EXHIBIT 4.3
AMENDED AND RESTATED
CLASS A CUMULATIVE PERPETUAL INCREASING DIVIDEND
PREFERRED STOCK
SUBSCRIPTION AGREEMENT
among
EEX Capital Inc.,
UBS Securities LLC,
as Placement Agent for the Holders from time
to time of the Preferred Stock,
and
Enserch Exploration, Inc.
(not an issuer)
_____________________________
Effective as of September 29, 1997
_____________________________
AMENDED AND RESTATED PREFERRED STOCK SUBSCRIPTION AGREEMENT
THIS AMENDED AND RESTATED PREFERRED STOCK SUBSCRIPTION
AGREEMENT (this "Agreement"), is entered into as of October 27,
1997, and effective as of September 29, 1997, by and among 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"), a wholly owned subsidiary 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 Stock (as defined
below) (in such capacity, the "Placement Agent"), and amends and
restates in its entirety that certain Cumulative Perpetual
Increasing Dividend Preferred Interests and Class A Cumulative
Perpetual Increasing Dividend Preferred Stock Subscription
Agreement dated as of September 29, 1997 by and among EEX
Capital, MIStS Issuer L.L.C., EEX, UBS and the Placement Agent
(the "Existing Agreement").
RECITALS
EEX Capital has authorized the execution and issuance
of 150,000 shares of its Class A Cumulative Perpetual Increasing
Dividend Preferred Stock (the "Preferred Stock").
On September 29, 1997, UBS purchased 75,000 shares of
Preferred Stock for $75,000,000 and purchased 75,000 Cumulative
Perpetual Increasing Dividend Preferred Interests of MIStS Issuer
L.L.C. (the "Preferred Interests") pursuant to the Existing
Agreement.
On October 27, 1997, (i) UBS purchased an additional
75,000 shares of Preferred Stock for $75,000,000 plus accrued and
unpaid dividends, (ii) EEX Capital paid in full and terminated
its obligations under it subordinated promissory note made by EEX
Capital in favor of MIStS Issuer L.L.C., reevidencing $75,000,000
of Indebtedness and (iii) MIStS Issuer L.L.C. redeemed the
Preferred Interests in full. Accordingly, as of the date hereof,
UBS owns all of the authorized, issued and outstanding shares of
the Preferred Stock.
The Preferred Stock was 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,
filed with the Secretary of State of the State of Delaware on
September 29, 1997 which is being amended and restated as of the
date hereof (as so amended and restated, the "Certificate of
Designations").
On the terms and subject to the conditions hereinafter
set forth, the parties wish to amend and restate the Existing
Agreement as hereinafter provided to govern certain of the terms
of the Preferred Stock from and after the Effective Date.
AGREEMENT
Accordingly, the parties agree as follows:
ARTICLE
DEFINITIONS
Section 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.
"Benefit Plan" means any employee pension benefit plan,
as defined in section 3(2) of ERISA (other than a Multiemployer
Plan), which (a) is currently or hereafter sponsored, maintained
or contributed to by EEX, a Subsidiary or an ERISA Affiliate or
(b) was at any time during the six preceding years, sponsored,
maintained or contributed to by EEX, a Subsidiary or an ERISA
Affiliate.
"Board" means the Board of Governors of the Federal
Reserve System of the United States or any successor.
"Business Day" means 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), 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 Date" means September 29, 1997.
"Code" means the Internal Revenue Code of 1986, as
amended, and any regulation promulgated thereunder.
"Commitment" means the commitment to purchase Preferred
Stock in the Liquidation Preference amount in each case as set
forth on the signature pages hereto opposite UBS' name.
"Commitment Letter" means that certain bridge
commitment letter, including the summary of terms attached
thereto, by and among UBS, EEX, MIStS Issuer L.L.C. and EEX
Capital, effective as of September 29, 1997.
"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.
"Consolidated Subsidiaries" means each Subsidiary
(whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been)
consolidated with the financial statements of EEX in accordance
with GAAP.
"Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy
Law.
"Debt" means for EEX and its Subsidiaries (except EEX
Capital), 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, EEX Capital is liable for
such Indebtedness under GAAP or such Indebtedness is reflected on
the consolidated balance sheet of EEX and/or EEX Capital;
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.
"Effective Date" means October 27, 1997.
"EEX" means Enserch Exploration, Inc., a Texas
corporation.
"EEX Capital" has the meaning specified in the preamble
to this 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 Subordination Agreement" means the subordination
agreement effective as of September 29, 1997, issued by EEX
Capital in favor of the administrative agent and the lenders
under the EEX Credit Agreement subordinating the Subordinated
Note to the "Superior Indebtedness" (as such term is defined in
such subordination agreement).
"Engagement Letter" means that certain amended and
restated engagement letter agreement by and among UBS, EEX and
EEX Capital effective as of September 29, 1997.
"Environmental Laws" means any and all Governmental
Requirements pertaining to health or the environment in effect in
any and all jurisdictions in which EEX or any Subsidiary is
conducting or at any time has conducted business, or where any
Property of EEX or any Subsidiary is located, including without
limitation, the Oil Pollution Act of 1990, as amended, ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980, as amended,
("CERCLA"), the Federal Water Pollution Control Act, as amended,
the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976, as amended,
("RCRA"), the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental
conservation or protection laws. The term "oil" shall have the
meaning specified in OPA, the terms "hazardous substance" and
"release" (or "threatened release") shall have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal"
(or "disposed") shall have the meanings specified in RCRA;
provided, however, that (i) in the event either OPA, CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (ii) to the extent the laws
of the state in which any Property of EEX or any Subsidiary is
located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that
specified in either OPA, CERCLA or RCRA, such broader meaning
shall apply.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute.
"ERISA Affiliate" means each trade or business (whether
or not incorporated) which together with EEX or a Subsidiary
would be deemed to be a "single employer" within the meaning of
section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o)
of section 414 of the Code.
