EXHIBIT 4.4
CUMULATIVE PERPETUAL INCREASING DIVIDEND PREFERRED INTERESTS
AND
CLASS A CUMULATIVE PERPETUAL INCREASING DIVIDEND
PREFERRED STOCK
SUBSCRIPTION AGREEMENT
among
EEX Capital Inc., MIStS Issuer L.L.C.,
UBS Securities LLC,
as Placement Agent for the Holders from time
to time of the Preferred Securities,
and
Enserch Exploration, Inc.
(not an issuer)
_____________________________
Dated as of September 29, 1997
_____________________________
PREFERRED INTERESTS AND PREFERRED STOCK SUBSCRIPTION AGREEMENT
PREFERRED INTERESTS AND PREFERRED STOCK SUBSCRIPTION
AGREEMENT, dated as of September 29, 1997 (this "Agreement"),
among MIStS Issuer L.L.C., a Delaware limited liability company
("MIStS Issuer"), EEX Capital Inc., a Delaware corporation (the
surviving corporation of the merger between EEX Preferred Capital
Inc. and EEX Capital L.L.C.) ("EEX Capital"), each directly or
indirectly wholly owned subsidiaries of Enserch Exploration,
Inc., a Texas corporation ("EEX"), and UBS Securities LLC
individually ("UBS") and as placement agent for the holders from
time to time of the Preferred Interests (as defined below) and
the Preferred Stock (as defined below) (in such capacity, the
"Placement Agent").
RECITALS
EEX Capital has (i) authorized 150,000 shares and (ii)
authorized the execution and issuance of 75,000 shares, in each
case, of its Class A Cumulative Perpetual Increasing Dividend
Preferred Stock (the "Preferred Stock") to facilitate the
financing of the redemption (the "Redemption") by MIStS Issuer of
its outstanding Minority Interest Structured Securities (the
"MIStS").
MIStS Issuer has authorized the execution and issuance
of 75,000 shares of its Cumulative Perpetual Increasing Dividend
Preferred Interests (the "Preferred Interests" and, together with
the Preferred Stock, the "Preferred Securities") to facilitate
the financing of the Redemption.
The Preferred Stock will be issued pursuant to a
certificate of designations, preferences and relative,
participating, optional and other special rights of preferred
stock and qualifications, limitations and restrictions thereof
(the "Certificate of Designations"), to be filed with the
Secretary of State of the State of Delaware on or before the
Closing Date (as defined below).
The Preferred Interests will be issued pursuant to a
second amended and restated limited liability company agreement
of MIStS Issuer (the "LLC Agreement"), to be executed on or
before the Closing Date.
This Agreement sets forth, inter alia, the terms and
conditions upon which UBS will purchase the Preferred Interests
and the Preferred Stock.
AGREEMENT
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used in this
Agreement, the following terms shall have the meanings specified
below:
"Action" has the meaning specified in Section 10.2.
"Additional Costs" means costs indemnified under
Section 10.4.
"Affected Party" means any Holder, any beneficial owner
of any Holder, and their respective successors and assigns.
"Affiliate" means 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.
"Bankruptcy Law" means Title 11, United States Code, or
any similar federal or state law for the relief of debtors.
"beneficial owner" has the meaning as defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act.
"Board" means the Board of Governors of the Federal
Reserve System of the United States or any successor.
"Business Day" 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 Obligations" means, with respect to EEX
or any Subsidiary of EEX (including EEX Capital and MIStS
Issuer), 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" means (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.
"Certificate of Designations" has the meaning specified
in the recitals to this Agreement and is in the form attached
hereto as Exhibit A.
"Change of Control" means 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.
"Closing" has the meaning specified in Section 6.1.
"Closing Date" has the meaning specified in Section
6.1.
"Code" means the Internal Revenue Code of 1986, as
amended, and any regulation promulgated thereunder.
"Commitment" means the commitment to purchase Preferred
Interests in the Liquidation Preference amount or Preferred Stock
in the Liquidation Preference amount in each case as set forth on
the signature pages hereto opposite UBS' name.
"Common Interests" means all interests now or hereafter
authorized of any class of common interests of MIStS Issuer,
including the common interests and any other interests of MIStS
Issuer, howsoever designated, authorized after the Initial Issue
Date, that have the right (subject always to prior rights of any
class or series of Preferred Interests) to participate in the
distribution of the assets and earnings of MIStS Issuer without
limit as to per share amount.
"Common Stock" means all shares now or hereafter
authorized of any class of common stock of EEX Capital, including
the common stock, par value per share $100.00, and any other
stock of EEX Capital, 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 EEX Capital.
"Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy
Law.
"Debt" shall mean for EEX and its Subsidiaries (except
EEX Capital 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 a
Lien 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 EEX Capital or MIStS Issuer is
liable for such Indebtedness under GAAP or such Indebtedness is
reflected on the consolidated balance sheet of EEX or any
Subsidiary; provided however, such term shall not include
Permitted Subordinated Debt.
"Default" means any event that is, or after the passage
of time or the giving of notice (or both) would be, an Event of
Default.
"EEX" means Enserch Exploration, Inc., a Texas
corporation.
"EEX Capital" has the meaning specified in the preamble
to this Agreement, which is the surviving entity of the Merger.
"EEX Capital Subordinated Note" means the subordinated
promissory note made by EEX Capital in favor of MIStS Issuer,
reevidencing $75.0 million of Indebtedness, dated as of September
29, 1997.
"EEX Capital Subordinated Note" means the subordination
agreement dated as of September 29, 1997 issued by EEX Capital 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" means 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 the First Amendment dated
September 19, 1996, and the 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 both adopted in accordance
therewith and consented to by the Majority Holders.
"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" 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" means the amended and restated
subordinated demand note made by EEX in favor of EEX Capital,
reevidencing $150.0 million of Indebtedness, dated as of
September 29, 1997.
"EEX Subordination Agreement" means the subordination
agreement dated as of September 29, 1997 issued by EEX Capital 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 such term is defined in such
subordination agreement).
"Engagement Letter" means 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" means 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" means any event specified in Section
8.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fee Letter" means 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" means generally accepted accounting principles
in the United States of America in effect from time to time.
"Governmental Authority" means 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" means 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" means 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" 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 EEX Capital 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" means the record holder of one or more (i)
shares of Preferred Stock, as shown on the books and records of
EEX Capital, or (ii) interests of Preferred Interests, as shown
on the books and records of MIStS Issuer.
"Incur" has the meaning specified in Section 5.3.
"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.
"Indemnified Party" has the meaning specified in
Section 10.1.
"Indemnifying Parties" has the meaning specified in
Section 10.1
"Lien" means 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.
"Liquidated Damages" means any and all liquidated
damages then owing pursuant to any of the Transaction Documents.
"Liquidation Preference" means (i) $1,000.00 per
Preferred Interest or (ii) $1,000.00 per share of Preferred
Stock, as the case may be.
"LLC Agreement" has the meaning specified in the
recitals to this Agreement and is attached as Exhibit B hereto.
"Loan Documents" has the meaning specified in Section
2.1.
"Majority Holders" means a majority in Liquidation
Preference of the Holders of the Preferred Securities.
"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" means any material and
adverse change in the financial condition, business or results of
operations of EEX and its Subsidiaries (including EEX Capital and
MIStS Issuer) taken as a whole which makes EEX unable to perform
its obligations under the Guaranty Agreement or the EEX
Subordinated Note.
"Merger" means the merger of EEX LLC with and into
Enserch Preferred on September 26, 1997, with Enserch Preferred
being the surviving corporation and renamed EEX Capital Inc.
"Merger Notice" has the meaning specified in Section
5.6.
"MIStS" has the meaning specified in the recitals to
this Agreement.
"Net Cash Proceeds" means the aggregate cash proceeds
received (including any cash payments received by way of deferred
payment of principal pursuant to a promissory note or installment
receivable or otherwise, but only as and when received) from any
Capital Market Transaction, net of (i) all commissions (including
any underwriters' discounts) and (ii) other ordinary and
reasonable fees and expenses (including legal fees and expenses)
incurred as a consequence of such Capital Market Transaction.
"Obligations" means 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 and
Indebtedness.
"Officer" means, with respect to any Person, the
Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial
Officer, the Managing Member, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Vice-President of
such Person.
"Officer's Certificate" means, with respect to any
Person, a certificate signed on behalf of such Person by an
Officer of such Person, 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 14.4.
"Operating Lease Obligations" shall mean, as to EEX or
any direct or indirect 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, the purposes of this Agreement, 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.
