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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 29, 1997
ENSERCH EXPLORATION, INC.
(Exact name of Registrant as specified in its charter)
Texas 1-12905 752421863
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
2500 City West Boulevard,
Suite 1400,
Houston, Texas 77046
(Address of principal executive offices) (Zip Code)
(281) 271-3100
(Registrant's telephone number, including Area Code)
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Item 5. Other Events.
On September 29, 1997, Enserch Exploration, Inc. ("Company")
concluded a transaction in which all of the outstanding
adjustable rate mandatorily redeemable preferred securities of
MIStS Issuer L.L.C. ("Issuer"), a Company subsidiary, was
redeemed at the stated value of $150,000,000. The redemption was
funded by a private sale of new issues of equal value of
preferred interests of Issuer and preferred stock of EEX Capital
Inc. ("EEXC"), also a subsidiary of the Company. The new
securities bear a dividend rate (reset quarterly) of LIBOR, plus
a spread equal to 300 basis points for the period though
December 31, 1997, with escalation quarterly of 100 basis points
through December 31, 1998. The dividend rate on the redeemed
securities was LIBOR plus 42.5 basis points. The new securities
are redeemable at the option of Issuer and EEXC, in whole or in
part, on their respective quarterly dividend payment dates.
Interest payable on a $150,000,000 intercompany demand note
made by the Company in favor of EEXC, and a $75,000,000
intercompany demand note made by EEXC in favor of Issuer will
fund the dividends to be paid on the new preferred securities.
The Company's guaranty of the EEXC note to Issuer, by its terms,
is subordinated to "senior debt" as defined in the Company's
Revolving Credit Facility.
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Item 7. Financial Statements and Exhibits.
Exhibits
4.1 Second Amended and Restated Limited Liability
Company Agreement of MIStS Issuer L.L.C. dated as
of September 29, 1997.
4.2 Certificate of Designations, Preferences and
Relative, Participating, Optional and Other
Special Rights - Class A Cumulative Perpetual
Increasing Dividend Preferred Stock of EEX Capital
Inc., dated, and filed with the Delaware Secretary
of State on, September 29, 1997.
4.3 Preferred Stock Registration Rights Agreement
dated as of September 29, 1997, by and between EEX
Capital Inc. and UBS Securities L.L.C.
4.4 Subscription Agreement among EEX Capital Inc.,
MIStS Issuer L.L.C., UBS Securities LLC, as
Placement Agent for the Holders from time to time
of the Preferred Securities and Enserch
Exploration, Inc. (not an issuer), dated as of
September 29, 1997.
4.5 $150,000,000 Subordinated Promissory Note made by
Enserch Exploration, Inc. in favor of EEX Capital
Inc., dated September 29, 1997.
4.6 $75,000,000 Subordinated Promissory Note made by
EEX Capital Inc. in favor of MIStS Issuer L.L.C.,
dated September 29, 1997.
4.7 Amended and Restated Guaranty Agreement of Enserch
Exploration, Inc., dated as of September 29, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Enserch Exploration, Inc.
Date: October 6, 1997 By: /s/ J. T. Leary
-------------------------
J. T. Leary
Vice President,
Finance and Treasurer
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EXHIBIT 4.1
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MIStS ISSUER L.L.C.
DATED AS OF SEPTEMBER 29, 1997
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
MIStS ISSUER L.L.C.
This Second Amended and Restated Limited Liability
Company Agreement of MIStS Issuer L.L.C. (the "Company") is made
as of September 29, 1997, among the Trustee (as defined below),
EEX Capital Inc., a Delaware corporation ("EEX Capital"), and UBS
Securities LLC, a Delaware limited liability company ("UBS")
acting as placement agent (the "Placement Agent") for the holders
of the Preferred Securities (as defined herein).
Recitals
A. As of August 1, 1995, EEX Capital L.L.C., a
Delaware limited liability company ("EEX LLC"), and Enserch
Preferred Capital, Inc., a Delaware Corporation ("Enserch
Preferred"), formed the Company pursuant to the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., as
amended from time to time (the "Delaware Act"), by filing a
Certificate of Formation with the office of the Secretary of
State of the State of Delaware on August 1, 1995 and entering
into a Limited Liability Company Agreement dated as of August 1,
1995 (the "Original L.L.C. Agreement").
B. As of August 4, 1995, EEX LLC and Enserch
Preferred admitted Wilmington Trust Company, not in its
individual capacity, but solely as trustee (in such capacity as
trustee, together with any successors in such capacity, the
"Trustee") of the MIStS Issuer Trust I (the "Trust"), as a
preferred member.
C. In connection with the admission of the Trustee as
a preferred member, EEX LLC, Enserch Preferred and the Trustee
amended and restated the Original L.L.C. Agreement in its
entirety, dated as of August 4, 1995, (the "Amended and Restated
L.L.C. Agreement").
D. EEX LLC and Enserch Preferred have merged with
Enserch Preferred being the surviving corporation, renamed EEX
Capital.
E. EEX Capital and the Trustee desire to admit UBS to
the Company as a Preferred Member and UBS desires to become a
Preferred Member of the Company, subject to the terms and
conditions set forth herein.
F. EEX Capital, UBS and the Trustee desire to cause
the Company to redeem the Company's mandatorily redeemable
securities outstanding on the Closing Date issued August 4, 1995
(the "MIStS Securities") and terminate the Trustee's membership
in the Company.
G. EEX Capital, the Trustee and UBS desire to
continue the Company as a limited liability company under the
Delaware Act and to amend and restate the Amended and Restated
L.L.C. Agreement in its entirety.
H. Now, therefore, in consideration of the agreements
and obligations set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Members hereby agree as follows:
ARTICLE I.
DEFINED TERMS
SECTION 1.1 DEFINITIONS.
The terms defined in this Article I shall, for the
purposes of this Agreement, have the meanings herein specified
and all terms defined in this Agreement in the singular have the
same meanings when used in the plural and vice versa.
"Additional Costs" shall have the meaning set forth in
the Subscription Agreement.
"Additional Dividends" shall have the meaning set forth
in Section 9.1(e) of this Agreement.
"Adjusted Capital Account" shall mean the Capital
Account established for a Member, as the same is adjusted
pursuant to Section 4.5 of this Agreement or is otherwise
specially computed to reflect the adjustments required or
permitted by the Treasury Regulations under Section 704(b) of the
Code to be taken into account in applying the second sentence of
section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.
"Affiliate" shall mean with respect to any Person, any
other Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person. For purposes of the foregoing
definition, "control" means the direct or indirect ownership of
more than 50% of the outstanding capital stock or other equity
interests having ordinary voting power.
"Agreement" shall mean this Second Amended and Restated
Limited Liability Company Agreement of the Company, as amended,
modified, supplemented or restated from time to time.
"Asset Coverage Ratio" shall mean, as of any day, the
ratio of (i) the outstanding principal amount of the EEX Capital
Subordinated Note to (ii) the product of the Liquidation
Preference and the number of then issued and outstanding shares
of Preferred Interests.
"Business Day" shall mean any day other than a
Saturday, a Sunday, a federal holiday or any day on which
dealings in U.S. dollar deposits are not carried out in the
London interbank market.
"Capital Account" shall have the meaning set forth in
Section 4.5.
"Capital Lease Obligations" means, with respect to EEX
or any Subsidiary of EEX, the obligations of such Person to pay
rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a
liability for a capital lease on a balance sheet of such Person
in accordance with GAAP and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount
thereof.
"Certificate of Designations" shall mean the
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, relating to the Preferred Stock.
"Certificate of Formation" shall mean the Certificate
of Formation of the Company, filed with the office of the
secretary of state of the State of Delaware by EEX LLC on August
1, 1995, and any and all amendments thereto and restatements
thereof filed on behalf of the Company with the office of the
secretary of state of the State of Delaware pursuant to the
Delaware Act.
"Change of Control" shall mean the acquisition by any
Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of the Securities Act of 1934, as
amended) of 35% or more of the outstanding shares of voting stock
of EEX.
"Change of Control Offer" shall have the meaning set
forth in Section 9.4(c) below.
"Change of Control Payment" shall have the meaning set
forth in Section 9.4(c) below.
"Change of Control Payment Date" shall have the meaning
set forth in Section 9.4(c).
"Closing Date" shall mean September 29, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any corresponding federal tax
statute enacted after the date of this Agreement. A reference to
a specific section (Section) of the Code refers not only to such
specific section but also to any corresponding provision of any
federal tax statute enacted after the date of this Agreement, as
such specific section or corresponding provision is in effect on
the date of application of the provisions of this Agreement
containing such reference.
"Collection Account" shall mean the MIStS Issuer
Collection Account created pursuant to Section 4.10 of this
Agreement.
"Common Member" shall mean EEX Capital.
"Common Securities" shall mean the Interests in the
Company which represent common limited liability company
interests in the Company and are described in Section 7.1(e) of
this Agreement.
"Debt" shall mean for EEX and its Subsidiaries (except
the Company and 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
Liens permitted by Sections 9.02(c), (e), (f), (h), (i), (j), (k)
and (l) of the EEX Credit Agreement; (vii) all production
payments in connection with oil and gas properties; and (viii)
all Indebtedness of Special Entities (as defined in the EEX
Credit Agreement) to the extent the Company is liable for such
Indebtedness under GAAP or such Indebtedness is reflected on the
consolidated balance sheet of EEX or any Subsidiary; provided,
however, such term shall not include Permitted Subordinated Debt.
"Distribution" shall mean any Dividend, Additional
Dividend, Liquidation Dividend or other payments, property and
distributions received by a Member from assets of the Company in
respect of its status as a member of the Company.
"Dividend" shall mean, with respect to the Preferred
Interests, any distribution due on account of yield on the
Preferred Interests under Section 9.1(c), Section 9.1(d) or
Section 9.1(e); and with respect to the Common Securities, any
amount allocated to the Common Member in excess of the amount of
its initial contribution under Section 4.1 of this Agreement plus
any subsequent contributions under Section 4.2 of this Agreement.
"Dividend Payment Date" shall mean the last Business
Day of each March, June, September and December in each year, the
first of which shall be December 31, 1997.
"Dividend Period" shall mean the period from, and
including, the Closing Date to, but not including, the first
Dividend Date and thereafter, each period from, and including,
the preceding Dividend Payment Date to, but not including the
next Dividend Payment Date.
"Dollar" or "$" shall mean lawful money of the United
States of America.
"EEX" shall mean Enserch Exploration, Inc., a Texas
corporation.
"EEX Capital Subordinated Note" shall mean the
subordinated promissory note made by EEX Capital in favor of the
Company, reevidencing $75.0 million of Indebtedness, dated as of
September 29, 1997.
"EEX Capital Subordination Agreement" shall mean the
subordination agreement dated as of September 29, 1997 issued by
the Company in favor of the administrative agent and the lenders
under the EEX Credit Agreement and subordinating the EEX Capital
Subordinated Note and the Guaranty Agreement to the "Superior
Indebtedness (as defined in such Subordination Agreement)
"EEX Capital Voting Rights Trigger Event" shall have
the meaning ascribed to "Voting Rights Trigger Event" in the
Certificate of Designations.
"EEX Credit Agreement" shall mean that certain Credit
Agreement, dated as of May 1, 1995, among EEX, as borrower, The
Chase Manhattan Bank, as Administrative Agent, and the lenders
signatory thereto, as amended by First Amendment, dated September
19, 1996, and Second Amendment, dated June 27, 1997, and as
modified by that certain letter from EEX to the Administrative
Agent and in effect on the Closing Date together with such
amendments thereto as may be both adopted in accordance therewith
and consented to by the Majority Holders.