"ERISA Event" means (i) a "Reportable Event" described
in section 4043 of ERISA and the regulations issued thereunder
(other than a "Reportable Event" not subject to the provision for
30-day notice to the PBGC), (ii) the withdrawal of EEX, a
Subsidiary or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a
termination under section 4041 of ERISA, (iv) the institution of
proceedings to terminate a Plan by the PBGC, (v) any other event
or condition which might constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or (vi) the partial or complete withdrawal
of EEX, a Subsidiary or any ERISA Affiliate from a Multiemployer
Plan.
"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 amended and restated
fee letter agreement by and among UBS, EEX and EEX Capital,
effective as of September 29, 1997.
"Financial Statements" means the financial statement or
statements of EEX and its Consolidated Subsidiaries described or
referred to in Section 4.1.
"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.
"Governmental Requirement" means any law, statute,
code, ordinance, order, determination, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement (whether
or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety
and health standards or controls, of any Governmental Authority.
"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.
"Holder" means the record holder of one or more shares
of Preferred Stock, as shown on the books and records of EEX
Capital.
"Incur" has the meaning specified in Section 5.2.
"Indebtedness" of a Person means 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 $1,000.00 per share of
Preferred Stock.
"Loan Documents" has the meaning specified in the EEX
Credit Agreement.
"Majority Holders" means a majority in Liquidation
Preference of the Holders of the Preferred Stock.
"Mandatorily Redeemable Obligation" means, 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)
taken as a whole which makes EEX unable to perform its
obligations under the Subordinated Note.
"Multiemployer Plan" means a multiemployer plan as
defined in section 3(37) or 4001(a)(3) of ERISA which is, or
within the six preceding years was, contributed to by EEX, a
Subsidiary or an ERISA Affiliate.
"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 such Person that meets the requirements of
Section 13.4.
"Operating Lease Obligations" means, 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 Majority Holders on the applicable date.
"PBGC" means the Pension Benefit Guaranty Corporation,
or any successor thereto.
"Permanent Securities" means any securities or other
obligation issued by EEX Capital to redeem or otherwise retire
the Preferred Stock in accordance with the terms and conditions
of the Fee Letter.
"Permitted Subordinated Debt" means Debt of EEX or
another Subsidiary (other than EEX Capital) subordinated to the
Indebtedness on terms substantially similar to the terms set
forth in the EEX Subordination Agreement.
"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.
"Plan" means each Benefit Plan and Multiemployer Plan.
"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 5.2.
"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 and each of
their respective Subsidiaries (if any).
"Responsible Officer" means as to EEX or any
Subsidiary, the Chief Executive Officer, the President or any
Vice President of EEX Capital and, with respect to financial
matters, the term "Responsible Officer" shall include the Chief
Financial Officer, Controller, Vice President, Finance, Treasurer
or Treasury Officer of such Person. Unless otherwise specified,
all references to a Responsible Officer herein shall mean a
Responsible Officer of EEX.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Senior Debt" means the principal (whether denominated
as principal, monthly rental or other notional quantity),
premium, if any, and unpaid interest on, and any reasonable fees
or costs related to, (a) any Debt of EEX and its Subsidiaries
(other than EEX Capital), whether outstanding on the date hereof
or hereafter created, which is incurred, assumed, or guaranteed
in compliance with the EEX Credit Agreement, unless in the
instrument creating or evidencing the same or pursuant to which
the same is outstanding it is provided that such indebtedness is
not superior in right of payment to the Subordinated Note, and
(b) renewals, extensions, modifications and refundings of any
such Debt. For the avoidance of doubt, Debt which is created,
incurred, assumed, or guaranteed in violation of terms of the EEX
Credit Agreement shall not constitute Senior Debt, and Debt which
is created, incurred, assumed, or guaranteed in compliance with
the terms of the EEX Credit Agreement Debt shall at all times
constitute Senior Debt, notwithstanding any event or circumstance
which may subsequently occur which would constitute the creation,
incurrence, assumption or guarantee of such Debt at such time a
violation of the EEX Credit Agreement.
"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.
"Special Entity" means any joint venture, limited
liability company, general or limited partnership or any other
type of partnership or company in which EEX or one or more of its
other Subsidiaries is a member, owner, partner or joint venturer
and owns at least a majority of the equity of such entity.
"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 Note" means the subordinated debenture
issued by EEX and held by EEX Capital evidencing $150.0 million
of Permitted Subordinated Debt, effective as of September 29,
1997.
"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).
"Subsidiary Guarantor" means any Subsidiary or Special
Entity that has executed a Subsidiary Guaranty Agreement.
"Subsidiary Guaranty Agreement" means any Guaranty
Agreement executed by a Subsidiary or a Special Entity as
required by the EEX Credit Agreement.
"Transaction Documents" means this Agreement, the
Certificate of Designations, the Preferred Stock, the Engagement
Letter, the Fee Letter, the Stock Registration Rights Agreement,
the Subordinated Note and the EEX Subordination Agreement.
"UBS" has the meaning specified in the preamble to this
Agreement.
"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.
"Withdrawal Liability" shall have the meaning given
such term under Part I of Subtitle E of Title IV of ERISA.
Section 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
REPRESENTATIONS AND WARRANTIES
As of the Closing Date (after giving pro forma effect
to the Transaction Documents, the issuance of the Preferred Stock
and the application of the proceeds thereof, and the transactions
contemplated hereby and thereby) and as of the Effective Date,
each of EEX and EEX Capital hereby agrees with, and represents
and warrants to, the Placement Agent and the Holders as follows:
Section Due Authorization and Enforceability.
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).
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.
The Certificate of Designations has been duly
authorized by all necessary corporate and stockholder action.
Section Private Offering; Rule 144A Matters.
Based in part on the accuracy of the
representations of UBS in Section 7.1, the sale of the Preferred
Stock 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."
The Preferred Stock will be eligible for resale
pursuant to Rule 144A under the Securities Act.
