall mean the Preferred Interest and Preferred Stock
Subscription Agreement, dated as of September 29, 1997, among
EEX, the Corporation, MIStS Issuer and UBS as Placement Agent for
the Holders of the Preferred Securities.
Subsidiary. The term "Subsidiary" shall mean, with
respect to any Person, (i) any corporation, association or other
business entity of which more than 50% of the total voting power
of shares of Voting Stock thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of
which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
Transaction Documents. The term "Transaction
Documents" shall mean the Subscription Agreement, the LLC
Agreement, the Certificate of Designations, the Class A Preferred
Stock, the Preferred Interests, the Engagement Letter, the Fee
Letter, the Stock Registration Rights Agreement, the Subordinated
Notes, the Guaranty Agreement, and the Subordination Agreements.
Transfer Agent. The term "Transfer Agent" shall mean
the entity designated from time to time by the Corporation to act
as the registrar and transfer agent for the Class A Preferred
Stock.
UBS. The term "UBS" shall mean UBS Securities LLC, a
Delaware limited liability company.
Voting Stock. The term "Voting Stock" shall mean with
respect to any specified Person, Capital Stock with voting power,
under ordinary circumstances and without regard to the occurrence
of any contingency, to elect the directors or other managers or
trustees of such Person.
Voting Rights Trigger Event. The term "Voting Rights
Trigger Event" shall have the meaning set forth in Section 5(b)
below.
2. Dividends.
(a) The Holders of shares of the Class A Preferred
Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the
Corporation legally available therefor, cumulative preferential
dividends from the date such shares of Class A Preferred Stock
are issued accruing, subject to Section 2(b), at a variable rate
per annum equal to the sum of (A) Union Bank of Switzerland's
three-month London interbank offered rate, reset quarterly, plus
(B) a spread equal to (i) 300 basis points for the period from
the Initial Issue Date to but excluding December 31, 1997, (ii)
400 basis points for the period from December 31, 1997, to but
excluding March 31, 1998, (iii) 500 basis points for the period
from March 31, 1998, to but excluding June 30, 1998, (iv) 600
basis points for the period from June 30, 1998, to but excluding
September 30, 1998, and (v) 700 basis points at all time from and
after September 30, 1998; provided, however, that upon the
occurrence and during the continuance of an Event of Default, the
spread otherwise applicable under this clause (B) shall increase
by 100 basis points. Dividends shall be payable quarterly in
arrears on the last Business Day of each March, June, September
and December in each year (each, a "Dividend Payment Date"), to
the Holders of record as of the tenth Business Day preceding such
Dividend Payment Date (each, a "Record Date"). Dividends will be
payable in cash. The first dividend payment will be payable on
December 31, 1997. Dividends payable on the Class A Preferred
Stock will be computed on the basis of a 360-day year and actual
days elapsed occurring in the period with respect to which such
dividends are payable.
(b) At any time after September 30, 1998, UBS may
elect to deliver a written notice (a "Rate Fixing Notice") fixing
the dividend rate, terms and condition on the Class A Preferred
Stock at the rate, terms and condition which UBS in good faith
determines in its sole discretion would be necessary to effect a
sale of the Class A Preferred Stock at par, whereupon the
dividend rate on all of the Class A Preferred Stock shall become
a fixed rate per annum; provided, however, that (i) such security
shall be of a perpetual nature and (ii) upon the occurrence and
during the continuance of an Event of Default, the dividend rate
specified in the Rate Fixing Notice shall increase by 100 basis
points.
(c) Dividends on the Class A Preferred Stock shall
accrue whether or not the Corporation has earnings or profits,
whether or not there are funds legally available for the payment
of such dividends and whether or not dividends are declared.
Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate.
Accumulated unpaid dividends will bear interest at the rate per
annum then applicable pursuant to Section 2(a) above. The
Corporation shall take all actions required or permitted under
Delaware law to permit the payment of dividends on the Class A
Preferred Stock.
(d) No dividend whatsoever shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any
outstanding Class A Preferred Stock with respect to any Dividend
Period unless all dividends for all preceding Dividend Periods
have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all
outstanding shares of Class A Preferred Stock. Unless full
cumulative dividends on all outstanding shares of Class A
Preferred Stock due for all past dividend periods shall have been
declared and paid, or declared and a sufficient sum for the
payment thereof set apart, then: (i) no dividend (other than a
dividend payable solely in shares of any Junior Securities) shall
be declared or paid upon, or any sum set apart for the payment of
dividends upon, any shares of Junior Securities; (ii) no other
distribution shall be made upon or any sum set apart for the
payment of any distribution upon, any shares of Junior
Securities; (iii) no shares of Junior Securities shall be
purchased, redeemed or otherwise acquired or retired for value
(excluding an exchange for shares of other Junior Securities) by
the Corporation or any of its Subsidiaries; and (iv) no monies
shall be paid into or set apart or made available for a sinking
or other like fund for the purchase, redemption or other
acquisition or retirement for value of any shares of Junior
Securities by the Corporation or any of its Subsidiaries.