"Opinion of Counsel" means, with respect to any Person,
an opinion from legal counsel to such Person that is reasonably
acceptable to the Placement Agent and meets the requirements of
Section 14.4.
"Permanent Securities" means any securities or other
obligation issued by the Company to redeem or otherwise retire
the Preferred Securities in accordance with the terms and
conditions of the Fee Letter.
"Permitted Subordinated Debt" means Debt of EEX or
another Subsidiary subordinated to the Indebtedness on terms
substantially similar to the terms set forth in the Subordination
Agreements.
"Person" means 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.
"Placement Agent" has the meaning specified in the
preamble to this Agreement.
"Preferred Securities" has the meaning specified in the
recitals to this Agreement.
"Preferred Interests" has the meaning specified in the
recitals to this Agreement.
"Preferred Stock" has the meaning specified in the
recitals to this Agreement.
"Preferred Stock Register" means the register
maintained by EEX Capital pursuant to the Certificate of
Designations.
"Prohibited Issuance" means an issuance of securities
or incurrence of Indebtedness in violation of the covenant set
forth in Section 5.3.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Redemption Price" means the Liquidation Preference,
plus (i) accrued and unpaid dividends to the date of redemption
and (ii) any Additional Costs.
"Relevant Parties" means EEX, EEX Capital, MIStS Issuer
and each of their respective Subsidiaries (if any).
"Required Merger Date" means the first dividend payment
date occurring at least thirteen (13) Business Days after receipt
by EEX Capital and/or MIStS Issuer of a Merger Notice.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Significant Subsidiary" means any Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such Regulation is in effect on the date hereof.
"Stock Registration Rights Agreement" means the
registration rights agreement, dated as of September 29, 1997,
between EEX Capital and the Placement Agent on behalf of the
Holders, in the form attached as Exhibit D.
"Subordinated Notes" means, collectively, the EEX
Capital Subordinated Note and the EEX Subordinated Note.
"Subordinated Agreements" means, collectively, the EEX
Capital Subordination Agreement and the EEX Subordination
Agreement.
"Subsidiary" means, 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" means this Agreement, the LLC
Agreement, the Certificate of Designations, the 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.
"UBS" means UBS Securities LLC, a Delaware limited
liability company.
"Voting Stock" means, with respect to any Person at any
time, the Capital Stock of such Person that is at such time
entitled to vote in the election of the board of directors of
such Person.
"Voting Rights Trigger Event" means a voting rights
trigger event as defined in the Certificate of Designations and
the LLC Agreement.
Section 0.1. Interpretation. In this Agreement, the
singular includes the plural and the plural includes the
singular; words implying any gender include the other genders;
references to any section, exhibit or schedule are to sections,
exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to; references to "writing" include printing,
typing, lithography and other means of reproducing words in a
visible form; "including" following a word or phrase shall not be
construed to limit the generality of such word or phrase; and an
accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP as in effect from time to time.
ARTICLE I
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date (after
giving pro forma effect to the Merger and the Transaction
Documents, the issuance of the Preferred Interests and the
Preferred Stock and the application of the proceeds thereof, and
the transactions contemplated hereby and thereby), each of EEX,
EEX Capital and MIStS Issuer hereby agrees with, and represents
and warrants to, the Placement Agent and any subsequent Holder as
follows:
Section 1.1. Incorporation of Guaranty Agreement
Representations and Warranties. Each of the representations and
warranties made by EEX under its Guaranty Agreement (i) is
incorporated mutatis mutandis by this reference into this
Agreement with the same effect as if set forth herein except that
references in the Guaranty Agreement to "Loan Documents" shall be
deemed to references to the Transaction Documents as defined
herein and any references in the Guaranty Agreement to "this
Agreement" and "the date hereof" shall be deemed to be references
to this Agreement and the date hereof, (ii) is made by EEX, EEX
Capital and MIStS Issuer and (iii) is true and correct as of the
date hereof and the Closing Date.
Section 1.2. Due Authorization and Enforceability.
(a) Each of the Transaction Documents (i) has
been duly authorized, executed and delivered by each
Relevant Party to the extent a party thereto and (ii)
constitutes a valid and binding obligation of such Relevant
Party, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at
law or in equity).
(b) The shares of Preferred Stock have been duly
authorized by EEX Capital and, when issued and paid for in
accordance with the terms hereof will be fully paid,
nonassessable and entitled to the rights, privileges and
preferences set forth in the Certificate of Designations,
and the issuance of such shares will not be subject to any
preemptive or similar rights.
(c) The Certificate of Designations has been duly
authorized by all necessary corporate and stockholder
action.
(d) The Preferred Interests have been duly
authorized by MIStS Issuer and, when issued and paid for in
accordance with the terms hereof will be fully paid,
nonassessable and entitled to the rights, privileges and
preferences set forth in the LLC Agreement, and the issuance
of such interests will not be subject to any preemptive or
similar rights.
(e) The LLC Agreement has been duly authorized by
all necessary member action.
Section 1.3. Private Offering; Rule 144A Matters.
(a) Based in part on the accuracy of the
representations of UBS in Section 7.1, the sale of the
Preferred Securities hereunder is and will be exempt from
the registration and prospectus delivery requirements of the
Securities Act. Each Preferred Security shall bear the
following legend.
"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 NOR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM NOR BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED TO ANY PERSON OR
ENTITY PRIMARILY ENGAGED, DIRECTLY OR INDIRECTLY,
IN THE OIL AND GAS EXPLORATION INDUSTRY OTHER THAN
THE CORPORATION OR ANY OF ITS AFFILIATES. 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. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE ISSUER 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 AT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE
ISSUER 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) The Preferred Securities will be eligible for
resale pursuant to Rule 144A under the Securities Act.
ARTICLE II
SALE AND OPTIONAL REPAYMENT OF PREFERRED STOCK
Section 2.1. Sale of the Preferred Stock. On the
basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, EEX Capital
agrees to sell to UBS, and UBS agrees to purchase from EEX
Capital, shares of Preferred Stock with an aggregate Liquidation
Preference equal to UBS' Commitment, at an aggregate purchase
price equal to 100% of such Liquidation Preference, payable on
the Closing Date in accordance with Section 6.1.
Section 2.2. Indemnity. EEX and EEX Capital jointly
and severally agree to indemnify each Affected Party and to hold
each Affected Party harmless from and against any loss or expense
which such Holder may sustain or incur as a consequence of (a)
the failure by EEX Capital to issue the Preferred Stock on the
Closing Date after EEX Capital has given a notice with respect
thereof in accordance with Section 6.1, (b) default by EEX
Capital in making any redemption after EEX Capital has given a
notice thereof in accordance with the provisions of the
Certificate of Designations, or (c) the making of any dividend or
redemption payment on any date other than a dividend payment
date. Such indemnification may include an amount equal to such
Affected Party's actual loss and expenses incurred (excluding
lost profits) in connection with, or by reason of, any of the
foregoing events. A certificate as to any amounts payable
pursuant to this Section 3.2 submitted to EEX Capital by any
Affected Party shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this
Agreement and the redemption of all outstanding shares of the
Preferred Stock and all other amounts payable hereunder.
Section 2.3. Method of Payment. Except as otherwise
set forth in the Certificate of Designations, all obligations
arising under the Transaction Documents shall be payable by wire
transfer in immediately available funds to the account of the
Holder, designated in a written notice to EEX Capital at least
three Business Days prior to the due date therefor.
Section 2.4. Payment on Business Days. If any
payment to be made hereunder or under any share of Preferred
Stock shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and
such extension of time shall be included in computing dividends
in connection with such payment).
ARTICLE III
SALE AND OPTIONAL REPAYMENT PREFERRED INTERESTS
Section 3.1. Sale of the Preferred Interests. On the
basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, MIStS
Issuer agrees to sell to UBS, and UBS agrees to purchase from
MIStS Issuer, shares of Preferred Interests with an aggregate
Liquidation Preference equal to UBS' Commitment, at an aggregate
purchase price equal to 100% of such Liquidation Preference,
payable on the Closing Date in accordance with Section 6.1.