Section Existence. Each of EEX and EEX Capital: (i)
is a corporation or limited liability company duly organized,
legally existing and in good standing under the laws of the
jurisdiction of its formation; (ii) has all requisite power, and
has all material governmental licenses, authorizations, consents
and approvals necessary to own its assets and carry on its
business as now being or as proposed to be conducted; and (iii)
is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would have a Material
Adverse Effect.
Section Financial Condition. The audited balance
sheet of EEX as at December 31, 1996 and the related statements
of operations, cash flows and changes in partners' capital and
common shareholders' equity of EEX and its predecessor for each
of the three years in the period ended on said date, with the
opinion thereon of Deloitte & Touche LLP and the unaudited
interim financial statements of EEX at June 30, 1997 heretofore
furnished to the Placement Agent and each of the Holders, are
complete and correct and fairly present the financial condition
of EEX as at said date and the results of operations and cash
flows of EEX and its predecessor for the stated periods then
ended, all in accordance with GAAP, subject, in the case of the
interim financial statements, to normal year-end adjustments.
Except as contemplated by the Commitment Letter, neither EEX nor
EEX Capital has on the Closing Date or on the Effective Date any
material Debt, contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the Financial
Statements. Since June 30, 1997 to the Effective Date, there has
been no change or event having a Material Adverse Effect. Since
the date of the Financial Statements to the Effective Date,
neither the business nor the Properties of EEX or any Subsidiary
have been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking
of Property or cancellation of contracts, permits or concessions
by any Governmental Authority, riot, activities of armed forces
or acts of God or of any public enemy.
Section Litigation. As of the Closing Date, there is
no litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the
knowledge of EEX threatened against or affecting EEX or any of
its Subsidiaries which involves the possibility of any judgment
or liability against EEX or any of its Subsidiaries not fully
covered by insurance (except for normal deductibles), and which
would have a Material Adverse Effect.
Section No Breach. Neither the execution and
delivery of the Transaction Documents to which EEX, EEX Capital
or any of their respective Subsidiaries is a party, nor
compliance with the terms and provisions hereof will conflict
with or result in a breach of, or require any consent which has
not been obtained as of the Effective Date under, the respective
charter or by-laws or other organizational documents of EEX, any
Subsidiary or EEX Capital or any Governmental Requirement or any
agreement or instrument for borrowed money to which any of the
foregoing is a party or by which it is bound or to which it or
its Properties are subject, or constitute a default under any
such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of EEX,
any Subsidiary or EEX Capital pursuant to the terms of any such
agreement or instrument.
Section Authority. EEX and EEX Capital have all
necessary power and authority to execute, deliver and perform its
obligations under the Transaction Documents to which it is a
party; and the execution, delivery and performance by any of the
foregoing of the Transaction Documents to which it is a party,
have been duly authorized by all necessary corporate or member
action on its part; and the Transaction Documents constitute the
legal, valid and binding obligations of EEX and EEX Capital,
enforceable in accordance with their terms, except to the extent
that enforcement may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditor's rights
generally.
Section Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any
Governmental Authority are necessary for the execution, delivery
or performance by EEX or EEX Capital of the Transaction Documents
or for the validity or enforceability thereof.
Section ERISA. As of the Closing Date, except as
would not have a Material Adverse Effect:
EEX, the Subsidiaries and each ERISA Affiliate
have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
No act, omission or transaction has occurred which
could result in imposition on EEX, any Subsidiary or any ERISA
Affiliate (whether directly or indirectly) of (i) either a
material civil penalty assessed pursuant to subsections (c), (i)
or (l) of section 502 of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary
duty liability damages under section 409 of ERISA.
No liability to the PBGC (other than for the
payment of current premiums which are not past due) by EEX, any
Subsidiary or any ERISA Affiliate has been or is expected by EEX,
any Subsidiary or any ERISA Affiliate to be incurred with respect
to any Plan. No ERISA Event with respect to any Plan has
occurred which could result in a liability of EEX, any Subsidiary
or any ERISA Affiliate.
Full payment when due has been made of all amounts
which EEX, the Subsidiaries or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as
contributions to such Plan as of the date hereof, and no
accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists
with respect to any Benefit Plan.
The actuarial present value of the benefit
liabilities under each Benefit Plan which is subject to Title IV
of ERISA does not, as of the end of EEX's most recently ended
fiscal year, exceed the current value of the assets (computed on
a plan termination basis in accordance with Title IV of ERISA) of
such Benefit Plan allocable to such benefit liabilities. The
term "actuarial present value of the benefit liabilities" shall
have the meaning specified in section 4041 of ERISA.
Neither EEX nor any ERISA Affiliate has received
any notification (or has knowledge of any reason to expect) that
any Multiemployer Plan is in reorganization, is insolvent or has
been terminated, within the meaning of Title IV of ERISA.
Neither EEX nor any ERISA Affiliate is required to
provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability
for the Plan.
Section Taxes. Each of EEX and its Subsidiaries has
filed all United States Federal income tax returns and all other
tax returns which are required to be filed by them and has paid
all material taxes due pursuant to such returns or pursuant to
any assessment received by EEX or any Subsidiary except for any
such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained. The
charges, accruals and reserves on the books of EEX and its
Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of EEX, adequate. No tax lien has been filed
and, to the knowledge of EEX and EEX Capital, no claim is being
asserted with respect to any such tax, fee or other charge.
Section Titles, etc. To the best of EEX's knowledge:
Each of EEX and EEX Capital has good and
defensible title to its material (individually or in the
aggregate) Properties in all material respects, free and clear of
all Liens except Liens permitted by Section 5.5.
All leases and agreements necessary for the
conduct of the business of EEX and EEX Capital are valid and
subsisting, in full force and effect and there exists no default
or event or circumstance which with the giving of notice or the
passage of time or both would give rise to a default under any
such lease or leases, which would affect in any material respect
the conduct of the business of EEX and EEX Capital.