Holders of the Class A Preferred Stock will not be entitled to
any dividends, whether payable in cash, property or stock, in
excess of the full cumulative dividends as herein described.
(e) The Corporation will not claim any deduction from
gross income for dividends paid on the Class A Preferred Stock in
any Federal income tax return, claim for refund, or other
statement, report or submission made to the Internal Revenue
Service, and will make any election or take any similar action to
effectuate the foregoing except, in each case, if there shall be
a change in law such that the Corporation may claim such
dividends as deductions from gross income without affecting the
ability of the Holders of the Class A Preferred Stock to claim
the dividends received deduction under Section 243(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision). At the reasonable request of any Holder of
Class A Preferred Stock (and at the expense of such Holder), the
Corporation will join in the submission to the Internal Revenue
Service of a request for a ruling that the dividends paid on
Class A Preferred Stock will be eligible for the dividends
received deduction under Section 243(a)(1) of the Code (or any
successor provision). In addition, the Corporation will
cooperate with any Holder of the Class A Preferred Stock (at the
expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received
deduction under Section 243(a)(1) of the Code (or any successor
provision) of any dividends (within the meaning of Section 316(a)
of the Code or any successor provision) paid on the Class A
Preferred Stock. To the extent possible, the principles of this
Section 2(e) shall also apply with respect to State and local
income taxes.
3. Distributions Upon Liquidation, Dissolution or
Winding Up.
Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation or reduction or
decrease in its Capital Stock resulting in a distribution of
assets to the holders of any class or series of the Corporation's
Capital Stock (a "reduction or decrease in Capital Stock"), each
Holder of shares of the Class A Preferred Stock shall be entitled
to payment out of the assets of the Corporation available for
distribution of an amount equal to the Liquidation Preference per
share of Class A Preferred Stock held by such Holder, plus
accrued and unpaid dividends to the date fixed for liquidation,
dissolution, winding up or reduction or decrease in Capital
Stock, before any distribution is made on any Junior Securities,
including, without limitation, Common Stock of the Corporation.
After payment in full of the Liquidation Preference and all
accrued dividends to which Holders of Class A Preferred Stock are
entitled, such Holders will not be entitled to any further
participation in any distribution of assets of the Corporation.
However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or
assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more corporations will be deemed
to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation or reduction or decrease in capital
stock, unless such sale, conveyance, exchange or transfer shall
be in connection with a liquidation, dissolution or winding up of
the business of the Corporation or reduction or decrease in
Capital Stock.
4. Redemption by the Corporation.
(a) The Class A Preferred Stock may be redeemed on any
Dividend Payment Date at the option of the Corporation upon ten
(10) Business Days' prior written notice (i) in whole or (ii)
ratably between the Preferred Stock and the Preferred Interests
in part (but not in increments of less than $25.0 million in the
aggregate for both types of Preferred Securities), in either case
at the Redemption Price.
(b) In case of redemption of less than all of the
shares of Class A Preferred Stock at the time outstanding, the
shares to be redeemed shall be selected pro rata or by lot as
determined by the Corporation in its sole discretion.
(c) Notice of any redemption shall be sent by or on
behalf of the Corporation ten (10) Business Days prior to the
date specified for redemption in such notice (the "Redemption
Date"), by either first class mail, postage prepaid, or facsimile
transmission to all Holders of record of the Class A Preferred
Stock at their respective last addresses as they shall appear on
the books of the Corporation; provided, however, that no failure
to give such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for the
redemption of any shares of Class A Preferred Stock except as to
the Holder to whom the Corporation has failed to give notice or
except as to the Holder to whom notice was defective. In
addition to any information required by law or by the applicable
rules of any exchange upon which Class A Preferred Stock may be
listed or admitted to trading, such notice shall state: (i) the
paragraph of this Certificate of Designations pursuant to which
the redemption is made; (ii) the Redemption Date; (iii) the
Redemption Price; (iv) the number of shares of Class A Preferred
Stock to be redeemed and, if less than all shares held by such
Holder are to be redeemed, the number of such shares to be
redeemed; (v) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price,
including any procedures applicable to redemptions to be
accomplished through book-entry transfers; and (vi) that
dividends on the shares to be redeemed will cease to accrue on
the Redemption Date. Upon the mailing of any such notice of
redemption, the Corporation shall become obligated to redeem at
the time of redemption specified thereon all shares called for
redemption.