"EEX LLC" shall mean EEX Capital L.L.C., a Delaware
limited liability company that was merged with and into EEX
Preferred pursuant to the Merger, with EEX Preferred being the
surviving corporation and renamed EEX Capital Inc.
"EEX Preferred" shall mean EEX Preferred Capital Inc.,
a Delaware corporation now known as EEX Capital Inc., into which
EEX LLC was merged pursuant to the Merger.
"EEX Subordinated Note" shall mean the subordinated
promissory note made by EEX in favor of EEX Capital, reevidencing
$150.0 million of Indebtedness, dated as of September 29, 1997.
"EEX Subordination Agreement" shall mean the
subordination agreement dated as of September 29, 1997 issued by
EEX Capital in favor of the administrative agent and the lenders
under the EEX Credit Agreement and subordinating the EEX
Subordinated Note to the "Superior Indebtedness" (as defined in
such Subordination Agreement).
"Engagement Letter" shall mean that certain engagement
letter agreement by and among UBS, EEX, EEX Preferred, EEX LLC
and the Company, dated as of September 24, 1997, as modified by
letter agreement dated September 29, 1997.
"Event of Default" shall mean (i) an "Event of Default"
as defined in the EEX Credit Agreement as in effect on the date
hereof (ii) failure by the Company to pay any scheduled Dividend
on the Preferred Securities within 30 days after the same is due,
(iii) the failure by the Company to cause either the merger of
the Company with and into EEX Capital or to cause the redemption
of all of the Preferred Interests and the Preferred Stock on the
Required Merger Date, (iv) failure to make any Change of Control
redemption within the time periods specified above in Section 9.4
hereof, (v) the occurrence of Prohibited Issuance, (vi) the
occurrence of an EEX Capital Voting Rights Trigger Event, (vii)
breach of any other provisions of this Agreement or of the other
Transaction Documents, in each case as in effect on the date
hereof or as subsequently modified with the consent of a majority
in aggregate Liquidation Preference of the Holders of the
Preferred Securities which is not cured within 60 days (except
that breach of the covenants described in Sections 12.1 and 13.1
of the Subscription Agreement shall not be entitled to any such
cure period) and (viii) any representation or warranty on the
part of EEX or any Subsidiary of EEX in any Transaction Document
shall prove to have been false or misleading in any material
respect when made, deemed made, or furnished.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Fee Letter" shall mean that certain fee letter
agreement from and EEX, EEX Capital (as successor in interest to
EEX Preferred and EEX LLC) and the Company to UBS, dated as of
September 24, 1997.
"GAAP" shall mean generally accepted accounting
principles in the United States of America in effect from time to
time.
"Guaranty Agreement" shall mean that certain Amended
and Restated Guaranty Agreement, dated as of September 29, 1997,
issued by EEX in favor of the Company guaranteeing the
obligations of EEX Capital to the Company under the EEX Capital
Subordinated Note, as the same may be further amended, modified
or supplemented from time to time with the consent of the
Majority Holders.
"Holder" shall mean the record holder of one or more
shares of Preferred Interests, as shown on the books and records
of the Company.
"Indebtedness" of a Person shall mean such Person's (i)
obligations for borrowed money, whether or not evidenced by a
bond, note or similar instrument, (ii) obligations representing
the deferred purchase price of property other than accounts 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,
acceptance, 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 Parties" shall mean each Preferred Member
and each of their Affiliates and each of their and the Common
Members' officers, directors, employees, representatives, agents,
attorneys, accountants and experts.
"Interest" shall mean a limited liability company
interest in the Company, including the right of the holder
thereof to any and all benefits to which a Member may be entitled
as provided in this Agreement, together with the obligations of a
Member to comply with all of the terms and provisions of this
Agreement.
"Investment Company Event" shall mean (a) either (i) a
change in any applicable United States law or regulation or in
the interpretation thereof (including but not limited to the
enactment or imminent enactment of any legislation, the
publication of any judicial decisions, regulatory rulings,
regulatory procedures, or notices or announcements (including
notices or announcements of intent to adopt such procedures or
regulations)) shall have occurred after September 29, 1997, or
(ii) a change in the official position or the interpretation of
any law or regulation by any legislative body, court,
governmental authority or regulatory body, irrespective of the
manner in which such change is made known) shall have occurred
after September 29, 1997, and (b) that the Company or EEX Capital
shall have received an opinion of nationally recognized
independent legal counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act"),
that, as a result of such change, there exists more than an
insubstantial risk that the Company is or will be considered an
"investment company" which is required to be registered under the
1940 Act.
"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.
"Liquidation Dividend" shall mean, for each issued and
outstanding share of the Preferred Interests, an amount equal to
the Liquidation Preference plus its pro rata share of any and all
other payments out of the assets of the Company upon either
voluntary or involuntary liquidation, dissolution or winding up
of the Company made in accordance with the terms of Section 14.3
and 14.4 of this Agreement.
"Liquidation Preference" shall mean, with respect to
each share of the (i) Preferred Interests, $1,000.00, as set
forth in Section 7.1(b) of this Agreement and (ii) Preferred
Stock, $1,000.00, as the case may be.
"LP Act" shall mean the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as
amended from time to time.
"Majority Holders" means a majority in aggregate
Liquidation Preference of the Holders of the Preferred
Securities.
"Mandatorily Redeemable Obligation" shall mean, with
respect to any Person, an obligation of such Person or any of its
Subsidiaries to the extent that it is redeemable, payable or
required to be purchased or otherwise retired or extinguished (a)
at a fixed or determinable date, whether by operation of a
sinking fund or otherwise, (b) at the option of any Person other
than such Person or such Subsidiary, or (c) upon the occurrence
of a condition not solely within the control of such Person or
such Subsidiary, such as a redemption required to be made out of
future earnings.
"Member" shall mean any Person that holds an Interest
in the Company and is admitted as a member of the Company
pursuant to the provisions of this Agreement, in its capacity as
a member of the Company. For purposes of the Delaware Act, the
Common Member and the Preferred Members shall constitute separate
classes of Members.
"Merger" shall mean the merger of EEX LLC with and into
Enserch Preferred on September 26, 1997, with Enserch Preferred
being the surviving corporation and renamed EEX Capital Inc.
"Merger Notice" shall mean a notice issued by UBS in
accordance with the letter agreement dated September 29, 1997,
requiring the Company to merge with and into EEX Capital, with
EEX Capital being the surviving corporation.
"Net Income" and "Net Loss," respectively, for any
Dividend Period, shall mean the income and loss, respectively, of
the Company for such Dividend Period as determined in accordance
with the method of accounting followed by the Company for federal
income tax purposes, including, for all purposes, any tax-exempt
income and any expenditures of the Company which are described in
Section 705(a)(2)(B) of the Code (or treated as so described
under Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations);
provided, however, that any item allocated under Section 4.7
shall be excluded from the computation of Net Income and Net
Loss.
"Notes" shall mean the EEX Capital Subordinated Note
and any and all promissory notes that may be issued from time to
time by any Common Member evidencing loans to such Common Member
from the Company of substantially all the proceeds of the
issuance of the Common Securities or any other capital
contributions.
"Notice of Dissolution" shall mean any notice of
dissolution of the Company given pursuant to Section 14.2 of this
Agreement.
"Notice of Redemption" shall have the meaning set forth
in Section 9.4(d)(i) of this Agreement.
"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.
"Operating Lease Obligations" shall mean, as to the
Company or any Subsidiary, the obligations of such person to pay
rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which
obligations are not required to be classified and accounted for
as a liability for a capital lease on a balance sheet of such
Person and, for purposes of this 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.
"Paying Agent" shall mean the Transfer Agent until such
time, if any, as an additional or other Paying Agent is
appointed.
"Permitted Subordinated Debt" shall mean Debt of EEX or
a Subsidiary Owing to EEX or another Subsidiary subordinated to
the "Superior Indebtedness" (as defined in the Subordination
Agreements) on terms substantially similar to the terms set forth
in the Subordination Agreements.
"Person" shall mean any individual, corporation,
company, limited liability company, voluntary association,
partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.
"Preferred Certificate" shall mean any certificate, in
substantially the form of Exhibit A to this Agreement, evidencing
the Preferred Interests.
"Preferred Interests" shall mean the $75,000,000 in
aggregate Liquidation Preference of Interests which represent
preferred limited liability company interests in the Company and
are described in Section 7.1(b) of this Agreement.
"Preferred Member" shall mean UBS and any other Person
who becomes a holder of any of the Preferred Interests under
Section 2.7 of this Agreement; and "Preferred Members" shall mean
all such Persons.
"Preferred Securities" shall mean the Preferred
Interests and the Preferred Stock.
"Preferred Stock" shall mean the Class A Cumulative
Perpetual Increasing Dividend Preferred Stock of EEX Capital.
"Prohibited Issuance" shall mean issuance by EEX, EEX
Capital, the Company or any of their respective Subsidiaries of
subordinated debt or equity securities in violation of the
provisions under Article V of the Subscription Agreement, the
proceeds of which are not used to fully redeem the Preferred
Securities.
"Redemption Price" shall mean, with respect to each
issued and outstanding share of the Preferred Interests, a cash
redemption price equal to (i) the Liquidation Preference plus
accumulated and unpaid Dividends (whether or not earned or
declared), including such share's pro rata amount of all
Additional Dividends, to the date fixed for redemption of such
share and (ii) Additional Costs.
"Required Merger Date" shall mean the first Dividend
Payment Date occurring at least thirteen (13) Business Days after
receipt by the Company of a Merger Notice.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Senior Debt" shall mean 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) and Debt of EEX and its
Subsidiaries (other than the Company and 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 Capital Subordinated Note and Guaranty Agreement,
and (b) renewals, extensions, modification 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.
"Stock Registration Rights Agreement" means the stock
registration rights agreement, dated as of September 29, 1977,
between EEX Capital and the Placement Agent on behalf of the
holders of the Preferred Stock pursuant to which the Preferred
Stock is required to be registered for public sale.
"Subordinated Notes" shall mean, collectively, the EEX
Capital Subordinated Note and the EEX Subordinated Note.
"Subordination Agreements" shall mean, collectively,
the EEX Capital Subordination Agreement and the EEX Subordination
Agreement.
"Subscription Agreement" shall mean the Preferred
Interest and Preferred Stock Subscription Agreement, dated as of
September 29, 1997, among EEX, EEX Capital, the Company and UBS
as Placement Agent for the Holders of the Preferred Securities.
"Tax Event" shall mean (a) either (i) a change in any
applicable United States law or regulation or in the
interpretation thereof (including but not limited to the
enactment or imminent enactment of any legislation, the
publication of any judicial decisions, regulatory rulings,
regulatory procedures, or notices or announcements (including
notices or announcements of intent to adopt such procedures or
regulations), or (ii) a change in the official position or the
interpretation of any law or regulation by any legislative body,
court, governmental authority or regulatory body, irrespective of
the manner in which such change is made known)) shall have
occurred after September 29, 1997, and (b) that the Company or
EEX Capital shall have received an opinion of nationally
recognized independent legal counsel experienced in such matters
that, as a result of such change, there exists more than an
insubstantial risk that (i) the Company will be subject to
federal income tax with respect to the interest received on the
EEX Capital Subordinated Note, (ii) EEX Capital (or EEX on a
consolidated basis) will be precluded from deducting the interest
paid on the EEX Capital Subordinated Note for federal income tax
purposes, or (iii) the Company will be subject to more than a de
minimis amount of other taxes, duties or other governmental
charges.
"Tax Matters Partner" shall mean EEX Capital designated
as such in Section 11.1(b) of this Agreement.