The rights, properties and other assets presently
owned, leased or licensed by EEX and EEX Capital, including,
without limitation, all easements and rights of way, include all
rights, Properties and other assets necessary to permit EEX and
EEX Capital to conduct their business in all material respects in
the same manner as its business has been conducted prior to the
Closing Date.
Section No Material Misstatements. No information,
exhibit or report furnished to the Placement Agent or any Holder
by or on behalf of EEX or any of its Subsidiaries in connection
with the negotiation and administration of this Agreement
contains any material misstatement of fact or omits to state a
material fact necessary in order to make the statements contained
therein not misleading.
Section Investment Company Act. Neither EEX nor EEX
Capital is an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
Section Subsidiaries and Partnerships. On the
Closing Date and the Effective Date, except as set forth on
Schedule 2.14, EEX has no Subsidiaries and neither EEX nor any
Subsidiary has any interest in any general or limited
partnerships, but excluding solely tax partnerships and oil and
gas joint ventures under joint operating agreements.
Section Public Utility Holding Company Act. Neither
EEX nor EEX Capital is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," or
a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Section Defaults. As of the Closing Date, neither
EEX nor any of its Subsidiaries is in default nor has any event
or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would
constitute a default under any agreement or instrument for
borrowed money to which any of the foregoing is a party or by
which it is bound. No Default has occurred and is continuing.
Section Environmental Matters. As of the Closing
Date, except as would not have a Material Adverse Effect (or with
respect to (c), (d) and (e) below, where the failure to take such
actions would not have a Material Adverse Effect):
Neither any Property of EEX or any Subsidiary nor
the operations conducted thereon violate any order or requirement
of any court or Governmental Authority or any Environmental Laws;
Without limitation of clause (a) above, no
Property of EEX or any Subsidiary nor the operations currently
conducted thereon or, to the best knowledge of EEX, by any prior
owner or operator of such Property or operation, are in violation
of or subject to any existing, pending or threatened action,
suit, investigation, inquiry or proceeding by or before any court
or Governmental Authority or to any remedial obligations under
Environmental Laws;
All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in
connection with the operation or use of any and all Property of
EEX and each Subsidiary, including without limitation past or
present treatment, storage, disposal or release of a hazardous
substance or solid waste into the environment, have been duly
obtained or filed, and EEX and each Subsidiary are in compliance
with the terms and conditions of all such notices, permits,
licenses and similar authorizations;
All hazardous substances, solid waste, and oil and
gas exploration and production wastes, if any, generated at any
and all Property of EEX or any Subsidiary have in the past been
transported, treated and disposed of in accordance with
Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of EEX, all such
transport carriers and treatment and disposal facilities have
been and are operating in compliance with Environmental Laws and
so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in
connection with any Environmental Laws;
EEX has taken all steps reasonably necessary to
determine and has determined that no hazardous substances, solid
waste, or oil and gas exploration and production wastes, have
been disposed of or otherwise released and there has been no
threatened release of any hazardous substances on or to any
Property of EEX or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the
environment;
To the extent applicable, all Property of EEX and
each Subsidiary currently satisfies all design, operation, and
equipment requirements imposed by the OPA or scheduled as of the
Closing Date or the Effective Date to be imposed by OPA during
the term of this Agreement, and EEX does not have any reason to
believe that such Property, to the extent subject to OPA, will
not be able to maintain compliance with the OPA requirements
during the term of this Agreement; and
Neither EEX nor any Subsidiary has any known
contingent liability in connection with any release or threatened
release of any oil, hazardous substance or solid waste into the
environment.
Section Compliance with Laws. As of the Closing
Date, neither EEX nor any of its Subsidiaries has violated any
Governmental Requirement or failed to obtain any license, permit,
franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its
business, which violation or failure would have (in the event
such violation or failure were asserted by any Person through
appropriate action) a Material Adverse Effect.
Section Subordination. The Liabilities and the
obligations of EEX under the Subordinated Note are subordinated
to Senior Debt.
ARTICLE
SALE AND OPTIONAL REPAYMENT OF PREFERRED STOCK
Section 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, to the extent not
already consummated under the Existing Agreement, EEX Capital
sold to UBS, and UBS purchased 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.
Section 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 additional 75,000 shares
of the Preferred Stock on the Closing Date, (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 Method of Payment. 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 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
AFFIRMATIVE COVENANTS
Section Financial Statements. EEX shall deliver, or
shall cause to be delivered, to the Placement Agent and each of
the Holders:
As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of
EEX, (i) EEX's Form 10-K filed with the SEC or (ii) the audited
consolidated statements of income, shareholders' equity, and cash
flows of EEX and its Consolidated Subsidiaries for such fiscal
year, and the related consolidated balance sheet of EEX and its
Consolidated Subsidiaries as at the end of such fiscal year, and
setting forth in each case in comparative form the corresponding
figures as of the end of and for the preceding fiscal year, and
accompanied by the related opinion of independent public
accountants of recognized national standing acceptable to the
Majority Holders which opinion shall state that said financial
statements fairly present the consolidated financial condition,
results of operations and cash flows of EEX and its Consolidated
Subsidiaries as at the end of, and for, such fiscal year and that
such financial statements have been prepared in accordance with
GAAP except for such changes in such principles with which the
independent public accountants shall have concurred and such
opinion shall not contain a "going concern" or like qualification
or exception, and a certificate of such accountants stating that,
in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any
Default.
As soon as available and in any event within sixty
(60) days after the end of each of the first three fiscal
quarterly periods of each fiscal year of EEX, (i) EEX's Form 10-Q
filed with the SEC or (ii) unaudited consolidated statements of
income, shareholders' equity, and cash flows of EEX and its
Consolidated Subsidiaries for such period and for the period from
the beginning of the respective fiscal year to the end of such
period, and the related consolidated balance sheets as at the end
of such period, and setting forth in each case in comparative
form the corresponding figures as of the end of and for the
corresponding period in the preceding fiscal year, accompanied by
the certificate of a Responsible Officer, which certificate shall
state that said financial statements fairly present the
consolidated financial condition, results of operations and cash
flows of EEX and its Consolidated Subsidiaries in accordance with
GAAP, as at the end of, and for, such period (subject to normal
year-end adjustments).