(d) If notice has been mailed or transmitted in
accordance with Section 4(c) above and provided that on or before
the Redemption Date specified in such notice, all funds necessary
for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds in trust for the pro rata
benefit of the Holders of the shares so called for redemption, so
as to be, and to continue to be available therefor, then, from
and after the Redemption Date, dividends on the shares of the
Class A Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be
outstanding and shall not have the status of shares of Class A
Preferred Stock, and all rights of the Holders thereof as
stockholders of the Corporation (except the right to receive from
the Corporation the Redemption Price) shall cease. Upon
surrender, in accordance with said notice, of the certificates
for any shares so redeemed (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice
shall so state), such shares shall be redeemed by the Corporation
at the Redemption Price. In case fewer than all the shares
represented by any such certificate are redeemed, a new
certificate or certificates shall be issued representing the
unredeemed shares without cost to the Holder thereof.
(e) The deposit of any funds deposited with a bank or
trust company for the purpose of redeeming Class A Preferred
Stock shall be irrevocable except that:
(i) the Corporation shall be entitled to receive
from such bank or trust company the interest or other
earnings, if any, earned on any money so deposited in trust,
and the Holders of any shares redeemed shall have no claim
to such interest or other earnings; and
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the Holders of the Class A
Preferred Stock entitled thereto at the expiration of two
years from the applicable Redemption Date shall be repaid,
together with any interest or other earnings earned thereon,
to the Corporation, and after any such repayment, the
Holders of the shares entitled to the funds so repaid to the
Corporation shall look only to the Corporation for payment
without interest or other earnings.
(f) No Class A Preferred Stock may be redeemed except
with funds legally available for such purpose. The Corporation
shall take all actions required or permitted under Delaware Law
to permit any such redemption.
(g) Notwithstanding the foregoing provisions of this
Section 4, unless the full cumulative dividends on all
outstanding shares of Class A Preferred Stock shall have been
paid or contemporaneously are declared and paid for all past
dividend periods, none of the shares of Class A Preferred Stock
shall be redeemed unless all outstanding shares of Class A
Preferred Stock are simultaneously redeemed.
(h) All shares of Class A Preferred Stock redeemed
pursuant to this Section 4 shall be restored to the status of
authorized and unissued shares of preferred stock, without
designation as to series and may thereafter be reissued as shares
of any series of preferred stock other than shares of Class A
Preferred Stock.
5. Voting Rights.
(a) The Holders of record of shares of Class A
Preferred Stock shall not be entitled to any voting rights except
as hereinafter provided in this Section 5 or as otherwise
provided by law.
(b) If (i) the Corporation fails to declare or pay
dividends in full (including any arrearages and additional
dividends owed pursuant to Section 2(b)) on the Class A Preferred
Stock for any Dividend Period and such failure is not cured
within 30 days, (ii) the Corporation fails to consummate a Change
of Control Offer within 60 days of a Change of Control (or 90
days, if a consent is required after the occurrence of a Change
of Control), (iii) the Corporation breaches the covenant
described in Section 5.6 of the Subscription Agreement, (iv) a
Prohibited Issuance occurs, (v) EEX breaches the "Debt to Capital
Ratio" covenant described in Section 9.01 of the EEX Credit
Agreement or (vi) a MIStS Issuer Voting Rights Trigger Event
shall occur (each of (i), (ii), (iii), (iv), (v) and (vi) a
"Voting Rights Trigger Event"), then the authorized number of
members of the Corporation's Board of Directors will be
immediately and automatically increased by the Required Number
and the Holders of a majority of the outstanding shares of Class
A Preferred Stock, voting separately as a class, shall be
entitled to elect the Required Number of directors of the
Corporation, so as to gain and maintain majority voting control
of the Corporation. As used in the preceding sentence, "Required
Number" means the sum of (x) the authorized number of members of
the Corporation's Board of Directors immediately prior to the
increase of such number pursuant to such sentence and (y) one
(1).
(c) Whenever such voting right shall have vested, such
right may be exercised initially either at a special meeting of
the Holders of Class A Preferred Stock, called as hereinafter
provided, or at any annual meeting of stockholders held for the
purpose of electing directors, and thereafter at such annual
meetings or by the written consent of the Holders of Class A
Preferred Stock. Such right of the Holders of Class A Preferred
Stock to elect directors may be exercised until (i) all dividends
in arrears shall have been paid in full and (ii) all other Voting
Rights Trigger Events have been cured or waived, at which time
the right of the Holders of Class A Preferred Stock to elect such
number of directors shall cease, the term of such directors
previously elected shall thereupon terminate, and the authorized
number of directors of the Corporation shall thereupon return to
the number of authorized directors otherwise in effect, but
subject always to the same provisions for the renewal and
divestment of such special voting rights in the case of any such
future dividend default or defaults or any such failure to make
redemption payments.