"Third-Party Creditors" shall have the meaning-set
forth in Section 13.1 of this Agreement.
"Transaction Documents" shall mean the Subscription
Agreement, this Agreement, the Certificate of Designations, the
Preferred Stock, the Preferred Interests, the Engagement Letter,
the Fee Letter, the Stock Registration Rights Agreement, the
Subordinated Notes, the Guaranty Agreement, and the Subordination
Agreements.
"Transfer Agent" shall mean the entity designated from
time to time by the Company to act as the registrar and transfer
agent for the Preferred Interests.
"Treasury Regulations" shall mean the regulations
promulgated by the United States Department of the Treasury
pursuant to and in respect of the provisions of the Code. All
references herein to sections of the Treasury Regulations shall
included any corresponding provision or provisions of succeeding,
similar, substitute proposed or final Treasury Regulations.
"Voting Rights Trigger Event" shall have the meaning
set forth in Section 8.1(b) below.
SECTION 1.2. HEADINGS.
The headings and subheadings in this Agreement are
included for convenience and identification only and are in no
way intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
ARTICLE II.
CONTINUATION AND TERM; ADMISSION AND RESIGNATION OF MEMBERS
SECTION 2.1. HISTORY AND CONTINUATION.
(a) The Company has been formed as a Delaware limited
liability company by the filing of the Certificate of Formation
under and pursuant to the Act. The initial Members were EEX LLC
and Enserch Preferred, each owning 99.9% and 0.1%, respectively,
of the total common Interests in the Company. On August 4, 1995,
EEX LLC, Enserch Preferred and the Trustee (i) amended and
restated the Original L.L.C. Agreement, effective as of August
4, 1995, as the Amended and Restated L.L.C. Agreement (ii)
continued the Company as a limited liability company under and
pursuant to the provisions of the Delaware Act, (iii) agreed that
the rights, duties and liabilities of the Members were to be as
provided in the Delaware Act, except as otherwise provided
therein and (iv) admitted the Trustee as a member of the Company.
EEX LLC and Enserch Preferred each owned 99.9% and 0.1%,
respectively, of the total common Interests in the Company. On
September 26, 1997, EEX LLC and Enserch Preferred merged, with
Enserch Preferred being the surviving corporation, renamed "EEX
Capital Inc." EEX Capital, the Trustee and UBS hereby (i) amend
and restate the Amended and Restated L.L.C. Agreement in its
entirety, effective as of September 29, 1997, (ii) continue the
Company as a limited liability company under and pursuant to the
provisions of the Delaware Act, except as otherwise provided
herein, (iii) admit UBS as a member of the Company, (iv) cause
the Company to redeem the MIStS Securities and terminate the
Trustee's membership in the Company and (v) agree that the
rights, duties and liabilities of the Members shall be as
provided in the Delaware Act, except as otherwise provided
herein. EEX Capital owns 100% of the total common Interests in
the Company. EEX Capital, as an authorized person within the
meaning of the Delaware Act, shall execute, deliver and file any
and all amendments to or restatements of the Certificate of
Formation, as may be required by the Delaware Act.
(b) The Members hereby agree to continue the Company as
a limited liability company under and pursuant to the provisions
of the Delaware Act and agree that the rights, duties and
liabilities of the Members shall be as provided in the Delaware
Act, except as provided herein.
(c) Upon execution of this Agreement by the Trustee,
EEX Capital and UBS, and the receipt by the Trustee of all
amounts due for the redemption of the MIStS Securities held by
the Trustee, UBS shall be admitted to the Company as a Member
and it and the remaining Members shall continue the Company
without dissolution.
(d) Notwithstanding any other provision of this
Agreement to the contrary, upon the Trustee's execution of this
Agreement and the payment of all amounts due for the redemption
of the MIStS Securities held by the Trustee, the Trustee shall
have no further rights, duties or obligations hereunder under
this Agreement.
SECTION 2.2. NAME.
The name of the Company heretofore formed and hereby
continued is MIStS Issuer L.L.C. The business of the Company may
be conducted upon compliance with all applicable laws under any
other name designated by EEX Capital.
SECTION 2.3. TERM.
The term of the Company commenced on the date the
Certificate of Formation was filed in the office of the Secretary
of State of the State of Delaware and shall be perpetual.
SECTION 2.4. REGISTERED AGENT AND OFFICE.
The Company's registered agent, manager and office in
Delaware shall be The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801. At any time, EEX Capital may designate another
registered agent and/or registered office. The name and business
address of each Member is set forth in Section 15.7 of this
Agreement.
SECTION 2.5. PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Company shall be
at The Corporation Trust Company, 1209 Orange Street, Wilmington,
New Castle County, Delaware 19801. EEX Capital may change the
location of the Company's principal place of business.
SECTION 2.6. QUALIFICATION IN OTHER JURISDICTIONS.
EEX Capital shall cause the Company to be qualified,
formed or registered under assumed or fictitious name statutes or
similar laws in any jurisdiction in which the Company conducts
business and in which such qualification, formation or
registration is required by law or deemed advisable by EEX
Capital. EEX Capital, as an authorized person within the meaning
of the Delaware Act, shall execute, deliver and file any
certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business.
SECTION 2.7. ASSIGNMENT OF COMMON SECURITIES.
No Member may sell, assign, convey, give, exchange or
otherwise dispose of its Common Securities without the prior
consent of UBS, which consent may be given or withheld in its
sole discretion. Except as provided in the foregoing proviso,
any attempted disposition of any Common Securities shall be null
and void ab initio.
SECTION 2.8. ASSIGNMENT OF PREFERRED INTERESTS.
UBS and its successors and assigns may, subject to the
Securities Act and State securities laws, sell, assign, convey,
give, exchange or otherwise dispose of its Preferred Interests
without the prior consent of the other Members.
SECTION 2.9. MERGER, CONSOLIDATION, ETC. OF THE COMPANY.
The Company may not consolidate with, merge with or
into, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an
entirety to any Person; provided, however, if UBS delivers a
Merger Notice, then either (i) the Company and EEX Capital shall
merge, with EEX Capital being the surviving corporation or (ii)
redeem all of the Preferred Interest contemporaneous with the
redemption by EEX Capital of the Preferred Stock such that no
Event or Default will result from the failure to so merge or
redeem.
SECTION 2.10 SUBORDINATION.
(a) The Company, for itself, its successors and
assigns, covenants and agrees, and each Holder of the Preferred
Interests, by its acceptance thereof, likewise covenants and
agrees, that payment by EEX of the principal of and premium, if
any, and interest on the EEX Capital Subordinated Note and
payment by EEX in respect of the Guaranty Agreement, and any fees
or costs related to either thereof, is hereby expressly
subordinated, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of all
Senior Debt. The provisions of this Section 2.10 are made for
the benefit of all holder of Senior Debt and any such holder may
proceed to enforce such provisions.
(b) During such time as any Senior Debt remains unpaid
and an Event of Default (under and as defined in the EEX Credit
Agreement) exists and is continuing, the Company will not ask
for, demand, sue for, take, receive or accept from EEX, by set-
off or in any other manner, any payment or distribution on
account of the EEX Capital Subordinated Note or the Guaranty
Agreement, or present any instrument evidencing the EEX
Subordinated Note or the Guaranty Agreement for payment (other
than such presentment as may be necessary to prevent discharge of
EEX or other liable parties on such instrument).
(c) In the event that the Company shall receive any
payment or distribution on account of the EEX Capital
Subordinated Note or the Guaranty Agreement which the Company is
not entitled to receive under the provisions of this Section
2.10, the Company will hold any such amount so received in trust
for the holders of the Senior Debt and will forthwith turn over
such payment to any court of competent jurisdiction in the form
received by the Company (together with any necessary endorsement)
to be applied ratably to Senior Debt.
ARTICLE III.
PURPOSE AND POWERS OF THE COMPANY
SECTION 3.1. PURPOSE AND POWERS.
The purposes of the Company are (i) to issue Interests
and to receive payments on the existing EEX Capital Subordinated
Note and to use all of the proceeds from either thereof to redeem
the MIStS Securities, (ii) to amend, hold and receive payments on
the EEX Capital Subordinated Note, (iii) to pursue remedies under
the EEX Capital Subordinated Note, (iv) to hold the Guaranty
Agreement and, except as otherwise limited herein, to enter into,
make and perform all contracts and other undertakings, and to
take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of
the purposes of the Company as set forth herein. The Company may
not conduct any other business or operations except as
contemplated by the preceding sentence. The Company may not: (a)
incur, create, assume or suffer to exist any Indebtedness (other
than subordinated indebtedness owning to affiliates of up to $5.0
million in aggregate principal amount for both EEX Capital and
the Company, taken as a whole), (b) create, incur, assume or
permit to exist any lien or security interest on any of its
properties (now owned or hereafter acquired), (c) sell, lease,
abandon or otherwise dispose of any of its property, (d) sell or
otherwise discount the EEX Capital Subordinated Note, or (e)
excepted as contemplated by Sections 4.2 or 4.3, sell or issue
any other Interests (or create any new series of Interests).
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ALLOCATIONS
SECTION 4.1. AMOUNT AND FORM OF INITIAL CONTRIBUTION.
EEX LLC, as predecessor in interest to EEX Capital, has
heretofore contributed the amount of $4,640,000, in cash, and EEX
Capital (formerly known as Enserch Preferred) has heretofore
contributed the amount of $4,640, in cash, and no other property
has been contributed to the Company. EEX Capital holds 100% of
the Common Securities in the Company.
The Trustee has heretofore contributed the amount of
$150,000,000, in cash. Immediately prior to the execution of this
Agreement, the Trustee held 100% of the MIStS Securities in the
Company. Upon the initial contribution of UBS and as of the
effectiveness of this Agreement, the Company redeemed 100% of the
MIStS Securities and, pursuant to Section 2.1 (c), the Trustee
resigned as a member of the Company.
The initial contribution of UBS to the Company shall be
cash in an amount not less than $75,000,000. Upon the initial
contribution of UBS and as of the effectiveness of this
Agreement, UBS shall hold 100% of the Preferred Interests.
SECTION 4.2. ADDITIONAL CONTRIBUTIONS BY THE COMMON MEMBERS.
The Common Member shall make such additional
contributions to the Company, either in connection with the
purchase of Common Securities or otherwise, so as to cause its
Interests to be entitled to at least 3% of all interests in the
capital, income, gain, loss, deduction and credit of the Company
at all times.
The Common Member may make additional contributions to
the Company from time to time in its sole discretion. In
addition, all expenses and losses incurred by the Company shall,
as more fully set forth in Article XII, be paid by the Common
Member when due and such payments shall constitute additional
contributions of the Common Member.
SECTION 4.3. ADDITIONAL CONTRIBUTIONS BY PREFERRED MEMBERS.
The Preferred Members shall make the initial
contribution to the Company in accordance with the applicable
terms of Section 4.1 and Section 7.1 of this Agreement. Each
Preferred Member, in its capacity as a Member of the Company,
shall not be required to make any additional contributions to the
Company and shall have no additional liability solely by reason
of being a Preferred Member in excess of its share of the
Company's assets and undistributed profits.
SECTION 4.4. INVESTMENT OF CAPITAL CONTRIBUTIONS.
The Company shall invest all of the proceeds from the
issuance of the Preferred Interests and all sums received in
payment of the existing EEX Capital Subordinated Note to redeem
the MIStS Securities and amend the EEX Capital Subordinated
Notes.
SECTION 4.5. CAPITAL ACCOUNTS.