Section 3.2. Indemnity. EEX and MIStS Issuer jointly
and severally agree to indemnify each Affected Party and to hold
each Affected Party harmless from and against any loss or expense
which such Holder may sustain or incur as a consequence of (a)
the failure by MIStS Issuer to issue the Preferred Interests on
the Closing Date after MIStS Issuer has given a notice with
respect thereof in accordance with Section 6.1, (b) default by
MIStS Issuer in making any redemption after MIStS Issuer has
given a notice thereof in accordance with the provisions of the
LLC Agreement, or (c) the making of any dividend or redemption
payment on any date other than a dividend payment date. Such
indemnification may include an amount equal to such Affected
Party's actual loss and expenses incurred (excluding lost
profits) in connection with, or by reason of, any of the
foregoing events. A certificate as to any amounts payable
pursuant to this Section 4.3 submitted to MIStS Issuer by any
Affected Party shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this
Agreement and the redemption of all outstanding shares of the
Preferred Interests and all other amounts payable hereunder.
Section 3.3. Method of Payment. Except as otherwise
set forth in the LLC Agreement, all obligations arising under the
Transaction Documents shall be payable by wire transfer in
immediately available funds to the account of the Holder,
designated in a written notice to MIStS Issuer at least three
Business Days prior to the due date therefor.
Section 3.4. Payment on Business Days. If any
payment to be made hereunder or under any share of Preferred
Interests shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and
such extension of time shall be included in computing dividends
in connection with such payment).
ARTICLE IV
COVENANTS
So long as any of the Preferred Securities are
outstanding or any obligation in respect of any of the Preferred
Securities shall be unpaid, EEX, EEX Capital and MIStS Issuer
covenant and agree with the Placement Agent and each Holder as
follows:
Section 4.1. Use of Proceeds. EEX Capital shall use
the proceeds of the sale of the Preferred Stock to repay $75.0
million of the $150.0 million principal outstanding under that
certain demand note dated August 4, 1995, issued by EEX Capital
in favor of MIStS Issuer. MIStS Issuer shall use the proceeds of
(i) the sale of the Preferred Interests and (ii) the $75.0
million repayment described in the preceding sentence to redeem
all of the then outstanding Preferred Securities of MIStS Issuer
and (iii) amend and restate the LLC Agreement.
Section 4.2. Compliance with Engagement Letter and
Fee Letter. EEX, EEX Capital and MIStS Issuer shall, and shall
cause each of their respective Subsidiaries to comply with the
provisions of the Engagement Letter and Fee Letter.
Section 4.3. Limitation on Incurrence of Additional
Indebtedness and/or Debt and Issuance of Capital Stock.
(a) Except as contemplated by the Transaction
Documents, EEX Capital and MIStS Issuer shall not directly
or indirectly, create, incur, issue, assume, guarantee or
otherwise become liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness or issue
any shares of Capital Stock (other than (i) the issuance of
the Permanent Securities and (ii) the incurrence of
Indebtedness owing to Affiliates of up to $10.0 million in
aggregate principal amount for both EEX Capital and MIStS
Issuer, taken as a whole) unless, in each of the foregoing
cases, the proceeds thereof are used to redeem the Preferred
Securities in full.
(b) Notwithstanding the fact that the EEX
Agreement may permit incurrences and issuances by EEX of
Permitted Subordinated Debt and Capital Stock, EEX shall
not, directly or indirectly, incur subordinated Debt or
issue any shares of Capital Stock (other than (i) treasury
stock or issuances of common stock of EEX employee benefit
plans) unless, in each of the foregoing cases, the proceeds
thereof are used to repay the Preferred Securities in full.
Section 4.4. Line of Business.
(a) EEX Capital and MIStS Issuer shall not
directly or indirectly, engage in any line of business other
than the businesses conducted on the Closing Date and
businesses reasonably related thereto or incidental thereto.
(b) Except as contemplated by the Transaction
Documents, EEX Capital and MIStS Issuer shall not, directly
or indirectly, engage in any activity or line of business
other than holding the Subordinated Notes, the Guaranty
Agreement or the Common Interests of MIStS Issuer, as the
case may be, and enforcing remedies thereunder in accordance
with the terms thereof but subject to the Subordination
Agreements.
Section 4.5. Payments for Consents. EEX Capital and
MIStS Issuer shall not directly or indirectly, pay or cause to be
paid as consideration, whether by way of divided, fee or
otherwise, to any Holder of any Preferred Securities for or as an
inducement to any consent, waiver or amendment of any of the
terms or provisions of the LLC Agreement, the Certificate of
Designations, this Agreement, the Preferred Interests or the
Preferred Stock unless such consideration is offered to be paid
or is paid to all Holders of Preferred Securities that consent,
waive or agree to amend in the time fame set forth in the
solicitation documents relating to such consent, waiver or
amendment.
Section 4.6. Springing Merger. If at any time after
September 30, 1998 UBS delivers a written notice (a "Merger
Notice") requiring MIStS Issuer to consummate a merger by the
Required Merger Date with and into EEX Capital pursuant to and in
accordance with the merger agreement in the form attached hereto
as Exhibit F, with EEX Capital being the surviving corporation.
Section 4.7. Notice of Default. EEX, EEX Capital
and/or MIStS Issuer shall provide written notice to the Placement
Agent of any of the Default or Event of Default under any of the
Transaction Documents or the EEX Credit Agreement at the same
time such entity provides such notice to the agent under the EEX
Credit Agreement or any similar entity.
ARTICLE V
CONDITIONS TO UBS' OBLIGATIONS
Section 5.1. Closing. Upon satisfaction of the
conditions set forth herein, and subject to the terms and
conditions of the Fee Letter and the Commitment Letter, UBS shall
pay the purchase price of the Preferred Securities, as set forth
in Sections 3.1 and 4.1, by wire transfer of immediately
available funds to the account designated by either EEX Capital
or MIStS Issuer, as the case may be, in New York, New York,
against delivery to the Placement Agent of Preferred Securities
in the names and denominations specified by the Placement Agent
(the "Closing"). EEX shall give the Placement Agent at least one
Business Day, notice of the expected date of such Closing (the
"Closing Date"). The Closing shall take place at such place as
shall be agreed upon by the Placement Agent and EEX.
Section 5.2. Conditions of UBS' Obligations. The
obligation of UBS to purchase and pay for the Preferred
Securities to be purchased by it hereunder on the Closing Date
subject to the prior or concurrent satisfaction on the Closing
Date of each of the following conditions:
(a) Capitalization. The Relevant Parties shall not
have any outstanding Indebtedness (except permitted
Indebtedness of entities other than EEX Capital or MIStS
Issuer under the EEX Credit Agreement), Capital Lease
Obligations or other Obligations other than as presented in
the latest financial statements and notes thereto, adjusted
for an equity reduction by EEX as contemplated by the letter
agreement by and among UBS, EEX, MIStS Issuer, EEX Capital
and EEX Preferred, dated September 29, 1997, and no material
inaccuracy in such financial statements shall exist.
(b) Absence of Certain Changes. No Material Adverse
Effect shall have occurred with respect to the Relevant
Parties other than the anticipated write-down of EEX's
shareholders' equity as contemplated by the letter agreement
by and among UBS, EEX, MIStS Issuer, EEX Capital and EEX
Preferred, dated September 29, 1997. The Relevant Parties
shall have no material liabilities except those set forth on
the most recent quarterly balance sheets of such entities
provided to UBS prior to September 4, 1997.
(c) Documentation; Legal Matters, Etc. All matters
relating to the transactions contemplated hereby shall be
satisfactory to UBS, and UBS shall have received such
additional certificates, legal and other opinions and
documentation as they shall reasonably request. The
Subordinated Notes and the Guaranty Agreement shall have
been subordinated to "Superior Indebtedness" under and as
defined in the Subordination Agreements.
(d) Market Disruption. There shall not have occurred
any disruption or adverse change in the financial or capital
markets generally, in the market for new issues of high
yield debt, preferred or common equity securities in
particular or affecting the syndication or funding of the
shares of Preferred Securities (or the refinancing thereof),
and a banking moratorium shall not have been declared by
Federal or New York State banking officials.
(e) Net Capital. There shall not have occurred any
change in law or regulation (or interpretation thereof) that
could result in any Holder's Commitment to provide, or any
Holder's providing, the financing contemplated by this
Agreement being a charge to the net capital of such Holder's
parent or affiliates.
(f) Engineering Report. UBS shall have received a
copy of EEX's engineers' reserve report as of
August/September 1997, and shall be satisfied with the
results thereof and shall have been afforded sufficient
opportunity to verify the conclusions expressed therein and
to discuss the same with EEX and EEX's engineers.