(d) At any time when such voting right shall have
vested in the Holders of Class A Preferred Stock and if such
right shall not already have been initially exercised, a proper
officer of the Corporation shall, upon the written request of
Holders of record of 10% or more of the Class A Preferred Stock
then outstanding, addressed to the Secretary of the Corporation,
call a special meeting of Holders of Class A Preferred Stock.
Such meeting shall be held at the earliest practicable date upon
the notice required for annual meetings of stockholders at the
place for holding annual meetings of stockholders of the
Corporation or, if none, at a place designated by the Secretary
of the Corporation. If such meeting shall not be called by the
proper officers of the Corporation within 30 days after the
personal service of such written request upon the Secretary of
the Corporation, or within 30 days after mailing the same within
the United States, by registered mail, addressed to the Secretary
of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal
authorities), then the Holders of record of 10% of the shares of
Class A Preferred Stock then outstanding may designate in writing
a Holder of Class A Preferred Stock to call such meeting at the
expense of the Corporation, and such meeting may be called by
such person so designated upon the notice required for annual
meetings of stockholders and shall be held at the place for
holding annual meetings of the Corporation or, if none, at a
place designated by such Holder. Any Holder of Class A Preferred
Stock that would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of
causing a meeting of stockholders to be called pursuant to the
provisions of this Section. Notwithstanding the provisions of
this paragraph, however, no such special meeting shall be called
if any such request is received less than 30 days before the date
fixed for the next ensuing annual or special meeting of
stockholders.
(e) If any director so elected by the Holders of Class
A Preferred Stock shall cease to serve as a director before his
term shall expire, the Holders of Class A Preferred Stock then
outstanding may, at a special meeting of the Holders called as
provided above, elect a successor to hold office for the
unexpired term of the director whose place shall be vacant.
(f) The Corporation shall not, without the affirmative
vote or consent of the Holders of a majority of the then
outstanding shares of Class A Preferred Stock (with shares held
by the Corporation or any of its Affiliates not being considered
to be outstanding for this purpose) amend or otherwise alter its
Certificate of Incorporation in any manner that adversely affects
the rights of Holders of Class A Preferred Stock.
(g) Without the consent of each Holder of Class A
Preferred Stock affected, an amendment or waiver may not (with
respect to any shares of Class A Preferred Stock held by a
non-consenting Holder of Class A Preferred Stock):
(i) alter the voting rights with respect to the
Class A Preferred Stock or reduce the number of shares of
Class A Preferred Stock whose Holders must consent to an
amendment, supplement or waiver;
(ii) reduce the Liquidation Preference of any
share of Class A Preferred Stock or alter the provisions
with respect to the redemption of the Class A Preferred
Stock (other than provisions relating to the covenant
described in Section 6 hereof);
(iii) reduce the rate of or change the time
for payment of dividends on any share of Class A Preferred
Stock;
(iv) waive a default or event of default in the
payment of dividends on the Class A Preferred Stock;
(v) make any share of Class A Preferred Stock
payable in any form other than that stated in this
Certificate of Designations;
(vi) make any change in the provisions of this
Certificate of Designations relating to waivers of the
rights of Holders of Class A Preferred Stock to receive the
Liquidation Preference or dividends on the Class A Preferred
Stock;
(vii) waive a redemption payment with respect
to any share of Class A Preferred Stock (other than a
payment required by the covenant described in Section 6
hereof);
(viii) alter the effect of the Rate Fixing
Notice or the Merger Notice; or
(ix) make any change in the foregoing amendment
and waiver provisions.
(h) The Corporation shall not, without the consent of
at least 100% of the then outstanding shares of Class A Preferred
Stock (with shares held by the Corporation or its Affiliates not
being considered to be outstanding for this purpose), authorize,
create (by way of reclassification or otherwise) or issue any
securities or any obligation or security convertible or
exchangeable into or evidencing a right to purchase, shares of
any class or series of securities other than the initial issuance
of the Class A Preferred Stock to holders of Preferred Interests
of MIStS Issuer or an issuance of Class A Preferred Stock in
connection with a merger of MIStS Issuer with and into the
Corporation.
(i) The Corporation in its sole discretion may without
the vote or consent of any Holders of the Class A Preferred Stock
amend or supplement this Certificate of Designations:
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to provide for uncertificated Class A
Preferred Stock in addition to or in place of certificated
Class A Preferred Stock; or
(iii) to make any change that would provide
any additional rights or benefits to the Holders of the
Class A Preferred Stock or that does not adversely affect
the legal rights or benefits under this Certificate of
Designations of any such Holder.
6. Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder of Class A Preferred Stock shall have the right to require
the Corporation to repurchase all or any part of such Holder's
shares of Class A Preferred Stock (a "Change of Control Offer")
at an offer price in cash equal to 101% of the aggregate
Liquidation Preference thereof plus (i) accrued and unpaid
dividends, if any, thereon to the date of purchase and (ii) any
Additional Costs (together, the "Change of Control Payment").
(b) The Change of Control Offer shall include all
instructions and materials necessary to enable Holders to tender
their shares of Class A Preferred Stock.
(c) The Corporation shall comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
the shares of Class A Preferred Stock as a result of a Change of
Control.
(d) Within 30 days following any Change of Control,
the Corporation shall mail or deliver by facsimile transmission a
notice to each Holder stating:
(i) that the Change of Control Offer is being
made pursuant to this Section 6 and that all shares of Class
A Preferred Stock tendered will be accepted for payment;
(ii) the purchase price and the purchase date,
which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed (the "Change of
Control Payment Date");
(iii) that any share of Class A Preferred
Stock not tendered will continue to accrue dividends;
(iv) that, unless the Corporation fails to pay the
Change of Control Payment, all shares of Class A Preferred
Stock accepted for payment pursuant to the Change of Control
Offer shall cease to accrue dividends after the Change of
Control Payment Date;
(v) that Holders electing to have any shares of
Class A Preferred Stock purchased pursuant to a Change of
Control Offer will be required to surrender the shares of
Class A Preferred Stock, with the form entitled "Option of
Holder to Elect Purchase," which shall be included with the
Notice of Change of Control, completed, to the Paying Agent
at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of
Control Payment Date;
(vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than
the close of business on the second Business Day preceding
the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of
the Holder, the number of shares of Class A Preferred Stock
delivered for purchase, and a statement that such Holder is
withdrawing his election to have such shares purchased; and
(vii) the circumstances and relevant facts
regarding such Change of Control (including, but not limited
to, information with respect to pro forma historical
financial information after giving effect to such Change of
Control and information regarding the Person or Persons
acquiring control).
(e) On the Change of Control Payment Date, the
Corporation shall, to the extent lawful: (i) accept for payment
all shares of Class A Preferred Stock properly tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect
of all shares of Class A Preferred Stock so tendered and (iii)
deliver or cause to be delivered to the Transfer Agent shares of
Class A Preferred Stock so accepted together with an Officers'
Certificate stating the aggregate Liquidation Preference of the
shares of Class A Preferred Stock or portions thereof being
purchased by the Corporation. The Paying Agent shall promptly
mail to each Holder of Class A Preferred Stock so tendered the
Change of Control Payment for such Class A Preferred Stock and
the Transfer Agent will promptly authenticate and mail (or cause
to be transferred by book-entry) to each Holder a new certificate
representing the shares of Class A Preferred Stock equal in
Liquidation Preference amount to any unpurchased portion of the
shares of Class A Preferred Stock surrendered, if any. The
Corporation shall announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control
Payment Date.
(f) Prior to complying with the provisions of this
Section 6, but in any event within 90 days following a Change of
Control, the Corporation shall either repay all of its
outstanding Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Indebtedness, in
each case to the extent required to permit the repurchase of
Class A Preferred Stock required by this Section 6. The
Corporation will announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control
Payment Date.
(g) The Corporation shall not be required to make a
Change of Control Offer upon a Change of Control if a third party
makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this
Section 6 applicable to a Change of Control Offer made by the
Corporation and purchases all shares of Class A Preferred Stock
validly tendered and not withdrawn under such Change of Control
Offer.
7. Certain Covenants.
(a) Use of Proceeds.
The Corporation shall use the proceeds of the Class A
Preferred Stock solely to repay $75,000,000 of the outstanding
principal amount on that certain demand note dated August 4,
1995, issued by EEX LLC payable to the order of MIStS Issuer.
(b) Activities; Business.
The Corporation shall not, directly or indirectly, engage in
any activity or line of business other than (i) holding the EEX
Subordinated Note and enforcing remedies thereunder in accordance
with the terms thereof but subject to the EEX Subordination
Agreement, (ii) holding the Equity Interests of MIStS Issuer,
(iii) making payments on the Class A Preferred Stock and the EEX
Capital Subordinated Note and, if applicable, (iv) merging MIStS
Issuer with and into the Corporation.
(c) Subsidiaries.
The Corporation shall not, directly or indirectly, create or
form any Subsidiaries (other than MIStS Issuer).
(d) Capitalization; Restrictions on Certain
Amendments.