An individual capital account (each a "Capital Account"
and collectively, the "Capital Accounts") shall be established
and maintained on the books of the Company for each Member in
compliance with Treasury Regulation Sections 1.704-1(b)(2)(iv)
and 1.704-2, as amended. Subject to the preceding sentence, each
Capital Account will be increased by the amount of the capital
contributions made by, and the Net Income allocated to, such
Member, and reduced by the amount of Distributions made by the
Company, and Net Losses allocated to such Member. In addition, a
Member's Capital Account shall be increased or decreased, as the
case may be, for any items specially allocated to such Member
under Section 4.7 of this Agreement, and the Common Member's
Capital Account shall be increased to the extent that the Common
Member pays any costs or expenses of the Company directly out of
the Common Member's own funds.
SECTION 4.6. GENERAL ALLOCATIONS.
After giving effect to the special allocations set
forth in Section 4.7 of this Agreement:
(a) Net Income. The Company's Net Income for each Dividend
Period shall be allocated, as of the close of business for such
Dividend Period, as follows:
(i) First, pro rata, to the Adjusted Capital Account
of each Preferred Member, in accordance with the percentage equal
to the number of shares of Preferred Interests held by such
Preferred Member over the total number of issued and outstanding
shares of Preferred Interests, an amount equal to the excess of
(x) the amount of all Dividends (including Additional Dividends)
accrued on the Preferred Interests from the issuance of the
Preferred Interests through the close of business for such
Dividend Period, over (y) the amount of Net Income allocated to
the Preferred Members in respect of the Preferred Interests
pursuant to this Section 4.6(a)(i) (and amounts, if any,
allocated pursuant to Section 4.7(c) of this Agreement) for all
prior Dividend Periods.
(ii) Second, pro rata, to the Adjusted Capital Account
of each Preferred Member, in accordance with the percentage equal
to the number of shares of Preferred Interests held by such
Preferred Member over the total number of issued and outstanding
shares of Preferred Interests, an amount equal to the excess of
(x) the amount of all Net Losses allocated to the Preferred
Members from the date of issuance of the Preferred Interests
through the close of business for such Dividend Period pursuant
to Section 4.6(b)(ii) over (y) the amount of Net Income allocated
to the Preferred Members in respect of the Preferred Interests
pursuant to this Section 4.6(a)(ii) for all prior Dividend
Periods.
(iii) Any remaining Net Income shall be allocated, pro
rata, to the Adjusted Capital Account of each Common Member.
(b) Net Loss. The Company's Net Loss for each Dividend
Period shall be allocated, as of the close of business for such
Dividend Period, as follows:
(i) First, pro rata, to the Adjusted Capital Account
of each Common Member until the aggregate balance of their
Adjusted Capital Accounts is reduced to zero.
(ii) Second, pro rata, to the Adjusted Capital Account
of each Preferred Member until the aggregate balance of their
Adjusted Capital Accounts is reduced to zero.
(iii) Any remaining Net Loss shall be allocated, pro
rata, to the Common Member and borne by the Common Member solely.
(c) Liquidation Dividends. EEX Capital may make such
changes to the allocations in Sections 4.6(a) and 4.6(b) as it
deems reasonably necessary so that, immediately prior to the
Company's liquidation, the positive balances in the Capital
Account of each Preferred Member shall, to the maximum extent
possible, equal its Liquidation Dividend.
SECTION 4.7. SPECIAL ALLOCATIONS.
(a) Determinations of Net Income/Net Loss. For purposes of
determining the Net Income, Net Loss or any other items allocable
to any Dividend Period, Net Income, Net Loss and any such other
items shall be determined on a daily, monthly, quarterly or other
basis, as determined by EEX Capital using any method that is
permissible under Section 706 of the Code and the Treasury
Regulations promulgated thereunder. Unless otherwise specified,
such Net Income, Net Loss or other items shall be determined for
each Dividend Period.
(b) Expenses Allocated to Common Members. All items of
loss and deduction in respect of expenses incurred by or on
behalf of the Company and paid, pro rata, by the Common Members
shall be allocated entirely to the Common Members.
(c) Adjustments for Treasury Regulations. The Members
intend that the allocations under Section 4.6 of this Agreement
and this Section 4.7 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation and to the
extent applicable, the minimum gain chargeback, chargeback of
partner nonrecourse debt minimum gain, qualified income offset
and partner nonrecourse debt provisions of such Treasury
Regulations), and EEX Capital shall make such allocations under
this Section 4.7, or such changes in the allocations under
Section 4.6 of this Agreement, as it believes are reasonably
necessary to meet all applicable requirements of such Treasury
Regulations.
SECTION 4.8. ALLOCATIONS FOR INCOME TAX PURPOSES.
The income, gains, losses, deductions and credits of
the Company shall be allocated in the same manner as the items
entering into the computation of Net Income and Net Loss are
allocated under Section 4.6 of this Agreement or as such items
are otherwise allocated under Section 4.7 of this Agreement;
provided, however, that solely for federal, state and local
income and franchise tax purposes, but not for book or Adjusted
Capital Account purposes, income, gain, loss and deductions with
respect to any property properly carried on the Company's books
at a value other than the tax basis of such property shall be
allocated in a manner determined in EEX Capital's discretion, so
as to take into account (consistently with the principles of
Section 704(c) of the Code) the difference between such
property's book value and its tax basis.
SECTION 4.9. INTERESTS AS PERSONAL PROPERTY.
Each Member hereby agrees that its Interest shall for
all purposes be personal property. A Member has no interest in
specific Company property.
SECTION 4.10. COLLECTION ACCOUNT.
(a) Establishment of Account. EEX Capital hereby
establishes the Collection Account. The Collection Account shall
be a general account of the Company, maintained with the Fiscal
Agent, and designated the "MIStS Issuer Collection Account."
(b) Deposits and Applications. All monies, including, all
interest on past due amounts, paid by EEX Capital on account of
the EEX Capital Subordinated Note (or by EEX on account of the
Guaranty Agreement) shall be deposited into the Collection
Account as and when received by the Company. EEX Capital shall,
on each Dividend Payment Date and on each other date on which a
redemption has been elected, apply all amounts in the Collection
Account to the payment of all amounts then due and payable under
Section 9.1(c) and (d) of this Agreement, or if a date on which a
redemption is to occur, apply all amounts in the Collection
Account to the payment of all amounts due and payable under
Section 9.4 of this Agreement.
ARTICLE V.
MEMBERS
SECTION 5.1. POWERS OF MEMBERS.
The Members shall have the power to exercise any and
all rights or powers granted to the Members pursuant to the
express terms of this Agreement.
SECTION 5.2. RESIGNATION; EXPULSION.
No Common Member shall have any right to resign from
the Company; provided however that a Common Member shall have the
power to withdraw or resign at any time in violation of this
Agreement. If a Common Member exercises such power in violation
of this Agreement, (a) such Common Member shall be liable to the
Company and the Preferred Members for all monetary damages
suffered by them as a result of such resignation; and (b) such
Common Member shall not have any rights under Section 18-604 of
the Delaware Act. Any Preferred Member may resign from the
Company prior to the liquidation, dissolution and winding up of
the Company only upon the assignment of its Interest (including
any redemption, repurchase, exchange or other acquisition by the
Company of such Interest) in accordance with the provisions of
this Agreement. A resigning Member shall not be entitled to
receive any Distribution and shall not be entitled to receive
fair value of its Interest except as otherwise expressly provided
in this Agreement. No Member may be expelled as a Member.
ARTICLE VI.
MANAGEMENT
SECTION 6.1. MANAGEMENT OF THE COMPANY.
Except as otherwise provided herein, the business and
affairs of the Company shall be managed, and all actions required
under this Agreement shall be determined, solely and exclusively
by EEX Capital, which shall have all rights and powers on behalf
and in the name of the Company to perform all acts necessary and
desirable to the objects and purposes of the Company. Without
limiting the generality of the foregoing, EEX Capital, in its
capacity as the Common Member and not by virtue of any delegation
of management power from any Member, shall have, subject to the
limitations set forth in Section 3.1 and Section 8.1 of this
Agreement, the power on behalf of the Company to:
(a) authorize and engage in transactions and dealings on
behalf of the Company, including transactions and dealings with
any Preferred Member or any Affiliate of any Member;
(b) pay all expenses incurred in forming the Company;
(c) redeem the MIStS Securities and/or merge the Company
with and into EEX Capital;
(d) issue the Preferred Interests;
(e) amend the EEX Capital Subordinated Note;
(f) amend the Guaranty Agreement;
(g) determine and make Distributions, in cash or otherwise,
on Interests, in accordance with the provisions of this Agreement
and the Delaware Act;
(h) establish a record date with respect to all actions to
be taken hereunder that require a record date to be established,
including with respect to allocations, Dividends and voting
rights;
(i) incur and pay all expenses and obligations incident to
the operation and management of the Company;
(j) open accounts and deposit, maintain and withdraw funds
in the name of the Company in accordance with the terms and
conditions of this Agreement;
(k) effect a dissolution of the Company and act as
liquidating trustee or the Person winding up the Company's
affairs, all in accordance with the provisions of this Agreement
and the Delaware Act;
(l) bring and defend on behalf of the Company actions and
proceedings at law or equity before any court or governmental,
administrative or other regulatory agency, body or commission or
otherwise;
(m) prepare and cause to be prepared reports, statements
and other relevant information for distribution to Members as may
be required or determined to be necessary or desirable by EEX
Capital from time to time;
(n) prepare and file all necessary returns and statements
and pay all taxes, assessments and other impositions applicable
to the assets of the Company; and
(o) execute all other documents or instruments, perform all
duties and powers and do all things for and on behalf of the
Company in all matters necessary or desirable or incidental to
the foregoing.
EEX Capital is authorized and directed to conduct its
affairs and to operate the Company in such a way that the Company
will not be deemed to be an "investment company" required to be
registered under the Investment Company Act of 1940, as amended,
or taxed as a corporation for federal income tax purposes and so
that EEX Capital Subordinated Note will be treated as
Indebtedness of EEX Capital (or EEX on a consolidated basis). In
this connection, EEX Capital is authorized to take any action not
inconsistent with applicable law and this Agreement that EEX
Capital determines in its discretion to be necessary or desirable
for such purposes.
SECTION 6.2. RELIANCE BY THIRD PARTIES.
Persons dealing with the Company are entitled to rely
conclusively upon the power and authority of EEX Capital herein
set forth.
SECTION 6.3. NO MANAGEMENT BY PREFERRED MEMBERS.
Except as otherwise expressly provided herein, no
Preferred Member shall take any part in the day-to-day
management, operation or control of the business and affairs of
the Company. Each Preferred Member, in its capacity as Preferred
Member of the Company, shall not be an agent of the Company or
have any right, power or authority to transact any business in
the name of the Company or to act for or on behalf of or to bind
the Company.
ARTICLE VII.
COMMON SECURITIES AND PREFERRED INTERESTS
SECTION 7.1. COMMON SECURITIES AND PREFERRED INTERESTS.
(a) Classes. The Interests in the Company shall be divided
into two classes, Common Securities and Preferred Interests.
(b) Preferred Interests; Designation. A total of 75,000
Cumulative Perpetual Increasing Dividend Preferred Interests with
a liquidation preference of $1,000.00, and par value of $1.00,
per security are hereby authorized and designated as "Cumulative
Perpetual Increasing Dividend Preferred Interests" (collectively,
the "Preferred Interests"). The Preferred Interests shall not
be subject to the operation of a retirement or sinking fund.
(c) Priority of Preferred Interests. The Preferred
Interests shall rank senior to the Common Securities in respect
of the right to receive Dividends and the right to receive
Liquidation Dividends. All Preferred Interests redeemed,
purchased or otherwise acquired by the Company shall be canceled
and thereupon restored to the status of authorized but unissued
Preferred Interests.