As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of
EEX Capital, the unaudited balance sheet of EEX Capital as at the
end of such fiscal year accompanied by the related Certificate of
a Responsible Officer which certificate shall state that said
financial statements fairly present the financial condition of
EEX Capital at the end of, and for, such fiscal year.
Promptly after a Responsible Officer of EEX or EEX
Capital knows that any Default has occurred, a notice of such
Default, describing the same in reasonable detail and the action
EEX and EEX Capital propose to take with respect thereto.
Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent by
EEX to stockholders generally and each regular or periodic report
and any registration statement or prospectus in respect thereof
filed by EEX with or received by EEX in connection therewith from
any securities exchange or the SEC or any successor agency,
including without limitation, Form 10-K's and Form 10-Q's.
EEX and EEX Capital will furnish to the Placement Agent
and each of the Holders, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a
certificate executed by a Responsible Officer (i) certifying as
to the matters set forth therein and stating that no Default has
occurred and is continuing (or, if any Default has occurred and
is continuing, describing the same in reasonable detail), and
(ii) setting forth in reasonable detail the computations
necessary to determine whether EEX is in compliance with Section
5.1 as of the end of the respective fiscal quarter or fiscal
year.
Section Litigation. EEX shall promptly give to the
Placement Agent and each of the Holders, notice of all legal or
arbitral proceedings, and of all proceedings before any
Governmental Authority affecting EEX or any of its Subsidiaries
except proceedings which, if adversely determined, would not have
a Material Adverse Effect.
Section Maintenance, Etc.
EEX and EEX Capital shall preserve and maintain
their corporate existence and all of their respective material
rights, privileges and franchises; keep books of record and
account in which full, true and correct entries will be made of
all dealings or transactions in relation to its business and
activities; comply with all Governmental Requirements if failure
to comply with such requirements will have a Material Adverse
Effect; pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being
maintained; during the continuance of an Event of Default and
upon reasonable notice, permit representatives of the Holders,
during normal business hours, to examine its books and records,
to inspect its Properties, and to discuss its business and
affairs with its financial officers, all to the extent reasonably
requested by the Placement Agent (at the direction of the
Majority Holders), copy and make extracts of its books and
records; and keep, or cause to be kept, insured by financially
sound and reputable insurers all Property of a character usually
insured by Persons engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such Persons and carry
such other insurance as is usually carried by such Persons
including, without limitation, pollution liability insurance to
the extent reasonably available. EEX Capital shall not engage in
any activity except as contemplated by the Transaction Documents.
Contemporaneously with the delivery of the
financial statements required by Section 4.1(a) to be delivered
for each year, EEX will furnish or cause to be furnished to the
Placement Agent a certificate of insurance coverage from insurers
and, if requested, will furnish the Placement Agent copies of the
applicable policies.
Section Environmental Matters.
EEX will, and will cause each Subsidiary to,
establish and implement such procedures as may be reasonably
necessary to continuously determine and assure that any failure
of the following does not have a Material Adverse Effect: (i) all
Property of EEX and its Subsidiaries and the operations conducted
thereon and other activities of EEX and its Subsidiaries are in
compliance with and do not violate the requirements of any
Environmental Laws, (ii) no oil, hazardous substances or solid
wastes are disposed of or otherwise released on or to any
Property owned by any such party except in compliance with
Environmental Laws, (iii) no hazardous substance will be released
on or to any such Property in a quantity equal to or exceeding
that quantity which requires reporting pursuant to Section 103 of
CERCLA, and (iv) no oil, oil and gas exploration and production
wastes or hazardous substance is released on or to any such
Property so as to pose an imminent and substantial endangerment
to public health or welfare or the environment.
EEX and EEX Capital will promptly notify the
Holders in writing of any threatened action, investigation or
inquiry by any Governmental Authority of which EEX has knowledge
in connection with any Environmental Laws which may have a
Material Adverse Effect.
Section Further Assurances. EEX and EEX Capital will
cure promptly any defects in the creation and issuance of the
Subordinated Note, the Preferred Stock and the execution and
delivery of the other Transaction Documents. EEX and EEX
Capital, at their expense, will promptly execute and deliver to
the Holders upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and
agreements of EEX and EEX Capital in the other Transaction
Documents, or to correct any omissions in the Transaction
Documents, or to make any recordings, to file any notices or
obtain any consents, all as may be necessary or appropriate in
connection therewith.
Section ERISA Information and Compliance. If any of
the following would result in a Material Adverse Effect, EEX will
promptly furnish and will cause the Subsidiaries and any ERISA
Affiliate to promptly furnish to the Placement Agent and each of
the Holders: (i) immediately upon becoming aware of the
occurrence of any ERISA Event which could result in a liability
of EEX, any Subsidiary or any ERISA Affiliate having a Material
Adverse Effect (individually or in the aggregate with respect to
all ERISA Events), a written notice signed by a Responsible
Officer of EEX, the Subsidiary or the ERISA Affiliate, as the
case may be, specifying the nature thereof, what action EEX, the
Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or
proposed by the Internal Revenue Service, the Department of Labor
or the PBGC with respect thereto, (ii) promptly after request by
the Placement Agent (at the direction of the Majority Holders), a
true and correct copy of each actuarial report for any Plan and
each annual report for any Multiemployer Plan, (iii) immediately
upon receipt of a notice from a Multiemployer Plan regarding the
imposition of Withdrawal Liability having a Material Adverse
Effect, a true and complete copy of such notice, (iv) immediately
upon becoming aware that a Multiemployer Plan has been
terminated, that the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or
that the PBGC has instituted or intends to institute proceedings
under section 4042 of ERISA to terminate a Multiemployer Plan
which occurrence would have a Material Adverse Effect, a written
notice signed by a Responsible Officer of EEX, the Subsidiary or
the ERISA Affiliate, as the case may be, specifying the nature of
such occurrence and any other information relating thereto
requested by the Placement Agent (at the direction of the
Majority Holders), and (v) immediately upon receipt thereof,
copies of any notice of the PBGC's intention to terminate or to
have a trustee appointed to administer any Benefit Plan.