(i) The Corporation shall not issue or agree to
issue any Capital Stock (including treasury shares, but
excepting shares of Class A Preferred Stock issued (i) to
UBS on the Initial Issue Date or (ii) to holders of
Preferred Interests of MIStS Issuer, in connection with a
Merger) or other Equity Interests unless the net proceeds
from such issuance are used to redeem all outstanding
Preferred Securities.
(ii) The Corporation shall not amend its
organizational documents (including its Certificate of
Incorporation or bylaws) or any terms of its Capital Stock
or the Subordinated Notes.
(e) Liens.
The Corporation shall not directly or indirectly, create,
incur, assume or suffer to exist any Lien on any asset now owned
or hereafter acquired, or any income or profits therefrom.
(f) Corporate Existence; Compliance with Laws; Taxes.
(i) The Corporation shall do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate, partnership or other existence in
accordance with its organizational documents and its rights
(charter and statutory), licenses and franchises.
(ii) The Corporation shall comply in all material
respects with all statutes, laws, ordinances, or government
rules and regulations to which it is subject.
(iii) The Corporation shall pay prior to
delinquency all taxes, assessments, and governmental levies
except those contested in good faith and by appropriate
proceedings.
(g) Notice of Default and Related Matters.
The Corporation shall furnish to UBS and each of the Holders
of record of shares of Class A Preferred Stock written notice,
promptly upon any Officer of the Corporation becoming aware of
the existence thereof, of:
(i) any condition or event that constitutes a
Default or a Voting Rights Trigger Event, specifying the
nature and period of existence thereof and the action that
the Corporation is taking or proposes to take with respect
thereto;
(ii) the filing or commencement of, or any threat
or notice of intention of any Person to file or commence,
any action, suit or proceeding, whether at law or in equity
or by or before any Governmental Authority, against or
affecting the Corporation that, if adversely determined,
would constitute a Material Adverse Effect; and
(iii) any development that constitutes a
Material Adverse Effect.
(h) Authorizations and Approvals.
The Corporation shall promptly obtain, from time to
time, all such Permits, consents and approvals as may be required
to enable the Corporation to comply with its obligations under
the Transaction Documents and the Class A Preferred Stock.
(i) No Senior Indebtedness.
Notwithstanding any other provision hereof, the
Corporation shall not incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable for any
Indebtedness that is senior in any respect in right of payment to
the Class A Preferred Stock, other than Indebtedness owing to
Affiliates of up to $10.0 million in aggregate principal amount
(for both the Corporation and MIStS Issuer, taken as a whole)
unless, in each of the foregoing cases, the proceeds thereof are
used to repay the Preferred Securities in full.
(j) Liquidation.
The Corporation shall not adopt a plan of liquidation
or dissolution.
(k) Restricted Payments.
The Corporation shall not directly or indirectly: (i)
declare or pay any dividend or make any other payment or
distribution on account of the Corporation's Parity Securities or
Junior Securities (including, without limitation, any payment in
connection with any merger or consolidation involving the
Corporation) or to the direct or indirect holders of the
Corporation's Parity Securities or Junior Securities in their
capacity as such; or (ii) make any payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any
Junior Securities.
(l) Incurrence of Indebtedness and Issuance of
Preferred Stock.
The Corporation shall not, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness and the
Corporation shall not issue any Preferred Stock (other than the
Class A Preferred Stock issued to (i) UBS on the Initial Issue
Date or (ii) to holders of Preferred Interests of MIStS Issuer,
in connection with a Merger).
(m) Merger, Consolidation or Sale of Assets.
Except for any merger of MIStS Issuer with and into the
Corporation, the Corporation shall not consolidate or merge with
or into (whether or not the Corporation is the surviving
corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another
corporation, Person or entity.
(n) Transactions with Affiliates.
Neither the Corporation nor any Subsidiary will enter
into any material transaction, including, without limitation, any
purchase, sale, lease or exchange of Property including the
purchase or sale of oil and gas properties and hydrocarbons or
the rendering of any service, with any Affiliate unless such
transactions are in the ordinary course of its business and are
upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a
Person not an Affiliate. For the avoidance of doubt, each of the
transactions set forth in or required by the Transaction
Documents shall be deemed to satisfy the covenant set forth in
this Section 7(n).
(o) Payments for Consent.
The Corporation shall not, directly or indirectly, pay
or cause to be paid any consideration, whether by way of dividend
or other distribution, fee or otherwise, to any Holder of any
Class A Preferred Stock for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this
Certificate of Designations or the Class A Preferred Stock unless
such consideration is offered to be paid and is paid to all
Holders of the Class A Preferred Stock that consent, waive or
agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
(p) Reports.