(d) Subscription; Preemptive Rights. No Member shall be
entitled as a matter of right to subscribe for or purchase, or
have any preemptive right with respect to, any part of any new or
additional issue of Common Securities or Preferred Interests of
any series whatsoever, or of securities convertible into any
Common Securities or Preferred Interests of any series
whatsoever, whether now or hereafter authorized and whether
issued for cash or other consideration or by way of dividend.
(e) Commons Securities Uncertificated. Except as noted in
Section 2.7, Common Securities shall not be evidenced by any
certificate or other written instrument, but shall only be
evidenced by this Agreement. Common Securities shall be
non-assignable and non-transferable, and may only be issued to
and held by EEX Capital.
(f) Preferred Interests Certificated. Preferred Interests
and the notation thereon relating to the certificate of
authentication, shall be evidenced by one or more Preferred
Certificates, but in such denominations as may be requested by
the Preferred Members and with such insertions, omissions,
substitutions and variations as may be permitted by or consistent
with this Agreement and with such notations, legends and
endorsements as may be required by the Securities Act or any
governmental authority. The provisions of Exhibit A are part of
this Agreement. An authorized officer of EEX Capital, in its
capacity as managing member of the Company shall sign each
Preferred Certificate as authentication on behalf of the Company.
No seal or stamp shall be required in connection with the
authentication, but no Preferred Interest shall be valid until
its has been so executed.
SECTION 7.2. PERSONS DEEMED PREFERRED MEMBERS.
The Company may treat the Person in whose name any
Preferred Certificate shall be registered on the books and
records of the Company as a Preferred Member and the sole holder
of such Preferred Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or
other claims to or interest in any Preferred Certificate on the
part of any other Person, whether or not the Company shall have
actual or other notice thereof.
ARTICLE VIII.
VOTING AND MEETINGS
SECTION 8.1. VOTING RIGHTS OF PREFERRED MEMBERS.
(a) No Rights Generally. Except as shall be otherwise
provided herein and except as otherwise required by the Delaware
Act, the Preferred Members shall have, with respect to the
Preferred Interests, no right or power to vote on any question or
matter or in any proceeding or to be represented at, or to
receive notice of, any meeting of Members.
(b) Rights of Preferred Members. If (i) the Company fails
to declare or pay Dividends in full (including any arrearages and
Additional Dividends) on the Preferred Interests for any Dividend
Period and such failure is not cured within 30 days, (ii) the
Company fails to consummate a Change of Control offer within 60
days of the occurrence of a Change of Control (or 90 days, if a
consent is required after a Change of Control), (iii) the Company
breaches the covenant described in Section 5.6 of the
Subscription Agreement, (iv) a Prohibited Issuance occurs, (v)
EEX breaches the "Debt to Capital Ratio" covenant described in
Section 9.01 of the EEX Credit Agreement or (vi) an EEX Capital
Voting Rights Trigger Event occurs (each of (i) , (ii) , (iii),
(iv), (v) and (vi), a "Voting Rights Trigger Event") then the
Preferred Members will be entitled to assume managing control of
the Company from the Common Member. For purposes of determining
whether the Company has failed to pay Dividends in full for
Dividend Periods, Dividends shall be deemed to remain in arrears,
notwithstanding any partial payments in respect thereof, until
all accumulated and unpaid Dividends (including any Additional
Dividends) have been or contemporaneously are declared and paid
with respect to all Dividend Periods terminating on or prior to
the date of payment of such full cumulative Dividends.
In furtherance of the foregoing, and without limiting
the powers of the Preferred Members and for the avoidance of any
doubt concerning the powers of the Preferred Members, the
Preferred Members, or any Person acting as agent on behalf of the
Preferred Members, may institute a proceeding, including, without
limitation, any suit in equity, an action at law or other
judicial or administrative proceeding, to enforce the Company's
creditor rights directly against either EEX or EEX Capital to the
same extent as the Company and on behalf of the Company; and the
Preferred Members, or their agent, may prosecute such proceeding
to judgment or final decree and enforce the same against EEX or
EEX Capital and collect, out of the property, wherever situated,
of either EEX or EEX Capital, the monies adjudged or decreed to
be payable in the manner provided by law. EEX Capital agrees to
execute and deliver such documents as may be necessary or
appropriate for the Preferred Members, or their agent, to
exercise such powers.
EEX Capital shall not at any time (w) direct the time,
method and place of conducting any proceeding for any remedy
available to the Preferred Members under the EEX Capital
Subordinated Note or the Guaranty Agreement, (x) waive compliance
with, or any past default under, the EEX Capital Subordinated
Note or the Guaranty Agreement, (y) exercise any right to rescind
or annul a declaration that the principal of the EEX Capital
Subordinated Note, or any obligation under the Guaranty
Agreement, shall be due and payable, and (z) consent to any
amendment or modification or forgiveness of debt of the EEX
Capital Subordinated Note or the Guaranty Agreement without, in
each case, obtaining the prior approval of the Preferred Members
holding in excess of 50% of the issued and outstanding shares of
the Preferred Interests. EEX Capital shall not revoke any action
previously authorized or approved by a vote or the consent of the
Preferred Members without the approval of the Preferred Members.
EEX Capital shall notify the Preferred Members of any notice of
default with respect to either the EEX Capital Subordinated Note
or the Guaranty Agreement.
(c) Other Rights. If EEX Capital proposes to effect:
(i) any action that would materially adversely affect
the powers, preferences or special rights of the Preferred
Members or Preferred Interests, whether by way of amendment of
this Agreement or otherwise (including, without limitation, the
authorization or issuance of any Interests in the Company),
(ii) the liquidation, dissolution or winding up of the
Company,
(iii) the commencement of any voluntary bankruptcy,
insolvency, reorganization or other similar proceeding involving
the Company,
(iv) extend the time of payment of any Dividend,
(v) reduce the Dividend Rate or Liquidation Preference
of the Preferred Interests, or
(vi) alter the Rate Fixing Notice or Merger Notice or
redemption price of the Preferred Interests,
then the Preferred Members will be entitled to vote on such
resolution or action of EEX Capital (but not any other resolution
or action) and such amendment or action shall not be effective
except with the approval of the majority of the Liquidation
Preference with respect to the issued and outstanding shares of
the Preferred Interests. Notwithstanding any provision to the
contrary herein, this Section 8.1 may only be amended with the
consent of the majority of the Liquidation Preference with
respect to the issued and outstanding shares of the Preferred
Interests of the Preferred Members.
SECTION 8.2. VOTING RIGHTS OF COMMON MEMBERS.
Except as otherwise provided herein and except as
otherwise required by the Delaware Act, all voting rights of the
Company shall be vested exclusively in the Common Members. The
Common Members shall have the right to vote separately as a class
on any matter on which the Common Members have the right to vote
regardless of the voting rights of any other Member.
SECTION 8.3. MEETINGS OF THE MEMBERS.
(a) Meetings of the Members of any class or series or of
all classes of Interests may be called at any time by EEX
Capital. Except to the extent otherwise provided, the following
provisions shall apply to meetings of Members.
(b) Members may vote in person or by proxy at such meeting.
Whenever a vote, consent or approval of Members is permitted or
required under this Agreement, such vote, consent or approval may
be given at a meeting of Members or by written consent.
(c) Each Member may authorize any Person to act for it by
proxy on all matters in which a Member is entitled to vote,
including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the
Member or its attorney-in-fact and shall be revocable at the
pleasure of the Member executing it at any time before it is
voted.
(d) Each meeting of Members shall be conducted by EEX
Capital or by such other Person that EEX Capital may designate.
(e) Any required approval of the Preferred Members may be
given at a separate meeting convened for such purpose or at a
meeting of Members of the Company or pursuant to written
consents. EEX Capital will cause a notice of any meeting at
which the Preferred Members are entitled to vote, or of any
matter upon which action by written consent of the Preferred
Members is to be taken, to be mailed to the Preferred Members 30
days prior to such meeting. Each such notice will include a
statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any
matter on which the Preferred Members are entitled to vote or of
such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
(f) Subject to Section 8.3(e), EEX Capital, in its sole
discretion, shall establish all other provisions relating to
meetings of Members, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by
any Members, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter
with respect to the exercise of any such right to vote.
ARTICLE IX.
DIVIDENDS AND REDEMPTION
SECTION 9.1. DIVIDENDS.
(a) Generally. Dividends on the Preferred Interests shall
be declared by EEX Capital for each Dividend Period on the Record
Date for such Dividend Period in accordance with Sections 9.1(c)
and (d), to the extent that EEX Capital reasonably anticipates
that at the time of payment the Company will have, and must be
paid by the Company to the extent that at the time of proposed
payment it has, in the Collection Account (i) funds legally
available for the payment of such Dividends and (ii) cash on hand
sufficient to make such payments. The Common Members may receive
Dividends under this Agreement as provided in Section 9.3 and in
accordance with the provisions of the Delaware Act out of funds
of the Company legally available therefor.
(b) Limitations on Preferred Dividends. A Preferred Member
shall not be entitled to receive any Dividend, irrespective of
whether such Dividend has been declared by EEX Capital, prior to
the applicable Dividend Payment Date and until such time as the
Company has received the interest payment on the EEX Capital
Subordinated Note for the interest payment date corresponding to
such Divided Payment Date and such monies are available for
Distribution to the Preferred Members pursuant to the terms of
this Agreement and the Delaware Act; and notwithstanding any
provision of Section 18-606 of the Delaware Act to the contrary,
until such time, no Preferred Member shall have the status of a
creditor of the Company or the remedies available to a creditor
of the Company.
(c) Preferred Dividends. Subject to Section 9.1(d), the
Preferred Members shall be entitled to receive cumulative cash
Dividends for each Dividend Period equal to the sum of (a) Union
Bank of Switzerland's three-month London interbank offered rate,
reset quarterly, plus (b) a spread equal to (i) 300 basis points
for the period from the Closing Date to but excluding December
31, 1997, (ii) 400 basis points for the period from December 31,
1997, to but excluding March 31, 1998, (iii) 500 basis points for
the period from March 31, 1998, to but excluding June 30, 1998,
(iv) 600 basis points for the period from June 30, 1998, to but
excluding September 30, 1998, and (v) 700 basis points at all
times from and after September 30, 1998, provided, however, that
upon the occurrence and during the continuance of an Event of
Default, the spread otherwise applicable under this clause (c)
shall increase by 100 basis points. Dividends shall be payable
quarterly in arrears on the last day of each Dividend Period of
each year, commencing on the initial Dividend Payment Date of
December 31, 1997 to the Holder of record as of the tenth (10th)
Business Day preceding (each, a "Record Date"). Dividends shall
accrue and be cumulative whether or not they have been earned or
declared and whether or not there are funds of the Company
legally available for the payment of Dividends. Dividends on the
Preferred Interests must be declared for each Dividend Period and
be paid on each Dividend Payment Date to the extent that the
Company has, in the Collection Account, on such date, (x) funds
legally available for the payment of such Dividends and (y) cash
on hand sufficient to make such payments, it being understood
that to the extent that funds are not available to pay in full
all accumulated and unpaid Dividends, the Company may pay partial
Dividends to the extent of funds legally available therefor.
Dividends payable on the Preferred Interests will be computed on
the basis of a 360-day year of and actual days elapsed occurring
in the period with respect to which such Dividends are payable.