Section Compliance with Engagement Letter and Fee
Letter. EEX and EEX Capital shall, and shall cause each of their
respective Subsidiaries to comply with the provisions of the
Engagement Letter and Fee Letter.
Section Notice of Default. EEX and/or EEX Capital
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.
Section Liquidation of MIStS Issuer L.L.C. EEX and
EEX Capital shall liquidate and dissolve MIStS Issuer L.L.C. as
soon as practicable after the Effective Date, but in no event any
later than October 31, 1997.
ARTICLE
NEGATIVE COVENANTS
So long as any of the Preferred Stock is outstanding or
any obligation in respect of any of the Preferred Stock shall be
unpaid, EEX and EEX Capital covenant and agree with the Placement
Agent and each Holder as follows:
Section Debt to EEX Capital Ratio. EEX will not
permit its ratio ("Debt to EEX Capital Ratio") expressed as a
percentage of (i) Debt of EEX and its Consolidated Subsidiaries
on a consolidated basis ("Consolidated Debt") to (ii) the sum of
Consolidated Debt plus Net Worth to exceed 60% at any time;
provided that in no event will Consolidated Debt ever exceed
$1,000,000,000.
Section Limitation on Incurrence of Additional
Indebtedness and/or Debt and Issuance of Capital Stock.
Except as contemplated by the Transaction
Documents, EEX Capital 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) unless, in each of the
foregoing cases, the proceeds thereof are used to redeem the
Preferred Stock in full.
Notwithstanding the fact that the EEX Credit
Agreement may permit incurrences and issuances by EEX of
Permitted Subordinated Debt and Capital Stock, EEX shall not,
directly or indirectly, incur additional subordinated Debt or
issue any shares of Capital Stock (other than 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 Stock in full.
Section Line of Business.
EEX Capital 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.
Except as contemplated by the Transaction
Documents, EEX Capital shall not, directly or indirectly, engage
in any activity or line of business other than holding the
Subordinated Note, and enforcing remedies thereunder in
accordance with the terms thereof but subject to the EEX
Subordination Agreement.
Section Payments for Consents. EEX Capital 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 Stock for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Certificate of
Designations, this Agreement, the Preferred Stock unless such
consideration is offered to be paid or is paid to all Holders of
Preferred Stock 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 Liens. Except as expressly permitted in this
Section 5.5, EEX and EEX Capital will not at any time, directly
or indirectly, create, assume or suffer to exist, and will not
cause, suffer or permit any Subsidiary Guarantor as long as it
remains a Subsidiary Guarantor, directly or indirectly, to
create, assume or suffer to exist, except in favor of EEX, any
Lien upon any of its Properties (now owned or hereafter
acquired), without making effective provision (and EEX covenants
that in any such case it will make or cause to be made effective
provision) whereby the Indebtedness and any other Debt of EEX or
any Subsidiary Guarantor then entitled thereto shall be secured
by such Lien equally and ratably with any and all other
obligations and indebtedness thereby secured, so long as any such
other obligations or indebtedness shall be so secured. Nothing
in this Agreement shall be construed to prevent EEX or any
Subsidiary Guarantor without so securing the amounts outstanding
hereunder, from creating, assuming or suffering to exist the
following Liens, to which the provisions of this paragraph shall
not be applicable:
Liens upon any Property presently owned or
hereafter acquired, created at the time of acquisition to secure
a portion of the purchase price thereof, or existing thereon at
the date of acquisition, whether or not assumed by EEX or one of
its Subsidiary Guarantors, provided that every such Lien shall
apply only to the Property so acquired and fixed improvements
thereon;
any extension, renewal or refunding of any Lien
permitted by Section 5.5(a), if limited to the same Property
subject to, and securing not more than the amount secured by, the
Lien extended, renewed or refunded;
the pledge of current assets in the ordinary
course of business, to secure current liabilities;
Liens upon (i) Property, to secure obligations to
pay all or a part of the purchase price of such Property only out
of or measured by the production, or the proceeds of such
production, from such Property of oil or gas or products or by-
products thereof, or (ii) the production from Property of oil or
gas or products or by-products thereof, or the proceeds of such
production, to secure obligations to pay all or a part of the
expenses of exploration, drilling or development of such Property
only out of such production or the proceeds of such production;
mechanics' or materialmen's liens, good faith
deposits in connection with tenders, leases of real estate, bids
or contracts (other than contracts for the payment of money),
deposits to secure public or statutory obligations, deposits to
secure, or in lieu of, surety, stay or appeal bonds, and deposits
as security for the payment of taxes or assessments or similar
charges, Liens given in connection with bid or completion bonds;
provided that such obligations secured are not yet due or are
being contested in good faith by appropriate action and against
which an adequate reserve has been established;
any Lien arising by reason of deposits with, or
the giving of any form of security to, any governmental agency or
any body created or approved by law or governmental regulation
for any purposes at any time as required by law or governmental
regulation as a condition to the transaction of any business or
the exercise of any privilege or license, or to enable EEX or a
Subsidiary to maintain self-insurance or to participate in any
funds established to cover any insurance risks or in connection
with workmen's compensation, unemployment insurance, old age
pensions or other social security, or to share in the privileges
or benefits required for companies participating in such
arrangements; provided that such obligations secured are not yet
due or are being contested in good faith by appropriate action
and against which an adequate reserve has been established;
the pledge or assignment of accounts receivable,
including customers' installment paper, to banks or others made
in the ordinary course of business (including to or by a
Subsidiary which is principally engaged in the business of
financing the business of EEX and its Subsidiaries);
the Liens of taxes or assessments for the then
current year or not at the time due, or the Liens of taxes or
assessments already due but the validity of which is being
contested in good faith by appropriate action and against which
an adequate reserve has been established;
any judgment or Lien against EEX or a Subsidiary
Guarantor, so long as the finality of such judgment is being
contested in good faith by appropriate action and the execution
thereon is stayed;
assessments or similar encumbrances, the existence
of which does not impair the value or the use of the Property
subject thereto for the purposes for which it was acquired;
landlords' liens on fixtures and movable Property
located on premises leased by EEX or a Subsidiary Guarantor in
the ordinary course of business so long as the rent secured
thereby is not in default;
Liens on the assets of any limited liability
company organized under a limited liability company act of any
state in which a limited liability company is treated as a
partnership for federal income tax purposes; provided that
neither EEX nor any Subsidiary Guarantor is liable for the Debt
of such limited liability company; and
other Liens on any Properties of EEX or any
Subsidiary with an aggregate value not exceeding 1% of the book
value of the total assets of EEX on a consolidated basis.