(g) Financial Statements. UBS shall have received the
most recent audited and unaudited historical consolidated
financial statements of the Relevant Parties (including pro
forma financial statements, if any) meeting the requirements
for filing with the Commission.
(h) No Conflicts. The execution, delivery and
performance of this Agreement, the Engagement Letter and the
other Transaction Documents and the consummation of the
Merger and all other the transactions contemplated hereby or
thereby will not conflict with, constitute a default under
or violate (i) any of the terms, conditions or provisions of
the certificate of incorporation, by-laws, certificate of
formation or operating agreement of the Relevant Parties,
(ii) any of the terms, conditions or provisions of any
material document, agreement or other instrument filed with
the Securities and Exchange Commission (iii) any applicable
foreign, federal, state or local statute, published rule or
regulation or (iv) any judgment, writ injunction, decree,
order or ruling of any court or governmental authority
binding on any of the Relevant Parties where such conflict,
default or violation would have a Material Adverse Effect on
the Relevant Parties, taken as a whole.
(i) Approvals and Consent. All governmental,
quasi-governmental, equity holder and third-party approvals and
consents necessary or desirable in connection with the
transactions contemplated hereby shall have been received
and shall be in full force and effect.
(j) Litigation, etc. There shall not exist any
action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator
or governmental authority that, in the opinion of UBS,
affects the transactions contemplated hereby, or that could
have a Material Adverse Effect on the Relevant Parties
(including any such action, suit, investigation, litigation
or proceeding which, in the reasonable opinion of UBS, is
likely to result in such a Material Adverse Effect) or any
of the transactions contemplated hereby.
(k) Legal Opinions. The Placement Agent shall have
received such legal opinions as it may reasonably request
(including opinions from counsel to EEX, EEX Capital and
MIStS Issuer), as Exhibit E and satisfactory to the
Placement Agent.
(l) Subordination and Modification of Intercompany
Subordinated Notes and Guaranty Agreement. The Subordinated
Notes and the Guaranty Agreement shall have been
subordinated to the "Senior Debt" specified by the EEX
Credit Agreement. In addition, the Guaranty Agreement will
have been amended and restated to include a prohibition on
the issuance of additional Subordinated Indebtedness or
equity securities (except treasury stock and issuances
pursuant to an employee benefit plan) by EEX while the
Preferred Securities remain outstanding unless the proceeds
thereof are used to fully redeem the Preferred Securities.
(m) The Merger. The Merger shall have been
consummated.
(n) Payment of Fees and Expenses. The Commitment and
takedown fee described in Section 1(a) of the Fee Letter due
to UBS on or before the Closing Date shall have been paid
in full.
Section 5.3. Representations and Warranties as to
Closing. The sale of Preferred Securities by EEX Capital or
MIStS Issuer, as the case may be, on the Closing Date shall
constitute a representation and warranty by EEX Capital or MIStS
Issuer, as the case may be, to the effect that the applicable
conditions precedent set forth in this Article VI are satisfied
on the Closing Date.
ARTICLE VI
TRANSFER OF THE PREFERRED SECURITIES;
REPRESENTATIONS OF HOLDERS
Section 6.1. Transfer of Preferred Securities. UBS
represents and agrees that it is purchasing the Preferred
Securities for its own account and with investment intent and
that it will not, directly or indirectly, transfer, sell, assign,
pledge or otherwise dispose of such Preferred Securities unless
such transfer, sale, assignment, pledge or other disposition is
made (i) pursuant to an effective registration statement under
the Securities Act or (ii) pursuant to an available exemption
from registration under, or otherwise in compliance with, the
Securities Act. UBS also represents and warrants to EEX Capital
and MIStS Issuer that it (i) is an "accredited investor" (as that
term is defined in Rule 501 of Regulation D promulgated under the
Securities Act) (ii) has been given or has had access to the
information described in Rule 502 of Regulation D promulgated
under the Securities Act, and (iii) has been given the
opportunity to ask any question of management of the Relevant
Parties that UBS may have. UBS and each of the Interim Purchasers
acknowledges that the Preferred Securities certificates will bear
a legend (as set forth in Exhibit A to the LLC Agreement or
Section 13(a) of the Certificate of Designations, as the case may
be) restricting the transfer thereof for so long as may be
required by the Securities Act.
Subject to the provisions of the previous paragraph
(including the terms of the legend referred to therein and
applicable law), each of the Relevant Parties agrees that UBS and
each subsequent Holder will be free to sell or transfer all or
any part of the Preferred Securities to any third party and to
pledge any or all of the Preferred Securities to any commercial
bank, other institutional lender, qualified institutional buyer
or accredited investor.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default. An "Event of
Default" with respect to the Preferred Securities shall occur if:
(a) an "Event of Default" as defined in the EEX Credit
Agreement;
(b) EEX Capital fails to pay any dividend on any of
the shares of Preferred Stock, in each case on or within 30
days after the same is due;
(c) MIStS Issuer fails to pay any dividend on any of
the shares of Preferred Interests, in each case on or within
30 days after the same is due;
(d) EEX, EEX Capital and MIStS Issuer fail to
consummate either (i) a merger of MIStS Issuer with and into
EEX Capital or the redemption of all Preferred Securities on
the Required Merger Date;
(e) EEX Capital and MIStS Issuer fail to make any
Change of Control redemption within the time periods
provided in the Certificate of Designations and the LLC
Agreement, as applicable;
(f) EEX, EEX Capital and MIStS Issuer consummate a
Prohibited Issuance;
(g) any "Event of Default" under and as defined in the
EEX Capital Subordinated Note or a "Maturity Event" under
and as defined in the EEX Subordinated Note shall occur; or
(h) any of the Relevant Parties fails to observe or
perform any of its covenants or agreements (other than those
set forth in clauses (a) through (g) above) contained in any
of the Transaction Documents and such failure continues for
a period of 60 Business Days following the earlier of
(i) written notice to EEX Capital and MIStS Issuer of such
failure by the Placement Agent or any Holder of outstanding
Preferred Securities or (ii) the date on which such failure
is discovered by such Relevant Party; (except that breach of
the covenants described in Sections 12.1 and 13.1 hereof
shall not be entitled to any such cure period).
Section 7.2. Rights and Remedies. The occurrence of
an Event of Default under this Agreement shall trigger those
rights and remedies available to Holders pursuant to the
provisions of the LLC Agreement or the Certificate of
Designations, as applicable.
Section 7.3. Rights and Remedies Cumulative. No
right or remedy herein conferred upon or reserved to the
Placement Agent or Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent or subsequent assertion or employment
of any other appropriate right or remedy.
Section 7.4. Delay or Omission Not Waiver. No delay
or omission by the Placement Agent or any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Placement Agent or the
Holders may be exercised from time to time, and as often as may
be deemed expedient, by the Placement Agent or the Holders.
Section 7.5. Waiver of Past Defaults. Subject to
Section 14.3, the Holders of a majority in aggregate Liquidation
Preference of the then outstanding Preferred Securities by
written notice to EEX Capital and MIStS Issuer may rescind an
acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events
of Default have been cured or waived.
Section 7.6. Rights of Holders to Receive Payment.
Notwithstanding anything to the contrary contained in this
Agreement, the LLC Agreement or the Certificate of Designations,
the right of any Holder to receive payment of dividends on the
Preferred Securities held by such Holder, on or after the
respective due dates expressed in the Preferred Securities, or to
bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without
the consent of such Holder.
ARTICLE VIII
TERMINATION
Section 8.1. Termination. Unless otherwise extended
by UBS, this Agreement and the obligations of UBS to purchase of
Preferred Securities shall terminate on 5:00 p.m., New York City
time, on September 30, 1997.
Section 8.2. Liability. If this Agreement is
terminated pursuant to Section 9.1, such termination shall be
without liability of any party to any other party, except that,
whether or not the transactions contemplated by this Agreement
are consummated: (i) each of EEX, EEX Capital and MIStS Issuer,
jointly and severally, agrees to reimburse the Placement Agent
for all its reasonable out-of-pocket expenses pursuant to Section
14.1 and the Commitment Letter and (ii) the indemnity provisions
contained in Article X shall remain operative and in full force
and effect.