(d) At any time after September 30, 1998, UBS may elect to
deliver a written notice (a "Rate Fixing Notice") fixing the
dividend rate, terms and conditions on the Preferred Interests at
the rate, terms or conditions which UBS in good faith determines
in its sole discretion would be necessary to effect a sale of the
Preferred Interests at par, whereupon the dividend rate on all of
the Preferred Interests shall become a fixed rate per annum;
provided, however, that (i) such security shall be of a perpetual
nature and (ii) upon the occurrence and during the continuance of
an Event of Default, the dividend rate specified in the Rate
Fixing Notice shall increase by 100 basis points
(e) Additional Dividends. The Company shall also declare
and pay, from time to time, upon demand of any Preferred Member,
additional amounts (but without duplication of any amounts
included in the calculation of Dividends) as follows:
(i) all out-of-pocket costs and expenses reasonably
incurred by such Preferred Member in connection with the
preparation, negotiation, execution, delivery, performance and
administration of this Agreement and the other Transaction
Documents, including, but not limited to, the following: (A) fees
and expenses of such Preferred Member, including, without
limitation, reasonable attorneys' fees and expenses; (B) all
other amounts, including, without limitation, fees, indemnities,
expenses, compensation in respect of increased costs, capital
adequacy or breakage of any kind or description payable under the
Transaction Documents; (C) out-of-pocket costs and expenses
incurred by such Preferred Member, after the date of this
Agreement (including, without limitation, reasonable attorneys'
fees and expenses and other expenses and disbursements reasonably
incurred) associated with (x) negotiating and entering into, or
the giving or withholding of, any future amendments, supplements,
waivers or consents with respect to this Agreement; (y) any
termination of this Agreement; and (z) any Event of Default and
the enforcement of the rights or remedies of the Preferred
Members under this Agreement and the other Transaction Documents;
and
(ii) all other out-of-pocket amounts that such
Preferred Member pays under the Transaction Documents other than
interest, principal, and amounts described in the first sentence
of this Section 9.1(e) and clause (i) above.
All amounts due pursuant to this Section 9.1(e) shall be
"Additional Dividends."
SECTION 9.2. LIMITATIONS ON DISTRIBUTIONS.
Notwithstanding any provision to the contrary contained
in this Agreement, the Company shall not make a Distribution
(including a Dividend) to any Member on account of its Interest
if such Distribution would violate Section 18-607 of the Delaware
Act or other applicable law.
SECTION 9.3. COMMON DISTRIBUTIONS.
EEX Capital may, from time to time, declare and pay
Dividends with respect to the common Interests of each Common
Member to the extent such Common Member's Adjusted Capital
Account exceeds the sum of such Common Member's initial capital
contribution specified in Section 4.1 plus the amount of any
additional contributions made by such Common Member pursuant to
Section 4.2; and after all of the issued and outstanding
Preferred Interests have been redeemed in full at the Liquidation
Preference and all accrued Dividends (including Additional
Dividends) have been paid in full, the Company may redeem in full
all common Interests.
SECTION 9.4. REDEMPTION AND EXCHANGE.
(a) Optional Redemption. The Preferred Interests shall be
redeemable on any Dividend Payment Date at the option of the
Company, in whole or in part from time to time, subject to ten
(10) Business Day's prior written notice, (i) in whole or (ii)
ratably between the Preferred Stock and the Preferred Interests
in part (but not in increments of less than $25.0 million in the
aggregate for both types of Preferred Securities), in either case
at the Redemption Price for the shares being so redeemed. The
Company may not redeem the Preferred Interests in part unless all
accumulated and unpaid Dividends (whether or not earned or
declared), including any Additional Dividends, have been paid in
full on all Preferred Interests for all Dividend Periods
terminating on or prior to the date of redemption. EEX Capital
shall have the right to cause the Company to exercise such
redemption option.
(b) Other Redemption Events. At any time after the
occurrence of a Tax Event, the Company may, or at any time after
the occurrence of an Investment Company Event, the Company shall,
within 30 days following the occurrence of such Investment
Company Event, redeem, in whole but not in part, the Preferred
Interests at the Redemption Price for all issued and outstanding
shares. In addition, in the event the Asset Coverage Ratio, as
of any time, fails to be at least 1.0 to 1.0, the Company shall
redeem, at the Redemption Price, a sufficient number of shares of
the Preferred Interests to restore the Asset Coverage Ratio to at
least 1.0 to 1.0.
(c) Change of Control.
(i) Upon the occurrence of a Change of Control, each
Preferred Member shall have the right to require the Company to
repurchase all or any part of such Member's shares of Preferred
Interests (a "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate Liquidation Preference thereof
plus (i) accrued and unpaid dividends, if any, thereon to the
date of purchase and (ii) any Additional Costs (together, the
"Change of Control Payment").
(ii) The Change of Control Offer shall include all
instructions and materials to enable Members to tender their
shares of Preferred Interests.
(iii) The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
the shares of Preferred Interests as a result of a Change of
Control.
(iv) Within 30 days following any Change of Control,
the Company shall mail or deliver by facsimile transmission a
notice (the "Notice of Change Control") to each Holder stating:
(A) that the Change of Control Offer is being
made pursuant to this Section 9.4(c) and that all shares of
Preferred Interests tendered will be accepted for payment;
(B) the purchase price and the purchase date,
which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed (the "Change of Control
Payment Date");
(C) that any share of Preferred Interests not
tendered will continue to accrue dividends;
(D) that, unless the Company fails to pay the
Change of Control Payment, all shares of Preferred Interests
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue dividends after the Change of Control
Payment Date;
(E) that Members electing to have any shares of
Preferred Interests purchased pursuant to a Change of Control
Offer will be required to surrender the shares of Preferred
Interests, with the form entitled "Option of Holder to Elect
Purchase" which shall be included with the Notice of Change of
Control completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(F) that Members will be entitled to withdraw
their election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Change
of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
name of shares of Preferred Interests delivered for purchase, and
a statement that Member is withdrawing his election to have such
shares purchased; and
(G) the circumstances and relevant facts
regarding such Change of Control (including, but not limited to,
information with respect to pro forma historical financial
information after giving effect to such Change of Control and
information regarding the Person or Persons acquiring control).
(v) On the Change of Control Payment Date, the Company
shall, to the extent lawful: (i) accept for payment all shares
of Preferred Interests properly tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all shares
of Preferred Interests so tendered and (iii) deliver or cause to
be delivered to the Paying Agent shares of Preferred Interests so
accepted together with an Officers' Certificate stating the
aggregate Liquidation Preference of the shares of Preferred
Interests or portions thereof being purchased by the Company.
The Paying Agent shall promptly mail to each holder of Preferred
Interests so tendered the Change of Control Payment for such
Preferred Interests and the Paying Agent will promptly
authenticate and mail (or cause to be transferred by book-entry)
to each Member a new certificate representing the shares of
Preferred Interests equal in Liquidation Preference amount to any
unpurchased portion of the shares of Preferred Interests
surrendered, if any. The Company shall announce the results of
the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
(vi) Prior to complying with the provisions of this
Section 9.4(c), but in any event within 90 days following a
Change of Control, the Company shall either repay all outstanding
Indebtedness or obtain the requisite consents, if any, under all
agreements governing outstanding Indebtedness, in each case to
the extent required to permit the repurchase of Preferred
Interests required by this Section 9.4(c).
(vii) The Company shall not be required to make a Change
of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this
Section 9.4(c) applicable to a Change of Control Offer made by
the Company and purchases all shares of Preferred Interests
validly tendered and not withdrawn under such Change of Control
Offer.
(d) Redemption Procedures.
(i) Notice of any redemption of the Preferred
Interests (a "Notice of Redemption") shall be irrevocable and
shall be given by the Company by facsimile transmission to be
followed by U.S. mail not fewer than ten (10) Business Days nor
more than 30 calendar days prior to the date fixed for redemption
thereof to EEX Capital and the Preferred Members. For purposes
of the calculation of the date of redemption and the dates on
which notices are given pursuant to this Section 9.4(d)(i), a
Notice of Redemption shall be deemed to be given on the day such
notice is first transmitted by facsimile (with receipt confirmed
orally) with a copy mailed by first-class U.S. mail, postage
prepaid, to the Preferred Members. A Notice of Redemption shall
be transmitted and addressed to the Preferred Members at the
facsimile number and address appearing in the books and records
of the Company.
(ii) If the Company issues a Notice of Redemption,
then, by 12:00 noon, New York time, on the date fixed for
redemption of shares, EEX Capital will deposit into the
Collection Account an amount representing that portion of
principal on the EEX Capital Subordinated Note, which, together
with accrued and unpaid interest thereon, will be an amount
sufficient to pay the Redemption Price for the Preferred
Interests to be redeemed. The Company shall immediately and
irrevocably deposit such funds on the date fixed for redemption
into the Collection Account and such funds shall be paid to the
Preferred Members before 1:00 p.m. New York time on such date.
If a Notice of Redemption shall have been given and funds
irrevocably deposited as required, then immediately prior to the
close of business on the date of such deposit, all rights of the
Preferred Members with respect to the Preferred Interests so
called for redemption will cease except the right of the
Preferred Members to receive the Redemption Price. In the event
that any date fixed for redemption of the Preferred Interests is
not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a
Business Day (with any interest or other payment in respect of
any such delay), except that if such Business Day falls in the
next calendar month, such payment will be made on the immediately
preceding Business Day. In the event that payment of the
Redemption Price is improperly withheld or refused and not paid
either by the Company or by EEX Capital or EEX (pursuant to the
Guaranty Agreement), Dividends on the Preferred Interests called
for redemption (including any Additional Dividends) will continue
to accumulate at the then applicable rate, from the original
redemption date to the date that the Redemption Price is actually
paid and the Preferred Members may exercise all of their rights
under this Agreement. Any partial redemption under Section
9.4(b) shall be allocated pro rata among the Preferred Members in
accordance with the percentage equal to the number of shares of
Preferred Interests held by such Preferred Member over the total
number of issued and outstanding shares of Preferred Interests.
ARTICLE X.
BOOKS AND RECORDS
SECTION 10.01. BOOKS AND RECORDS; ACCOUNTING; ACCESS TO
RECORDS
EEX Capital shall keep or cause to be kept at the
address of EEX Capital (or at such other place as EEX Capital
shall determine) true and full books and records regarding the
status of the business and financial condition of the Company,
together with a certified copy of this Agreement and of the
Certificate of Formation. In addition to the other rights
specifically set forth in this Agreement, the Preferred Member
and/or its duly authorized representative is entitled to access
any and all documents relating to the business of the Company
during normal business hours and any and all such documents shall
be furnished to the Preferred Member or its duly authorized
representative promptly upon demand.
SECTION 10.2. FISCAL YEAR.
The fiscal year of the Company for federal income tax
and accounting purposes shall, except as otherwise required in
accordance with the Code, end on December 31 of each year.
ARTICLE XI.
TAX MATTERS
SECTION 11.1. COMPANY TAX RETURNS.
(a) EEX Capital shall cause to be prepared and timely filed
all tax returns required to be filed for the Company. EEX
Capital may, in its discretion, make or refrain from making any
federal, state or local income or other tax elections for the
Company that it deems necessary or advisable, including, without
limitation, any election under Section 754 of the Code or any
successor provision.
(b) EEX Capital is hereby designated as the Company's "Tax
Matters Partner" under Code Section 6231(a)(7) and shall have all
the powers and responsibilities of such position as provided in
the Code. EEX Capital is specifically directed and authorized to
take whatever steps EEX Capital, in its discretion, deems
necessary or desirable to perfect such designation, including
filing any forms or documents with the Internal Revenue Service
and taking such other action as may from time to time be required
under the regulations issued under the Code. Expenses incurred
by the Tax Matters Partner, in its capacity as such, will be
borne by EEX Capital.
SECTION 11.2. TAX REPORTS.