Section ERISA Compliance. EEX and the Subsidiaries
will not at any time:
Engage in, or permit any ERISA Affiliate to engage
in, any transaction in connection with which EEX, a Subsidiary or
any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to subsections (c), (i) or (l) of section 502
of ERISA or a tax imposed by Chapter 43 of Subtitle D of the
Code;
Terminate, or permit any ERISA Affiliate to
terminate, any Benefit Plan in a manner, or take any other action
with respect to any Benefit Plan, which could result in any
liability of EEX, a Subsidiary or any ERISA Affiliate to the
PBGC;
Fail to make, or permit any ERISA Affiliate to
fail to make, full payment when due of all amounts which, under
the provisions of any Plan, agreement relating thereto or
applicable law, EEX, a Subsidiary or any ERISA Affiliate is
required to pay as contributions thereto;
Permit to exist, or allow any ERISA Affiliate to
permit to exist, any accumulated funding deficiency within the
meaning of section 302 of ERISA or section 412 of the Code,
whether or not waived, with respect to any Benefit Plan;
Permit, or allow any ERISA Affiliate to permit,
the actuarial present value of the benefit liabilities under any
Benefit Plan maintained by EEX, a Subsidiary or any ERISA
Affiliate which is regulated under Title IV of ERISA to exceed
the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Benefit Plan
allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA;
Incur, or permit any ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 4062, 4063,
or 4064 of ERISA;
Amend, or permit any ERISA Affiliate to amend, a
Plan resulting in an increase in current liability such that EEX,
a Subsidiary or any ERISA Affiliate is required to provide
security to such Plan under section 401(a)(29) of the Code; or
Incur or permit Withdrawal Liability and liability
in connection with a reorganization or termination of a
Multiemployer Plan of EEX, the Subsidiaries and the ERISA
Affiliates;
provided, however, that the transactions, events and occurrences
described in this Section 5.6 shall be permitted so long as such
transactions, events and occurrences (individually and in the
aggregate) will not result in a Material Adverse Effect.
Section Environmental Matters. Neither EEX nor any
Subsidiary will cause or permit any of its Property to be in
violation of, or do anything or permit anything to be done which
will subject any such Property to any remedial obligations under,
any Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such
violations or remedial obligations would have a Material Adverse
Effect.
Section Transactions with Affiliates. Neither EEX
nor any Subsidiary Guarantor will enter into any material
transaction, including, without limitation, any purchase, sale,
lease or exchange of Property including the purchase or sale of
oil and gas properties and hydrocarbons or the rendering of any
service, with any Affiliate unless such transactions are in the
ordinary course of its business and are upon fair and reasonable
terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an
Affiliate.
Section Restrictive Dividend Agreements. Neither EEX
nor EEX Capital will create, incur, assume or suffer to exist any
financing agreement (other than this Agreement and the other
Transaction Documents) which in any way restricts EEX or EEX
Capital from paying dividends to their respective stockholders.
ARTICLE
CONDITIONS TO EFFECTIVENESS
Section Effectiveness. This Agreement shall become
effective as of the Effective Date when each of the following
conditions precedent has been satisfied:
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.
Consent under EEX Credit Agreement. The requisite
lenders party to the EEX Credit Agreement shall have amended the
EEX Credit Agreement to permit the merger of a Subsidiary of the
Company if the Subsidiary is the survivor of such merger.
Approvals and Consents. 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.
Certificate of Designations. The Certificate of
Designations shall have been amended and restated in the form of
Exhibit A hereto and filed with the Delaware Secretary of State.
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.
Legal Opinions. The Placement Agent and each of
the Holders shall have received such legal opinions as it may
reasonably request (including opinions from counsel to EEX and
EEX Capital), as Exhibit E and satisfactory to the Majority
Holders on the date when delivered.
Subordination of the Subordinated Note. The
Subordinated Note shall have been subordinated to Senior Debt.
ARTICLE
TRANSFER OF THE PREFERRED STOCK;
REPRESENTATIONS OF HOLDERS
Section Transfer of Preferred Stock. UBS represents
and agrees that it is purchasing the Preferred Stock 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 Stock 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 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 Stock
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 Stock to any third party and to pledge
any or all of the Preferred Stock to any commercial bank, other
institutional lender, qualified institutional buyer or accredited
investor.
ARTICLE
EVENTS OF DEFAULT
Section Events of Default. An "Event of Default"
with respect to the Preferred Stock shall occur if:
an "Event of Default" as defined in the EEX Credit
Agreement;
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;
EEX Capital fails to make any Change of Control
redemption within the time periods provided in the Certificate of
Designations and the LLC Agreement, as applicable;
EEX, EEX Capital or any of their respective
Subsidiaries consummates a Prohibited Issuance;
any "Maturity Event" under and as defined in the
Subordinated Note shall occur; or
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 (e) 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 of such failure by the Placement Agent or any Holder
of outstanding Preferred Stock or (ii) the date on which such
failure is discovered by such Relevant Party; (except that breach
of the covenants described in Section 4.9 and Section 12.1 hereof
shall not be entitled to any such cure period).