(i) Whether or not required by the rules and
regulations of the Securities and Exchange Commission (the
"Commission"), so long as any shares of Class A Preferred
Stock are outstanding, the Corporation shall furnish to the
Holders of Class A Preferred Stock all quarterly and annual
financial information that would be required to be contained
in a filing by EEX with the Commission on Forms 10-Q and 10-K
if EEX were required to file such Forms, including
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual
information only, a report thereon by EEX's certified
independent accountants; and
(ii) The Corporation shall deliver to the Holders,
within 120 days after the end of each fiscal year, an
unaudited financial statement prepared in accordance with
GAAP together with an Officer's Certificate stating that a
review of the activities of the Corporation and its
Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing officers with a view to
determining whether the Corporation has kept, observed,
performed and fulfilled its obligations under this
Certificate of Designations and further stating, that to the
best of his or her knowledge the Corporation has kept,
observed, performed and fulfilled each and every covenant
contained in this Certificate of Designations and is not in
default in the performance or observance of any of the
terms, provisions and conditions of this Certificate of
Designations (or, if any such default shall have occurred,
describing all such defaults of which he or she may have
knowledge and what action the Corporation is taking or
proposes to take with respect thereto) and that to the best
of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the
Liquidation Preference of or dividends, if any, on the Class
A Preferred Stock is prohibited or if such event has
occurred, a description of the event and what action the
Corporation is taking or proposes to take with respect
thereto.
(iii) The Corporation shall, so long as any of
the shares of Class A Preferred Stock are outstanding,
deliver to the Holders, forthwith upon any Executive Officer
of the Corporation becoming aware of any default under this
Certificate of Designations, an Officers' Certificate
specifying such default and what action the Corporation is
taking or proposes to take with respect thereto.
(q) Conflicts with By-laws.
If any provisions of the Corporation's By-laws conflict
in any way with this Certificate of Designations, the Corporation
shall, so long as any of the shares of Class A Preferred Stock
are outstanding, take all necessary actions to amend such By-laws
and thereby resolve the conflict.
(r) Compliance with Engagement Letter and Fee Letter.
The Corporation shall, and shall cause its Subsidiaries
to comply with, the provision of the Engagement Letter and Fee
Letter.
(s) Merger upon Merger Notice.
If UBS delivers a Merger Notice, then either (i) the
Corporation and MIStS Issuer shall merge, with the Corporation
being the surviving corporation or (ii) the Corporation shall
redeem all of the Class A Preferred Stock and cause MIStS Issuer
to redeem all of the Preferred Interests such that no Event of
Default will result from the failure to so merge or redeem.
8. Payment.
(a) All amounts payable in cash with respect to the
Class A Preferred Stock shall be payable in United States dollars
at the office or agency of the Corporation maintained for such
purpose within the City and State of New York or, at the option
of the Corporation, payment of dividends may be made by check
mailed to the Holders of the Class A Preferred Stock at their
respective addresses set forth in the register of Holders of
Class A Preferred Stock maintained by the Transfer Agent,
provided that all cash payments with respect to the Global Shares
(as defined below) and shares of Class A Preferred Stock the
Holders of which have given wire transfer instructions to the
Corporation will be required to be made by wire transfer of
immediately available funds to the accounts specified by the
Holders thereof. Unless otherwise designated by the Corporation,
the Corporation's office or agency in New York shall be the
office of the Paying Agent maintained for such purpose.
(b) Any payment on the Class A Preferred Stock due on
any day that is not a Business Day need not be made on such day,
but may be made on the next succeeding Business Day with the same
force and effect as if made on such due date.
(c) The Corporation has initially appointed the
Transfer Agent to act as the Paying Agent. The Corporation may
at any time terminate the appointment of any Paying Agent and
appoint additional or other Paying Agents, provided that until
the Class A Preferred Stock has been delivered to the Corporation
for cancellation, or moneys sufficient to pay the Liquidation
Preference and accrued dividends on the Class A Preferred Stock
have been made available for payment and either paid or returned
to the Corporation as provided in this Certificate of
Designations, it shall maintain an office or agency in the
Borough of Manhattan, The City of New York for surrender of Class
A Preferred Stock.
(d) Dividends payable on the Class A Preferred Stock
on any redemption date or repurchase date that is a Dividend
Payment Date will be paid to the Holders of record as of the
immediately preceding Record Date.
(e) All moneys deposited with any Paying Agent or then
held by the Corporation in trust for the payment of the
Liquidation Preference and dividends on any shares of Class A
Preferred Stock which remain unclaimed at the end of two years
after such payment has become due and payable will be repaid to
the Corporation, and the Holder of such shares of Class A
Preferred Stock will thereafter look only to Corporation for
payment thereof.