EEX Capital shall, as promptly as practicable and in
any event within 120 days after the end of each fiscal year,
cause to be prepared and mailed to the Common Members and the
Preferred Members, federal income tax form K-1 and any other
forms which are necessary or advisable.
SECTION 11.3. TAXATION AS PARTNERSHIP.
The Members recognize that the Company will be treated
as a partnership for U.S. federal income tax purposes, and EEX
Capital shall operate the Company in such a manner as will
preserve its treatment as a partnership for U.S. federal income
tax purposes.
ARTICLE XII.
EXPENSES
SECTION 12.1. EXPENSES.
Except as otherwise provided in this Agreement, EEX
Capital shall be responsible for, and shall pay, all expenses and
obligations of the Company out of funds of EEX Capital, whether
such expenses or obligations are those of the Company or are
otherwise incurred by EEX Capital in connection with this
Agreement, including, without limitation:
(a) all costs and expenses related to the business of the
Company and all routine administrative expenses of the Company,
including the maintenance of books and records of the Company,
the preparation and dispatch to the Members of checks, financial
reports, tax returns and notices required pursuant to this
Agreement and the holding of any meetings of the Members;
(b) all expenses incurred in connection with any litigation
involving the Company (including the cost of any investigation
and preparation) and the amount of any judgment or settlement
paid in connection therewith (other than expenses incurred by EEX
Capital in connection with any litigation brought by or on behalf
of any Member against EEX Capital);
(c) all expenses for indemnity or contribution payable by
the Company to any Person;
(d) all expenses incurred in connection with the collection
of amounts due to the Company from any Person;
(e) all expenses incurred in connection with the
preparation of amendments to this Agreement; and
(f) all expenses incurred in connection with the
liquidation, dissolution or winding-up of the Company.
ARTICLE XIII.
LIABILITY, EXCULPATION AND INDEMNIFICATION
SECTION 13.1. LIABILITY OF COMMON MEMBERS.
Each Common Member, by acquiring its Interest and being
admitted to the Company as a Common Member, shall be liable to
the creditors of the Company (other than to any Preferred Member,
in its capacity as a Member) (hereinafter referred to
individually as a "Third-Party Creditor," and collectively as the
"Third-Party Creditors") to the same extent that a general
partner of a limited partnership formed under the LP Act is
liable under Section 17-403(b) of the LP Act to creditors of the
limited partnership (other than the other partners in their
capacity as partners), as if the Company were a limited
partnership formed under the LP Act and each Common Member was
general partner of the limited partnership. In furtherance but
not in limitation of the generality of the foregoing, each Common
Member is liable for any and all debts, obligations and other
liabilities of the Company, whether arising under contract or by
tort, statute, operation of law or otherwise, all of which shall
be enforceable directly and absolutely against each Common Member
by each Third-Party Creditor.
SECTION 13.2. LIABILITY OF PREFERRED MEMBERS.
(a) Except as otherwise provided by the Delaware Act, (i)
the debts, obligations and liabilities of the Company, whether
arising by contract, tort, statute, operation of law or
otherwise, shall be solely the debts, obligations and liabilities
of the Company and, to the extent set forth in Section 13.1 of
this Agreement, the Common Members and (ii) no Indemnified Party
shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being an Indemnified
Party or a Preferred Member of the Company.
(b) Each Preferred Member, in its capacity as such, shall
have no liability in excess of (i) the amount of its capital
contributions, (ii) its share of any assets and undistributed
profits of the Company, (iii) any amounts required to be paid by
the Preferred Members for the Preferred Interests held by it and
(iv) the amount of any Distributions wrongfully distributed to
it.
SECTION 13.3. EXCULPATION.
(a) No Indemnified Party shall be liable to the Company or
any other Indemnified Party for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by
such Indemnified Party in good faith on behalf of the Company and
in a manner reasonably believed to be within the scope of
authority conferred on such Indemnified Party by this Agreement,
except that an Indemnified Party shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified
Party's gross negligence, bad faith, recklessness or willful
misconduct.
(b) An Indemnified Party shall be fully protected in
relying in good faith upon the records of the Company and upon
such information, opinions, reports or statements presented to
the Company by any Person as to matters the Indemnified Party
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Company, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses or any other facts pertinent
to the existence and amount from which distributions to Members
might properly be paid.
SECTION 13.4. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified
Party has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to any other Indemnified
Party, an Indemnified Party acting under this Agreement shall not
be liable to the Company or to any other Indemnified Party for
its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict
the duties and liabilities of an Indemnified Party otherwise
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified
Party.
(b) Unless otherwise expressly provided herein, (i)
whenever a conflict of interest exists or arises between
Indemnified Parties, or (ii) whenever this Agreement or any other
agreement contemplated herein provides that an Indemnified Party
shall act in a manner that is, or provides terms that are, fair
and reasonable to the Company or any Member, the Indemnified
Party shall resolve such conflict of interest taking such action
or providing such terms, considering in each case the relative
interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith
by the Indemnified Party, the resolution, action or term so made,
taken or provided by the Indemnified Party shall not constitute a
breach of this Agreement or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Party at
law or in equity or otherwise.
(c) Whenever in this Agreement an Indemnified Party is
permitted or required to make a decision (i) in its "discretion"
or under a grant of similar authority or latitude, the
Indemnified Party shall be entitled to consider only such
interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Company or any other
Party, or (ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
SECTION 13.5. INDEMNIFICATION.
To the fullest extent permitted by applicable law, an
Indemnified Party shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such
Indemnified Party by reason of any act or omission performed or
omitted by such Indemnified Party in good faith on behalf of the
Company and in a manner reasonably believed to be within the
scope of authority conferred on such Indemnified Party by this
Agreement except that no Indemnified Person shall be entitled to
be indemnified in respect of any loss damage or claim incurred by
such Indemnified Person by reason of gross negligence, bad faith,
recklessness or willful misconduct with respect to such acts or
omissions.
SECTION 13.6. EXPENSES.
To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Party
in defending any claim, demand action, suit or proceeding shall,
from time to time, be advanced by EEX Capital (which shall be
deemed to be a capital contribution) prior to the final
disposition of such claim, demand, action, suit or proceeding
upon receipt by the Company (or EEX Capital) of an undertaking by
or on behalf of the Indemnified Party to repay such amount if it
shall be determined that the Indemnified Party is not entitled to
be indemnified as authorized in Section 13.5 hereof.
SECTION 13.7. OUTSIDE BUSINESS.
Any Member or its Affiliate may engage in or possess an
interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the
business of the Company, and the Company and the Members shall
have no rights by virtue of this Agreement in and to such
independent ventures or the income or profits derived therefrom,
and the pursuit of any such venture, even if competitive with the
business of the Company, shall not be deemed wrongful or
improper. No Member or its Affiliate shall be obligated to
present any particular investment opportunity to the Company even
if such opportunity is of character that, if presented to the
Company, could be taken by the Company, and any Member or its
Affiliate shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to
others any such particular investment opportunity.
ARTICLE XIV.
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 14.1. DISSOLUTION.
The Company shall be dissolved upon the first to occur
of the following: (i) the bankruptcy of the Company, (ii) the
written consent of all of the Members, (iii) any time there are
no Members, and (iv) the entry of a decree of judicial
dissolution under Section 18-802 of the Delaware Act.
With the exception of the events set forth in this
Section 14.1, the Company shall not be dissolved by any other
event or vote set forth in Section 18-801 of the Delaware Act.
SECTION 14.2. NOTICE OF DISSOLUTION.
Upon the dissolution of the Company, EEX Capital shall
promptly notify the Members of such dissolution.
SECTION 14.3. LIQUIDATION.
Upon dissolution of the Company, EEX Capital, as
liquidating trustee, shall immediately commence to wind-up the
Company's affairs; provided, however, that a reasonable time
shall be allowed for the orderly liquidation of the assets of the
Company and the satisfaction of liabilities to creditors so as to
enable the Members to minimize the normal losses attendant upon a
liquidation. The proceeds of liquidation shall be distributed,
as realized, in the manner provided in Section 18-804 of the
Delaware Act, subject to Section 14.4 of this Agreement.
SECTION 14.4. CERTAIN RESTRICTIONS ON LIQUIDATION PAYMENTS.
In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the
Preferred Members will be entitled to receive out of the assets
of the Company legally available for Distribution to Members,
after satisfaction of liabilities to creditors, including
contingent, conditional or unmatured claims or obligations, as
required by the Delaware Act but before any Distribution of
assets is made to any Common Member, for each and every Preferred
Interests then issued and outstanding, an amount equal to the
Liquidation Preference, plus all accumulated and unpaid Dividends
(whether or not earned or declared), including any Additional
Dividends, to the date of payment.
SECTION 14.5. TERMINATION.
Upon dissolution and completion of the winding-up
process, the Company shall terminate when all of the assets of
the Company have been distributed in the manner provided for in
this Article XIV, and the Certificate of Formation shall have
been canceled in the manner required by the Delaware Act.
ARTICLE XV.
MISCELLANEOUS
SECTION 15.1. AMENDMENTS.
Except as otherwise provided in this Agreement, this
Agreement may be amended by, and only by, a written instrument
executed by all of the Common Members and a majority of the
Preferred Members.
SECTION 15.2. SUCCESSORS; COUNTERPARTS.
This Agreement (a) shall be binding as to the
executors, administrators, estates, heirs and legal successors,
or nominees or representatives, of the Members and (b) may be
executed in several counterparts with the same effect as if the
parties executing the several counterparts had all executed one
counterpart. No Person other than the Members and their
respective legal successors or assigns, or their nominees or
representatives, shall obtain any rights by virtue of this
Agreement.
SECTION 15.3. GOVERNING LAW; SEVERABILITY.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof. In
particular, this Agreement shall be construed to the maximum
extent possible to comply with all of the terms and conditions of
the Delaware Act. If, nevertheless, it shall be determined by a
court of competent jurisdiction that any provisions or wording of
this Agreement shall be invalid or unenforceable under the
Delaware Act or other applicable law, such invalidity or
unenforceability shall not invalidate the entire Agreement. In
that case, this Agreement shall be construed so as to limit any
term or provision so as to make it enforceable or valid within
the requirements of applicable law, and, in the event such term
or provisions cannot be so limited, this Agreement shall be
construed to omit such invalid or unenforceable provisions. If
it shall be determined by a court of competent jurisdiction that
any provision relating to the Distributions and allocations of
the Company or to any fee payable by the Company is invalid or
unenforceable, this Agreement shall be construed or interpreted
so as (a) to make it enforceable or valid and (b) to make the
Distributions and allocations as closely equivalent to those set
forth in this Agreement as is permissible under applicable law.
SECTION 15.4. FILINGS.
Following the execution and delivery of this Agreement,
EEX Capital shall promptly prepare any documents required to be
filed and recorded under the Delaware Act, and EEX Capital shall
promptly cause each such document to be filed and recorded in
accordance with the Delaware Act and, to the extent required by
local law, to be filed and recorded or notice thereof to be
published in the appropriate place in each jurisdiction in which
the Company may hereafter establish a place of business. EEX
Capital shall also promptly cause to be filed, recorded and
published such statements or other instruments required by any
provision of any applicable law of the United States or any state
or other jurisdiction which governs the conduct of its business
from time to time.
SECTION 15.5. POWER OF ATTORNEY.
Each Preferred Member does hereby constitute and
appoint EEX Capital as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute,
sign, deliver and file (a) any amendment of the Certificate of
Formation required because of an amendment to this Agreement or
in order to effectuate any change in the membership of the
Company, and (b) all such other instruments, documents and
certificates which may from time to time be required by the laws
of the United States of America, the State of Delaware or any
other jurisdiction, or any political subdivision of agency
thereof, to effectuate, implement and continue the valid and
subsisting existence of the Company or to dissolve the Company or
for any other purpose expressly provided in this Agreement.