Section 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 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 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 Waiver of Past Defaults. Subject to Section
13.3, the Placement Agent (at the direction of the Majority
Holders) by written notice to EEX Capital 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 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 Stock held by such Holder, on or after the respective
due dates expressed in the Preferred Stock, 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
TERMINATION
Section Termination. This Agreement shall terminate
upon redemption in full of the Preferred Stock at the Redemption
Price.
Section 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 and EEX Capital, jointly and
severally, agrees to reimburse the Placement Agent for all its
reasonable out-of-pocket expenses pursuant to Section 13.1 and
the Commitment Letter and (ii) the indemnity provisions contained
in Article X shall remain operative and in full force and effect.
ARTICLE
INDEMNITY
Section Indemnification. EEX and EEX Capital (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 Stock) 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 Notice of Action.
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.
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 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 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):
subjects an Affected Party to any tax or changes
the basis of taxation with respect to this Agreement or the
Preferred Stock 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;
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;
shall change the amount of capital maintained or
requested or directed to be maintained by an Affected Party;
or
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 Stock 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 Stock 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.
To avoid doubt, the parties hereto acknowledge and
agree that none of EEX, EEX Capital or their Affiliates have
made any representations or warranties to the Placement
Agent, the Holders 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 Survivorship of Indemnification. The
provisions contained in this Article X and in Section 3.2 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 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
THE PLACEMENT AGENT
Section 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 Stock, 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 Stock without hereby limiting any implied authority,
(a) to give notice on behalf of such Holder to EEX Capital 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 (b) 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 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 or EEX
Capital 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 No Duty to Act. Each Holder by its
acceptance of Preferred Stock, 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 Stock.
Section 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 or EEX Capital. 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 Rights Placement Agent as Holder of Preferred
Stock. 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 Expenses of Placement Agent. Each Holder by
acceptance of Preferred Stock, 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 or EEX Capital 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 or EEX Capital;
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 Stock 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 Stock is then outstanding, each
Holder shall contribute an amount equal to its pro rata share of
the aggregate Liquidation Preference, of all outstanding
Preferred Stock to any amounts payable to the Placement Agent
pursuant to this paragraph.
Section Due Diligence by Holders. Each Holder by its
acceptance of Preferred Stock, 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 Stock. Each Holder by its
acceptance of Preferred Stock, 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
THE SUBORDINATED NOTE
Section Covenants With Respect to the 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 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 (at the
direction of the Majority Holders) after the occurrence of a
Voting Rights Trigger Event, EEX Capital agrees to deliver to the
Placement Agent the originals of the 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
Majority Holders, in any way encumber, or hypothecate, or create
or permit to exist any lien, security interest or encumbrance on
or other interest in the 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 Subordinated Note or
any interest therein.
Section 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:
upon instruction of EEX Capital or the Placement
Agent (at the direction of the Majority Holders), make
demand for payment under the Subordinated Note,
take any actions necessary or desirable, in the
Majority Holders' sole discretion, to collect, on behalf of
EEX Capital, the amounts due to EEX Capital under the
Subordinated Note, including compromising any amounts due
thereunder and acknowledging satisfaction of the maker's
liability thereunder,
instruct EEX, as the maker of the Subordinated
Note, to pay all sums payable thereunder to EEX Capital,
endorse, cash, sue upon, collect and otherwise
enforce, the 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
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 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 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 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 Subordinated Note or otherwise.
ARTICLE
MISCELLANEOUS
Section Expenses; Documentary Taxes. EEX and EEX
Capital 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 and EEX Capital 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 Notices. All notices and other
communications pertaining to this Agreement, 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, Suite 1000
New York, New York 10022
Attention: Nancy L. Schimmel, Esq.
Facsimile No.: (212) 751-4864
(ii) If to EEX or EEX Capital, 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 13.2.
Section Consent to Amendments and Waivers. (a)
Except as provided in Section 13.3(b), this Agreement may be
amended or supplemented with the consent of each of EEX, EEX
Capital and the Majority Holders (including, without limitation,
consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Preferred Stock), and any event of
default or compliance with any provision of this Agreement or the
Preferred Stock may be waived with the consent of the Majority
Holders (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for Preferred
Stock). Preferred Stock held by EEX, EEX Capital or any of their
Affiliates will not be deemed to be outstanding for purposes of
this Section 13.3.
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 13.3(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 Statements Required in Officer's Certificate
and Opinion. Each Officer's Certificate with respect to
compliance provided for in this Agreement shall include:
a statement that the Person making such
certificate or opinion has read such covenant or
condition;
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;
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
a statement as to whether, in such Person's
opinion, such condition or covenant has been
complied with.
Section 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 Section 3.2
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 Section 3.2 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 Stock and their
respective successors and assigns, and for the benefit of no
other person.
Section 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 AND EEX CAPITAL 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 AND EEX CAPITAL 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 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 and EEX
Capital or of the Placement Agent, UBS or any subsequent Holder
in this Agreement or any Preferred Stock shall bind their
respective successors and assigns. Neither EEX nor EEX Capital
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 Stock then outstanding. Prior to
purchase of the Preferred Stock, 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 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 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 Stock
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 EEX or EEX Capital, and
shall survive delivery of the Preferred Stock.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement on the Effective Date, effective as of
September 29, 1997.
Enserch Exploration, Inc.
By:
Name: Joseph T. Leary
Title: Vice PresidentFinance and
Treasurer
EEX Capital Inc.
By:
Name: Joseph T. Leary
Title: Vice PresidentFinance and
Treasurer
UBS Securities LLC, as Placement
Agent
By:
Name: James A. Ajello
Title: Managing Director
By:
Name: Jeffrey M. Donahue
Title: Director
PREFERRED STOCK:
Commitment UBS Securities LLC
$150,000,000.00
(150,000 Shares)
By:
Name: James A. Ajello
Title: Managing Director
By:
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