ARTICLE IX
INDEMNITY
Section 9.1. Indemnification. EEX, EEX Capital and
MIStS Issuer (each, an "Indemnifying Party" and, collectively,
the "Indemnifying Parties") jointly and severally agree to
indemnify and hold harmless the Placement Agent, UBS and all
subsequent the Holders, each of their respective controlling
persons and each director, officer, employee, affiliate and agent
thereof (each, an "Indemnified Party") from and against any and
all losses, claims, damages and liabilities, joint or several, to
which any Indemnified Party may become subject relating to or
arising out of or in connection with the transactions
contemplated by the Transaction Documents (including the use of
the proceeds from the sale of the Preferred Securities) or any
related transaction, and to reimburse each Indemnified Party,
promptly upon demand, for expenses (including reasonable counsel
fees and expenses) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or
threatened loss, claim, damage or liability, or any litigation,
proceeding or other action in respect thereof, including any
amount paid in settlement of any litigation, proceeding or other
action (commenced or threatened) to which the Indemnifying
Parties shall have consented in writing (such consent not to be
unreasonably withheld) whether or not any Indemnified Party is a
party and whether or not liability resulted; provided, however,
that the indemnity contained in this Article X will not apply to
any Indemnified Party with respect to losses, claims, damages,
liabilities or related expenses arising from the willful
misconduct or gross negligence of such Indemnified Party.
Section 9.2. Notice of Action. (a) Promptly after
receipt by an Indemnified Party of written notice with respect to
the commencement of any investigation, claim, litigation,
proceeding or other action (collectively, an "Action") with
respect to which such Indemnified Party may seek indemnification
hereunder, such Indemnified Party shall notify the Indemnifying
Parties in writing of such Action; but the omission so to notify
the Indemnifying Party shall not relieve the Indemnifying Parties
from any liability that the Indemnifying Parties may have
hereunder to such Indemnified Party unless such failure results
in material prejudice to the Indemnifying Parties, defenses in
such Action.
(b) Upon receipt of such notice by an Indemnifying
Party, such Indemnifying Party will be entitled to participate in
any Action and, to the extent it wishes, to assume the defense
thereof, and after notice from the Indemnifying Party to such
Indemnified Party of its election to assume the defense thereof,
the Indemnifying Party will not be liable to such Indemnified
Party under this indemnity for any legal expenses subsequently
incurred by such Indemnified Party in connection with such
defense; provided, however, that such Indemnified Party will have
the right to employ its own counsel in any such Action, and the
fees and expenses of such counsel will be at the expense of such
Indemnified Party; provided, further, that if (i) the employment
of such counsel has been authorized by such Indemnifying Party in
connection with the defense of such Action, which authorization
shall not be unreasonably withheld, or (ii) the named parties in
any such Action (including any impleaded parties) include any
Indemnified Party and such Indemnifying Party and such
Indemnified Party will have been advised by such counsel that
there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those
available to the Indemnifying Party (in which case the
Indemnifying Party will not have the right to assume the defense
of such Action on behalf of such Indemnified Party) or (iii) such
Indemnifying Party shall not have assumed the defense of such
Action and employed counsel therefor reasonably satisfactory to
such Indemnified Party within a reasonable time after notice of
commencement of such action, such fees and expenses will be borne
by the Indemnifying Party, it being understood that such
Indemnifying Party will not, in connection with any one such
Action, be liable for the fees and expenses of more than one firm
of attorneys in any one jurisdiction.
Section 9.3. Indemnity Not Available. If
indemnification were for reason of public policy not to be
available, the Indemnifying Parties and the Holders agree to
contribute (in proportion to their respective commitments in the
case of the Holders) to the losses, claims, damages, liabilities
or expenses (or Actions in respect thereof) for which such
indemnification is held unavailable in such proportion as is
appropriate to reflect the relative benefits to the Indemnifying
Party, on the one hand, and the Holders, on the other hand, in
connection with the matter giving rise to such losses, claims,
damages, liabilities or expenses (or actions in respect thereof).
Section 9.4. Indemnity for Taxes, Reserves and
Expenses. If after the date hereof, the adoption of any law or
guideline or any amendment or change in the administration,
interpretation or application of any existing or future law or
guideline by any Governmental Authority charged with the
administration, interpretation or application thereof, or the
compliance with any request or directive of any Governmental
Authority (whether or not having the force of law):
(a) subjects an Affected Party to any tax or
changes the basis of taxation with respect to this Agreement
or the Preferred Securities or payments of amounts due
hereunder or thereunder or with respect to this Agreement or
the Transaction Documents, (including, without limitation,
any sales, gross receipts, general corporate, withholding,
personal property, privilege or license taxes, and including
claims, losses and liabilities arising from any failure to
pay or delay in paying any such tax (unless such failure or
delay results solely from such Affected Party's gross
negligence or willful misconduct), but excluding federal,
state or local taxes based on income or franchise taxes
imposed in lieu of income taxes) incurred by such Affected
Party arising out of or as a result of this Agreement or the
Transaction Documents;
(b) imposes, modifies or deems applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets held
by, credit extended by, deposits with or for the account of,
or other acquisition of funds by, an Affected Party;
(c) shall change the amount of capital maintained
or requested or directed to be maintained by an Affected
Party; or
(d) imposes upon an Affected Party any other
condition or expense (including, without limitation,
(i) loss of margin and (ii) attorneys' fees and expenses,
expenses incurred by officers or employees of an Affected
Party (or any successor thereto) and expenses of litigation
or preparation therefor in contesting any of the foregoing)
with respect to this Agreement or the Transaction Documents
or the purchase, maintenance or funding of the purchase of
the Preferred Securities by an Affected Party, and the
result of any of the foregoing is to increase the cost to,
reduce the income receivable by, reduce the rate of return
on capital of, or impose any expense (including loss of
margin) upon, an Affected Party with respect to this
Agreement, the obligations hereunder, the Transaction
Documents or the funding of the purchase of the Preferred
Securities hereunder, the Affected Party may notify the
Indemnifying Parties of the amount of such increase,
reduction, or imposition, and the Indemnifying Parties shall
pay to the Affected Party the amount the Affected Party
deems necessary to compensate the Affected Party for such
increase, reduction or imposition. Any Affected Party
claiming additional compensation under this Section 10.4
shall deliver to EEX a certificate setting forth any
additional amounts that such Affected party is entitled to
receive, including a calculation thereof in reasonable
detail, such certificate to be conclusive absent manifest
error. Such amounts shall be due and payable by the
Indemnifying Parties five (5) Business Days after such
certificate is delivered.
(e) To avoid doubt, the parties hereto
acknowledge and agree that none of EEX, EEX Capital, MIStS
Issuer or their Affiliates have made any representations or
warranties to the Placement Agent or any Affected Party
concerning the availability, or lack thereof, of the
"dividend received deduction under the Code." Accordingly,
no indemnification with respect to any taxes owed, or
purported to be owed, relating to such deduction shall be
available under this Agreement or any Transaction Document.
Section 9.5. Survivorship of Indemnification. The
provisions contained in this Article X and in Sections 3.3 and
4.3 shall remain in full force and effect whether or not any of
the transactions contemplated hereby are consummated and
notwithstanding the termination of this Agreement. The amounts
payable by any Indemnifying Party under this Article X shall be
payable whether or not any of the transactions contemplated under
this Agreement are consummated.
Section 9.6. Liability Not Exclusive; Payments. The
agreements of each Indemnifying Party in this Article X shall be
in addition to any liability that each may otherwise have. All
amounts due under this Article X shall be payable as incurred
within five (5) Business Days after such written notice is
delivered.
ARTICLE X
THE PLACEMENT AGENT
Section 10.1. Appointment of Placement Agent. In
order to expedite the transactions contemplated by the
Transaction Documents, UBS is hereby appointed to act as the
Placement Agent on behalf of the Holders. Each Holder by its
acceptance of Preferred Securities, irrevocably authorizes the
Placement Agent to take such actions on behalf of the Holders and
to exercise such powers as are specifically delegated to the
Placement Agent by the terms and provisions of the Transaction
Documents, together with such actions and powers as are
reasonably incidental thereto. The Placement Agent is expressly
authorized by each Holder hereby, and by each Holder upon its
acceptance of Preferred Securities without hereby limiting any
implied authority, (a) to receive on behalf of such Holder all
payments, Liquidation Preference and dividends on the Preferred
Securities and all other amounts due to such Holder hereunder or
under any Transaction Document, and promptly to distribute to
each Holder its proper share of each payment so received; (b) to
give notice on behalf of such Holder to EEX Capital and MIStS
Issuer of any Event of Default specified in this Agreement of
which the Placement Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to
each Holder copies of all notices, financial statements and other
materials delivered by any of the Relevant Parties pursuant to
this Agreement and the other Transaction Documents as received by
the Placement Agent.