9. Officer's Certificate.
Each Officer's Certificate provided for in this
Certificate of Designations shall include:
(a) a statement that the officer making such certi-
ficate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of such officer,
he or she has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion
of such officer, such condition or covenant has been
satisfied.
10. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares
of Class A Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other
special rights, other than those specifically set forth in this
Certificate of Designations (as such Certificate of Designations
may be amended from time to time) and in the Certificate of
Incorporation. The shares of Class A Preferred Stock shall have
no preemptive or subscription rights.
11. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
12. Severability of Provisions.
If any voting powers, preferences and relative,
participating, optional and other special rights of the Class A
Preferred Stock and qualifications, limitations and restrictions
thereof set forth in this resolution (as such resolution may be
amended from time to time) is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all
other voting powers, preferences and relative, participating,
optional and other special rights of Class A Preferred Stock and
qualifications, limitations and restrictions thereof set forth in
this resolution (as so amended) which can be given effect without
the invalid, unlawful or unenforceable voting powers, preferences
and relative, participating, optional and other special rights of
Class A Preferred Stock and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Class A
Preferred Stock and qualifications, limitations and restrictions
thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating,
optional or other special rights of Class A Preferred Stock and
qualifications, limitations and restrictions thereof unless so
expressed herein.
13. Form of Class A Preferred Stock.
(a) The shares of Class A Preferred Stock will bear a
legend to the following effect, unless the Corporation determines
otherwise in compliance with applicable law:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NEITHER BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
NOR BE OFFERED, SOLD OR OTHERWISE TRANSFERRED TO
ANY PERSON OR ENTITY PRINCIPALLY ENGAGED, DIRECTLY
OR INDIRECTLY, IN THE OIL AND GAS EXPLORATION
INDUSTRY OTHER THAN THE CORPORATION OR ANY OF ITS
AFFILIATES. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE CORPORATION
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, OR (c) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE CORPORATION SO REQUESTS), (2) TO
THE CORPORATION OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(b) Upon surrender of any share of Class A Preferred
Stock by a holder for registration of transfer or exchange, the
Corporation will execute and deliver in exchange therefor a new
certificate or certificates representing shares of Class A
Preferred Stock of the same aggregate tenor and Liquidation
Preference, registered in such names and in such denominations as
such holder may request. The Corporation may require
certificates of transferrers and transferees of shares of Class A
Preferred Stock, or an opinion of counsel, in order to establish
compliance with the Securities Act. The Corporation may require
payment by such holder of a sum sufficient to cover any stamp tax
or governmental charge imposed in respect of any such transfer.
(c) The Corporation shall maintain a register (the
"Class A Preferred Stock Register") of the holders of all the
shares of Class A Preferred Stock issued pursuant to this
Certificate of Designations. The Corporation will allow any
Holder of record of shares of Class A Preferred Stock to inspect
and copy such register at the Corporation's principal place of
business during normal business hours.
14. Notice.
Any notice or communication by the Corporation to UBS
is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the following address:
UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Telecopier No.: (212) 821-6119
Attention: James A. Ajello,
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telecopier No.: (212) 751-4864
Attention: Nancy L. Schimmel
15. Subordination of EEX Subordinated Note.
(a) The Corporation, for itself, its successors and
assigns, covenants and agrees, and each Holder of the Class A
Preferred Stock, by its acceptance thereof, likewise covenants
and agrees, that payment by EEX of the principal of and premium,
if any, and interest on the EEX Subordinated Note, and any fees
or costs related thereto, is hereby expressly subordinated, to
the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Debt. The
provisions of this Section 15 are made for the benefit of all
holders of Senior Debt and any such holder may proceed to enforce
such provisions.
(b) During such time as any Senior Debt remains unpaid and
an Event of Default (under and as defined in the EEX Credit
Agreement) exists and is continuing, the Corporation will not ask
for, demand, sue for, take, receive or accept from EEX, by set-off
or in any other manner, any payment or distribution on
account of the EEX Subordinated Note, or present any instrument
evidencing the EEX Subordinated Note for payment (other than such
presentment as may be necessary to prevent discharge of EEX or
other liable parties on such instrument).
(c) In the event that the Corporation shall receive any
payment or distribution on account of the EEX Subordinated Note
which the Corporation is not entitled to receive under the
provisions of this Section 15, the Corporation will hold any such
amount so received in trust for the holders of the Senior Debt
and will forthwith turn over such payment to any court of
competent jurisdiction in the form received by the Corporation
(together with any necessary endorsement) to be applied ratably
to the Senior Debt.
<signature page follows>
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be duly executed by Joseph T. Leary, its Vice
President, Finance and Treasure, this 29th day of September,
1997.
EEX Capital Inc.
By:/s/ Joseph T. Leary
----------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and
Treasurer