Section 10.2. No Liability as Placement Agent.
Neither the Placement Agent nor any of its directors, officers,
employees, beneficial owners or agents shall be liable as such to
any Holder for any action taken or omitted by any of them except
for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein
or the contents of any document delivered in connection herewith,
or be required to ascertain or to make any inquiry concerning the
performance or observance by any of the Relevant Parties of any
of the terms, conditions, covenants or agreements contained
herein. The Placement Agent shall not be responsible to the
Holders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the
Transaction Documents or any other instruments or agreements.
The Placement Agent shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written
instructions signed by any Holder and, except as otherwise
specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Holders.
The Placement Agent shall, in the absence of knowledge to the
contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to
have been signed or sent by the proper Person or Persons.
Neither the Placement Agent nor any of its directors, officers,
employees or agents shall have any responsibility to EEX, EEX
Capital or MIStS Issuer on account of the failure of or delay in
performance or breach by any Holder of any of its obligations
hereunder or to any Holder on account of the failure of or delay
in performance or breach by any other Holder or any of the
Relevant Parties or any of their respective obligations under the
Transaction Documents or in connection herewith or therewith.
The Placement Agent may execute any and all duties hereunder by
or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action
taken or suffered in good faith by it in accordance with the
advice of such counsel.
Section 10.3. No Duty to Act. Each Holder by its
acceptance of Preferred Securities, acknowledges that the
Placement Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Transaction Document unless it shall
be requested in writing to do so by a majority in Liquidation
Preference of the Holders of Preferred Securities.
Section 10.4. Successor Placement Agent. Subject to
the appointment and acceptance of a successor Placement Agent as
provided below, the Placement Agent may resign at any time by
notifying the Holders and EEX, EEX Capital or MIStS Issuer. Upon
any such resignation, the Holders shall have the right to appoint
a successor. If no successor shall have been so appointed by the
Holders and shall have accepted such appointment within 30 days
after the retiring Placement Agent files notice of its
resignation, then the retiring Placement Agent may, on behalf of
the Holders, appoint a successor Placement Agent, which shall be
a bank having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the
acceptance of any appointment as Placement Agent hereunder by a
successor bank, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Placement Agent, and the retiring Placement Agent shall
be discharged from its duties and obligations hereunder. After
the Placement Agent's resignation hereunder, the provisions of
this Article XI and Article X hereof shall continue in effect for
its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Placement Agent.
Section 10.5. Rights Placement Agent as Holder of
Preferred Securities. With respect to its Commitment made in its
capacity as a Holder, the Placement Agent in its individual
capacity and not as Placement Agent shall have the same rights
and powers as any other Holder and may exercise the same as
though it were not the Placement Agent, and the Placement Agent
and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Relevant
Parties or other Affiliate thereof as if it were not the
Placement Agent.
Section 10.6. Expenses of Placement Agent. Each
Holder by acceptance of Preferred Securities, agrees that (a) the
Placement Agent shall be reimbursed, on demand, for any expenses
incurred for the benefit of the Holders by the Placement Agent,
including reasonable counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Holders,
that shall not have been reimbursed by EEX, EEX Capital or MIStS
Issuer and (b) to indemnify and hold harmless the Placement Agent
and its beneficial owners, directors, officers, employees or
agents, on demand, from and against any and all suits, costs,
expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by or asserted against it in its
capacity as the Placement Agent or any of them in any way
relating to or arising out this Agreement or any other
Transaction Document or any action taken or omitted by it or any
of them under this Agreement or any other Transaction Document,
to the extent the same shall not have been reimbursed by EEX, EEX
Capital or MIStS Issuer; provided, however, no Holder shall be
liable to the Placement Agent or any such other indemnified
Person for any portion of such liabilities, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements that are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of the Placement
Agent or any of its directors, officers, employees or agents. If
no Preferred Securities are then outstanding, each Holder shall
contribute an amount equal to its pro rata share of the aggregate
Commitment of all of the Holders to any amounts payable to the
Placement Agent pursuant to this paragraph. If any Preferred
Securities are then outstanding, each Holder shall contribute an
amount equal to its pro rata share of the aggregate Liquidation
Preference, of all outstanding Preferred Securities to any
amounts payable to the Placement Agent pursuant to this
paragraph.
Section 10.7. Due Diligence by Holders. Each Holder
by its acceptance of Preferred Securities, acknowledges that it
has, independently and without reliance upon the Placement Agent,
or any other Holder, and based on such documents and information
as it has deemed appropriate, made its own investment analysis
and decision to purchase the Preferred Securities. Each Holder
by its acceptance of Preferred Securities, also acknowledges that
it (i) will, independently and without reliance upon the
Placement Agent or any other Holder, and based on such documents
and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action
under or based upon this Agreement, the Transaction Documents or
any related agreement or any document furnished hereunder or
thereunder and (ii) has reviewed publicly available information
filed with the SEC.
ARTICLE XI
EEX SUBORDINATED NOTE
Section 11.1. Covenants With Respect to EEX
Subordinated Note. EEX Capital hereby agrees to deliver prompt
written notice to the Placement Agent of the occurrence of a
Voting Rights Trigger Event and to defend the EEX Subordinated
Note against all claims and demands of all Persons at any time
claiming the same or any interest therein except as expressly
provided in this Article XII. Upon demand by the Placement Agent
after the occurrence of a Voting Rights Trigger Event, EEX
Capital agrees to deliver to the Placement Agent the originals of
the EEX Subordinated Note and the EEX Subordination Agreement.
EEX Capital hereby further agrees that at any time while the
Preferred Stock remains outstanding, EEX Capital will not,
without the prior written consent of the Placement Agent, in any
way encumber, or hypothecate, or create or permit to exist any
lien, security interest or encumbrance on or other interest in
the EEX Subordinated Note except for the rights granted to the
Placement Agent, for the benefit of the Holders, under this
Article XII, nor will EEX Capital sell, transfer, assign,
exchange or otherwise dispose of the EEX Subordinated Note or any
interest therein.
Section 11.2. Power of Attorney. EEX Capital hereby
irrevocably appoints the Placement Agent as EEX Capital's agent
and attorney-in-fact, coupled with an interest, with full power
and authority in the place and stead of EEX Capital and in the
name of EEX Capital or otherwise, from and after the occurrence
of a Voting Rights Trigger Event in the Placement Agent's
reasonable discretion, but at EEX's and EEX Capital's joint and
several cost and expense, to:
(a) make demand for payment under the EEX
Subordinated Note,
(b) take any actions necessary or desirable, in
the Placement Agent's sole discretion, to collect, on
behalf of EEX Capital, the amounts due to EEX Capital
under the EEX Subordinated Note, including compromising
any amounts due thereunder and acknowledging
satisfaction of the maker's liability thereunder,
(c) instruct EEX, as the maker of the EEX
Subordinated Note, to pay all sums payable thereunder
to EEX Capital,
(d) endorse, cash, sue upon, collect and
otherwise enforce, the EEX Subordinated Note and all
instruments made payable to EEX Capital representing
any payment of principal or interest thereon or any
part thereof and to give full discharge for the same,
and
(e) pay all reasonable costs and expenses
incurred in the exercise or enforcement of its rights
hereunder, including reasonable attorneys' fees,
subject, in each of the foregoing cases, to the provisions of the
EEX Subordination Agreement. EEX Capital shall send to the
Placement Agent a copy of any written payment notice given to EEX
with respect to the EEX Subordinated Note, concurrently with
sending such notice to EEX. The Placement Agent shall only be
accountable for monies which it actually receives as
attorney-in-fact for EEX Capital from or out of the EEX
Subordinated Note.
The power of attorney granted herein shall automatically
terminate and be of no further force and effect upon redemption
for value of the Preferred Stock and payment of all accrued and
unpaid dividends thereon and any other fees, expenses, LIBOR
breakage fees and Additional Costs owing to the Placement Agent
or the Holders in accordance with this Agreement in connection
with the Preferred Stock. EEX hereby acknowledges receipt of
notice of the foregoing power of attorney, agrees to comply with
any payment instructions it receives from the Placement Agent
following a Voting Rights Trigger Event, as attorney-in-fact for
EEX Capital, and hereby agrees that it will not assert against
the EEX Subordinated Note any right of setoff, defense or
counterclaim it may have against EEX Capital, whether or not such
right, defense or counterclaim arises out of the loan evidenced
by the EEX Subordinated Note or otherwise.
ARTICLE XII
EEX CAPITAL SUBORDINATED NOTE AND GUARANTY AGREEMENT
Section 12.1 Covenants With Respect to EEX Capital
Subordinated Note and Guaranty Agreement. MIStS Issuer hereby
agrees to deliver prompt written notice to the Placement Agent of
the occurrence of a Voting Rights Trigger Event and to defend the
EEX Capital Subordinated Note and Guaranty Agreement against all
claims and demands of all persons at any time claiming the same
or any interest therein except as expressly provided in this
Article XIII. Upon demand by the Placement Agent after the
occurrence of a Voting Rights Trigger Event, MIStS Issuer agrees
to deliver to the Placement Agent, the originals of the EEX
Capital Subordinated Note, the Guaranty Agreement and the EEX
Capital Subordination Agreement. MIStS Issuer hereby further
agrees that at any time while the Preferred Interests remain
outstanding, MIStS Issuer will not, without the prior written
consent of the Placement Agent, in any way encumber, or
hypothecate, or create or permit to exist any lien, security
interest or encumbrance on or other interest in the EEX Capital
Subordinated Note or the Guaranty Agreement except for the rights
granted to the Placement Agent, for the benefit of the Holders,
under this Article XIII, nor will MIStS Issuer sell, transfer,
assign, exchange or otherwise dispose of the EEX Capital
Subordinated Note or the Guaranty Agreement or any interest
therein.
Section 13.2 Power of Attorney. MIStS Issuer hereby
irrevocably appoints the Placement Agent as MIStS Issuer's agent
and attorney-in-fact, coupled with an interest, with full power
and authority in the place and stead of MIStS Issuer and in the
name of MIStS Issuer or otherwise, from and after the occurrence
of a Voting Rights Trigger Event in the Placement Agent's
reasonable discretion, but at EEX's and MIStS Issuer's joint and
several cost and expense, to:
(a) make demand for payment under the EEX Capital
Subordinated Note and/or the Guaranty Agreement,
(b) take any actions necessary or desirable, in
the Placement Agent's sole discretion, to collect, on
behalf of MIStS Issuer, the amounts due to MIStS Issuer
under the EEX Capital Subordinated Note and the
Guaranty Agreement, including compromising any amounts
due thereunder and acknowledging satisfaction of the
maker's liability thereunder,
(c) instruct EEX Capital, as the maker of the EEX
Capital Subordinated Note, and EEX, as the maker of the
Guaranty Agreement, to pay all sums payable thereunder
to MIStS Issuer,
(d) endorse, cash, sue upon, collect and
otherwise enforce, the EEX Capital Subordinated Note
and the Guaranty Agreement and all instruments made
payable to MIStS Issuer representing any payment of
principal or interest thereon or any part thereof and
to give full discharge for the same, and
(e) pay all reasonable costs and expenses
incurred in the exercise or enforcement of its rights
hereunder, including reasonable attorneys' fees,
subject, in each of the foregoing cases, to the provisions of the
EEX Capital Subordination Agreements. MIStS Issuer shall send to
the Placement Agent a copy of any written payment notice given to
EEX Capital with respect to the EEX Capital Subordinated Note or
to EEX with respect to the Guaranty Agreement, concurrently with
sending such notice to EEX Capital or EEX, as the case may be.
The Placement Agent shall only be accountable for monies which it
actually receives as attorney-in-fact for MIStS Issuer from or
out of the EEX Capital Subordinated Note and the Guaranty
Agreement. The power of attorney granted herein shall
automatically terminate and be of no further force and effect
upon redemption for value of the Preferred Interests and payment
of all accrued and unpaid dividends thereon and any other fees,
expenses, LIBOR breakage fees and Additional Costs owing to the
Placement Agent or the Holders in accordance with this Agreement
in connection with the Preferred Interests. Each of EEX Capital
and EEX hereby acknowledges receipt of notice of the foregoing
power of attorney, agrees to comply with any payment instructions
it receives from the Placement Agent following a Voting Rights
Trigger Event, as attorney-in-fact for MIStS Issuer, and hereby
agrees that it will not assert against the EEX Capital
Subordinated Note or the Guaranty Agreement any right of setoff,
defense or counterclaim it may have against MIStS Issuer, whether
or not such right, defense or counterclaim arises out of the loan
evidenced by the EEX Capital Subordinated Note, the Guaranty
Agreement or otherwise.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Expenses; Documentary Taxes. EEX, EEX
Capital and MIStS Issuer jointly and severally agree to pay,
within 30 days of the date of invoice, (a) all reasonable
out-of-pocket expenses (including, without limitation, expenses
incurred
in connection with due diligence of the Holders) associated with
the preparation, execution and delivery, administration, waiver,
enforcement or modification and enforcement of the documentation
contemplated hereby and (b) the reasonable fees and disbursements
of Latham & Watkins and Richards, Layton & Finger legal counsel
to the Placement Agent and the Holders in connection with the
transactions contemplated herein. EEX, EEX Capital and MIStS
Issuer jointly and severally agree to indemnify the Placement
Agent and the Holders against any transfer taxes, documentary
taxes, assessments or charges made by any Governmental Authority
by reason of the execution and delivery, or the terms, of this
Agreement or the Transaction Documents.
Section 13.2. Notices. All notices and other
communications pertaining to this Agreement, the LLC Agreement,
any Preferred Interests, the Certificate of Designations or any
share of Preferred Stock shall be in writing and shall be
delivered in person, with receipt acknowledged, or by facsimile
and confirmed immediately in writing by a copy mailed by
registered or certified mail, return receipt requested, postage
prepaid, addressed as hereafter set forth, or mailed by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(i) If to the Placement Agent or the Holders, to
them at:
UBS Securities LLC
229 Park Avenue
New York, New York 10171-0026
Attention: James A. Ajello
Facsimile No.: (212) 821-6119
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Nancy L. Schimmel, Esq.
Facsimile No.: (212) 751-4864
(ii) If to EEX, EEX Capital or MIStS Issuer, to it
at:
c/o Enserch Exploration, Inc.
2500 City West Boulevard, Suite 1400
Houston, Texas 77042
Attention: Joseph T. Leary
Facsimile No.: (281) 271-3416
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil-South Tower
711 Louisiana Street
Houston, Texas 77002
Attention: William D. Morris, Esq.
Facsimile No.: (713) 236-0822
or to such other Person or address as shall be furnished to the
other parties in compliance with this Section 14.2.
Section 13.3. Consent to Amendments and Waivers. (a)
Except as provided in Section 14.3(b), this Agreement may be
amended or supplemented with the consent of each of EEX, EEX
Capital and MIStS Issuer and the Holders of at least a majority
in Liquidation Preference of the Preferred Securities then
outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer
for, Preferred Securities), and any event of default or
compliance with any provision of this Agreement or the Preferred
Securities may be waived with the consent of the Holders of a
majority in Liquidation Preference of the then outstanding
Preferred Securities (including consents obtained in connection
with a purchase of, or tender offer or exchange offer for
Preferred Securities). Preferred Stock held by EEX, EEX Capital
or MIStS Issuer or any of its Affiliates will not be deemed to be
outstanding for purposes of this Section 14.3.
(b) None of the Relevant Parties shall, directly or
indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder for or as an
inducement to any consent, waiver or amendment permitted by
Section 14.3(a) unless such consideration is offered to be paid
or is paid to all Holders that consent, waive or agree to amend
in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
Section 13.4. Statements Required in Officer's
Certificate and Opinion. Each Officer's Certificate with respect
to compliance provided for in this Agreement shall include:
(a) a statement that the Person making such
certificate 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 Person,
he or she has made such examination or
investigation as is necessary to enable him or her
to express an informed opinion as to whether or
not such covenant or condition has been complied
with; and
(d) a statement as to whether, in such Person's
opinion, such condition or covenant has been
complied with.
Section 13.5. Parties. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and each
subsequent Holder and each of their respective successors and
assigns. Except as otherwise expressly provided in Sections 3.2
and 4.2 and Article X in the preceding sentence, nothing
expressed or mentioned in this Agreement is intended or shall be
construed to give any Person, other than the parties hereto, the
Holders and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. Except as otherwise
expressly provided in Sections 3.2 and 4.2 and Article X in the
preceding sentence, all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of UBS, the
parties hereto and the affiliates and beneficial owners of the
Holders, and any subsequent Holder of any of the Preferred
Securities and their respective successors and assigns, and for
the benefit of no other person.
Section 13.6. New York Law; Submission to
Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN SUCH STATE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PLACEMENT AGENT, EEX, EEX CAPITAL AND
MIStS ISSUER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN NEW YORK CITY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT. EACH OF THE PLACEMENT AGENT, EEX, EEX CAPITAL
AND MIStS ISSUER WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 13.7. Successors and Assigns. Whenever in
this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns
of such party; and all covenants and agreements of EEX, EEX
Capital and MIStS Issuer or of the Placement Agent, UBS or any
subsequent Holder in this Agreement or any Preferred Securities
shall bind their respective successors and assigns. Except in
accordance with a merger pursuant to a Merger Notice, neither
EEX, EEX Capital and MIStS Issuer may assign or transfer any of
its rights or obligations hereunder (by operation of law or
otherwise) without the prior written consent of the Holders of at
least a majority in Liquidation Preference of Preferred
Securities then outstanding. Prior to purchase of the Preferred
Securities, UBS may not assign or transfer any of its rights or
obligations hereunder (by operation of law or otherwise) without
the prior written consent of EEX.
Section 13.8. Severability Clause. In case any
provision in this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby and such provision shall be
ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
Section 13.9. Representations, Warranties and
Agreements to Survive Delivery. All representations, warranties
and agreements contained in or incorporated into this Agreement,
or contained in Officers' Certificates submitted pursuant hereto,
shall remain operative and in full force and effect until the
Preferred Securities have been repaid in full, regardless of any
investigation made by or on behalf of the Holders or any
controlling person of the Interim Purchasers, or by or on behalf
of the Company, and shall survive delivery of the Preferred
Securities.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.
Enserch Exploration, Inc.
By:/s/ Joseph T. Leary
-------------------------------
Name: Joseph T. Leary
Title: Vice President, Finance
and Treasurer
EEX Capital Inc.
By:/s/ Joseph T. Leary
-------------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and Treasurer
MIStS Issuer L.L.C.
By: EEX Capital Inc., its
common member
By:/s/ Joseph T. Leary
--------------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and Treasurer
UBS Securities LLC, as Placement
Agent
By:/s/ James A. Ajello
---------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey M. Donahue
---------------------------------
Name: Jeffrey M. Donahue
Title: Director
PREFERRED STOCK:
Commitment UBS Securities LLC
$75,000,000.00
(75,000 Shares)
By:/s/ James A. Ajello
---------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey M. Donahue
---------------------------------
Name: Jeffrey M. Donahue
Title: Director
Wire Transfer Instructions
Account Name: UBS Securities LLC
Name of Bank: The Chase Manhattan
Bank
ABA#: 021000021
Account No.: 140083231
Attention: Bruce J. Burmester
PREFERRED INTERESTS:
Commitment UBS Securities LLC
$75,000,000.00
(75,000 Shares)
By:/s/ James A. Ajello
-------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey Donahue
-------------------------------
Name: Jeffrey Donahue
Title: Director
Wire Transfer Instructions
Account Name: UBS Securities LLC
Name of Bank: The Chase Manhattan
Bank
ABA#: 021000021
Account No.: 140083231
Attention: Bruce J. Burmester
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 1
Section 1.1. Defined Terms. . . . . . . . . . . . . . . 1
Section 1.2. Interpretation . . . . . . . . . . . . . . 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Incorporation of Guaranty
Agreement Representations and
Warranties . . . .. . . . . . . . . . . . . . . . . 9
Section 2.2. Due Authorization and Enforceability . . 9
Section 2.3. Private Offering; Rule 144A
Matters . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
. . . . . . . . . . . . . . . 11
Section 3.1. Sale of the Preferred Stock. . . . . . . 11
Section 3.2. Indemnity. . . . . . . . . . . . . . . . 11
Section 3.3. Method of Payment. . . . . . . . . . . . 11
Section 3.4. Payment on Business Days . . . . . . . . 11
ARTICLE IV
SALE AND OPTIONAL REPAYMENT
Section 4.1. Sale of the Preferred Interests. . . . . 12
Section 4.2. Indemnity. . . . . . . . . . . . . . . . 12
Section 4.3. Method of Payment. . . . . . . . . . . . 12
Section 4.4. Payment on Business Days . . . . . . . . 12
ARTICLE V
COVENANTS
Section 5.1. Use of Proceeds. . . . . . . . . . . . . 12
Section 5.2. Compliance with Engagement Letter
and Fee Letter . . . . . . . . . . . . . . . . . . 13
Section 5.3. Limitation on Incurrence of
Additional Indebtedness and/or
Debt and Issuance of Capital Stock . . . . . . . . 13
Section 5.4. Line of Business . . . . . . . . . . . . 13
Section 5.5. Payments for Consents. . . . . . . . . . 13
Section 5.6. Springing Merger . . . . . . . . . . . . 13
Section 5.7. Notice of Default. . . . . . . . . . . . 14
ARTICLE VI
CONDITIONS TO UBS' OBLIGATIONS
Section 6.1. Closing. . . . . . . . . . . . . . . . . 14
Section 6.2. Conditions of UBS' Obligations . . . . . 14
Section 6.3. Representations and Warranties as
to Closing . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TRANSFER OF THE PREFERRED SECURITIES;
REPRESENTATIONS OF HOLDERS
Section 7.1. Transfer of Preferred Securities . . . . 16
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1. Events of Default. . . . . . . . . . . . 17
Section 8.2. Rights and Remedies. . . . . . . . . . . 17
Section 8.3. Rights and Remedies Cumulative . . . . . 17
Section 8.4. Delay or Omission Not Waiver . . . . . . 18
Section 8.5. Waiver of Past Defaults. . . . . . . . . 18
Section 8.6. Rights of Holders to Receive
Payment. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
TERMINATION
Section 9.1. Termination. . . . . . . . . . . . . . . 18
Section 9.2. Liability. . . . . . . . . . . . . . . . 18
ARTICLE X
INDEMNITY
Section 10.1. Indemnification . . . . . . . . . . 18
Section 10.2. Notice of Action. . . . . . . . . . 19
Section 10.3. Indemnity Not Available . . . . . . 19
Section 10.4. Indemnity for Taxes, Reserves and
Expenses . . . . . . . . . . . . . . . . . . . . . 20
Section 10.5. Survivorship of Indemnification . . 21
Section 10.6. Liability Not Exclusive; Payments . 21
ARTICLE XI
THE PLACEMENT AGENT
Section 11.1. Appointment of Placement Agent. . . 21
Section 11.2. No Liability as Placement Agent . . 21
Section 11.3. No Duty to Act. . . . . . . . . . . 22
Section 11.4. Successor Placement Agent . . . . . 22
Section 11.5. Rights Placement Agent as Holder
of Preferred . . . . . . . . . . . . . . . . . . . 22
Section 11.6. Expenses of Placement Agent . . . . 22
Section 11.7. Due Diligence by Holders. . . . . . 23
ARTICLE XII
EEX SUBORDINATED NOTE
Section 12.1. Covenants With Respect to
EEX Subordinated Note. . . . . . . . . . . . . . . 23
Section 12.2. Power of Attorney. . . . . . . . 23
ARTICLE XIII
EEX CAPITAL SUBORDINATED NOTE AND GUARANTY AGREEMENT
Section 13.1 Covenants With Respect to EEX
Capital Subordinated Note and
Guaranty Agreement . . . . . . . . . . . . . . . . 24
Section 13.2 Power of Attorney. . . . . . . . . . . . 25
ARTICLE XIV
MISCELLANEOUS
Section 14.1. Expenses; Documentary Taxes . . . . 26
Section 14.2. Notices . . . . . . . . . . . . . . 26
Section 14.3. Consent to Amendments and Waivers . 27
Section 14.4. Statements Required in Officer's
Certificate and Opinion. . . . . . . . . . . . . . 27
Section 14.5. Parties . . . . . . . . . . . . . . 28
Section 14.6. New York Law; Submission to
Jurisdiction; Waiver of Jury
Trial. . . . . . . . . . . . . . . . . . . . . . . 28
Section 14.7. Successors and Assigns. . . . . . . 28
Section 14.8. Severability Clause . . . . . . . . 29
Section 14.9. Representations, Warranties and
Agreements to Survive
Delivery . . . . . . . . . . . . . . . . . . . . . 29
EXHIBITS
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of LLC Agreement
Exhibit C - Form of LLC Registration Rights Agreement
Exhibit D - Form of Stock Registration Rights Agreement
Exhibit E - Form of Legal Opinion
Exhibit F - Form of Springing Merger Agreement