The power of attorney granted hereby is coupled with an
interest and shall (a) survive and not be affected by the
subsequent death, incapacity, disability, dissolution,
termination or bankruptcy of any Preferred Member and (b) extend
to such Preferred Member's legal successors and assigns.
SECTION 15.6. ADDITIONAL DOCUMENTS.
Each Preferred Member, upon the request, and at the
expense, of EEX Capital, agrees to perform all further acts and
execute, acknowledge and deliver any documents that may be
reasonably necessary to carry out the provisions of this
Agreement.
SECTION 15.7. NOTICES.
All notices provided for in this Agreement shall be in
writing, duly signed by the party giving such notice, and shall
be delivered, telecopied to be followed by a copy mailed by
registered or certified mail, as follows:
(i) If given to the Company, in care of EEX Capital at
the Company's mailing address set forth below:
EEX Capital L.L.C.
c/o Enserch Exploration, Inc.
2500 City West Boulevard
Suite 1400
Houston, Texas 77042
Facsimile No.: (281) 271-3416
Attention: Joseph T. Leary
(ii) If given to any Member, at the address set forth
on the registration books maintained by or on behalf of the
Company.
Each such notice, request or other communication shall be
effective (a) if given by telecopier, when transmitted to the
number specified in such registration books and the appropriate
confirmation is received, (b) if given by mail, 72 hours after
such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (c) if given by any
other means, when delivered at the address specified in such
registration books.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above stated.
EEX Capital Inc.
By:/s/ Joseph T. Leary
-------------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and Treasurer
MIStS Issuer LLC
By:/s/ Joseph T. Leary
--------------------------------
Name: Joseph T. Leary
Title:
EEX Capital Inc.,
As Common Member
By:/s/ Joseph T. Leary
--------------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and Treasurer
UBS Securities LLC
By:/s/ James A. Ajello
---------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey M. Donahue
---------------------------------
Name: Jeffrey M. Donahue
Title: Director
<PAGE>
<PAGE>
CONSENTING to this Agreement and as evidence of the
redemption and payment in full of the MIStS Securities.
MIStS Issuer Trust I
By: Wilmington Trust Company, not
in its individual capacity, but
solely as trustee of the MIStS
Issuer Trust I
By:________________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit A
[Form of]
Certificate Evidencing the MIStS Issuer L.L.C.
Cumulative Perpetual Increasing Dividend Preferred Interest
Liquidation Preference: $1,000.00 per share
_________ Shares Certificate No. _____
THIS CERTIFIES THAT _________________________________,
is the registered holder of ______ shares of fully paid and
non-assessable shares of the Cumulative Perpetual Increasing
Dividend Preferred Interest $1.00 par value per share,
transferable on the books of MIStS Issuer L.L.C. (the "Company")
by the holder hereof, in person or by a duly authorized attorney,
upon surrender of this Certificate properly endorsed and
accompanied by a properly executed application for transfer for
the Preferred Interests represented by this Certificate.
IN WITNESS WHEREOF, EEX Capital has caused this
Certificate to be signed by its duly authorized officers, this
______ day of _______________, 199__.
MIStS Issuer L.L.C.
By:________________________________
Name:
Title:
<PAGE>
<PAGE>
[Reverse of Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NEITHER BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES AND
REGULATIONS THEREUNDER AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS NOR BE OFFERED, SOLD OR OTHERWISE TRANSFERRED TO
ANY PERSON OR ENTITY PRINCIPALLY ENGAGED, DIRECTLY OR INDIRECTLY,
IN THE OIL AND GAS EXPLORATION INDUSTRY OTHER THAN THE COMPANY OR
ANY OF ITS AFFILIATES. WITHOUT SUCH REGISTRATION, THE COMPANY
WILL NOT TRANSFER SUCH SECURITIES EXCEPT UPON RECEIPT OF A
REPRESENTATION FROM THE HOLDER AND/OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY THAT THE REGISTRATION PROVISIONS OF
SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH REGISTRATION IS NOT
REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY APPLICABLE
STATE SECURITIES LAWS.
THE COMPANY IS AUTHORIZED TO ISSUE SHARES OF BOTH
COMMON AND PREFERRED INTERESTS. A FULL STATEMENT OF ALL OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF
THE SHARES OF BOTH CLASS AND ANY SERIES THEREOF TO THE EXTENT
THAT THEY HAVE BEEN FIXED AND DETERMINED AND THE AUTHORITY OF THE
COMMON MEMBERS OF THE COMPANY TO FIX AND DETERMINE THE RELATIVE
RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES IS SET FORTH IN THE
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE
COMPANY ON FILE IN THE OFFICE OF EEX CAPITAL. THE COMPANY WILL
FURNISH A COPY OF SUCH STATEMENT TO THE RECORD HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE ON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
FOR VALUE RECEIVED, _____________________________
hereby assigned, conveys, sells and transfers unto
_________________________________________________________________
(Please print or typewrite (Please insert Social
name and address of Security or other
Assignee) identifying number of
Assignee)
_______________________________ shares of a Cumulative
Perpetual Increasing Dividend Preferred Interest evidenced by
this Certificate and does hereby irrevocably constitute and
appoint ____________________ as its attorney-in-fact with full
power of substitution to transfer the same on the books of MIStS
Issuer L.L.C.
Date:__________________
NOTE: The signature to any endorsement hereon must
correspond with the name as written upon the face of
this Certificate in every particular, without
alteration, enlargement or change.
In presence of:
<PAGE>
<PAGE>
Schedule 1
List of Operative Documents
1. Limited Liability Company Agreement for Issuer.
2. Certificate No. 2 of MIStS Issuer Preferred Interests
in name of Placement Agent.
3. EEX Capital Subordinated Note issued by EEX Capital to
the order of Issuer.
4. Guaranty Agreement executed by EEX in favor of Issuer
guarantying payment of EEX Capital Subordinated Note.
<PAGE>
<PAGE>
Table of Contents
ARTICLE I. DEFINED TERMS 2
SECTION 1.1. DEFINITIONS. 2
SECTION 1.2. HEADINGS. 11
ARTICLE II. CONTINUATION AND TERM; ADMISSION OF MEMBERS 11
SECTION 2.1. HISTORY AND CONTINUATION. 11
SECTION 2.2. NAME. 12
SECTION 2.3. TERM. 13
SECTION 2.4. REGISTERED AGENT AND OFFICE. 13
SECTION 2.5. PRINCIPAL PLACE OF BUSINESS. 13
SECTION 2.6. QUALIFICATION IN OTHER JURISDICTIONS. 13
SECTION 2.7. ASSIGNMENT OF COMMON SECURITIES. 13
SECTION 2.8. ASSIGNMENT OF PREFERRED INTERESTS. 13
SECTION 2.9. MERGER, CONSOLIDATION, ETC. OF THE COMPANY. 13
ARTICLE III. PURPOSE AND POWERS OF THE COMPANY 14
SECTION 3.1. PURPOSE AND POWERS. 14
ARTICLE IV. CAPITAL CONTRIBUTIONS AND ALLOCATIONS 15
SECTION 4.1. AMOUNT AND FORM OF INITIAL CONTRIBUTION. 15
SECTION 4.2. ADDITIONAL CONTRIBUTIONS BY THE COMMON MEMBERS. 15
SECTION 4.3. ADDITIONAL CONTRIBUTIONS BY PREFERRED MEMBERS. 16
SECTION 4.4. INVESTMENT OF CAPITAL CONTRIBUTIONS. 16
SECTION 4.5. CAPITAL ACCOUNTS. 16
SECTION 4.6. GENERAL ALLOCATIONS. 16
SECTION 4.7. SPECIAL ALLOCATIONS. 17
SECTION 4.8. ALLOCATIONS FOR INCOME TAX PURPOSES. 18
SECTION 4.9. INTERESTS AS PERSONAL PROPERTY. 18
SECTION 4.10. COLLECTION ACCOUNT. 18
ARTICLE V. MEMBERS 19
SECTION 5.1. POWERS OF MEMBERS. 19
SECTION 5.2. RESIGNATION; EXPULSION. 19
ARTICLE VI. MANAGEMENT 19
SECTION 6.1. MANAGEMENT OF THE COMPANY. 19
SECTION 6.2. RELIANCE BY THIRD PARTIES. 21
SECTION 6.3. NO MANAGEMENT BY PREFERRED MEMBERS. 21
ARTICLE VII. COMMON SECURITIES AND PREFERRED INTERESTS 21
SECTION 7.1. COMMON SECURITIES AND PREFERRED INTERESTS. 21
SECTION 7.2. PERSONS DEEMED PREFERRED MEMBERS. 22
ARTICLE VIII. VOTING AND MEETINGS 22
SECTION 8.1. VOTING RIGHTS OF PREFERRED MEMBERS. 22
SECTION 8.2. VOTING RIGHTS OF COMMON MEMBERS. 24
SECTION 8.3. MEETINGS OF THE MEMBERS. 24
ARTICLE IX. DIVIDENDS AND REDEMPTION 25
SECTION 9.1. DIVIDENDS. 25
SECTION 9.2. LIMITATIONS ON DISTRIBUTIONS. 27
SECTION 9.3. COMMON DISTRIBUTIONS. 27
SECTION 9.4. REDEMPTION AND EXCHANGE. 27
ARTICLE X. BOOKS AND RECORDS 31
SECTION 10.1. BOOKS AND RECORDS; ACCOUNTING;
ACCESS TO RECORDS 31
SECTION 10.2. FISCAL YEAR. 31
ARTICLE XI. TAX MATTERS 31
SECTION 11.1. COMPANY TAX RETURNS. 31
SECTION 11.2. TAX REPORTS. 32
SECTION 11.3. TAXATION AS PARTNERSHIP. 32
ARTICLE XII. EXPENSES 32
SECTION 12.1. EXPENSES. 32
ARTICLE XIII. LIABILITY, EXCULPATION AND INDEMNIFICATION 33
SECTION 13.1. LIABILITY OF COMMON MEMBERS. 33
SECTION 13.2. LIABILITY OF PREFERRED MEMBERS. 33
SECTION 13.3. EXCULPATION. 33
SECTION 13.4. FIDUCIARY DUTY. 34
SECTION 13.5. INDEMNIFICATION. 34
SECTION 13.6. EXPENSES. 35
SECTION 13.7. OUTSIDE BUSINESS. 35
ARTICLE XIV. DISSOLUTION, LIQUIDATION AND TERMINATION 35
SECTION 14.1. DISSOLUTION. 35
SECTION 14.2. NOTICE OF DISSOLUTION. 35
SECTION 14.3. LIQUIDATION. 36
SECTION 14.4. CERTAIN RESTRICTIONS ON LIQUIDATION PAYMENTS. 36
SECTION 14.5. TERMINATION. 36
ARTICLE XV. MISCELLANEOUS 36
SECTION 15.1. AMENDMENTS. 36
SECTION 15.2. SUCCESSORS; COUNTERPARTS. 36
SECTION 15.3. GOVERNING LAW; SEVERABILITY. 37
SECTION 15.4. FILINGS. 37
SECTION 15.5. POWER OF ATTORNEY. 37
SECTION 15.6. ADDITIONAL DOCUMENTS. 38
SECTION 15.7. NOTICES. 38
Exhibit A - Form of Preferred Security
Schedule 1 - List of Operative Documents
EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
CLASS A CUMULATIVE PERPETUAL INCREASING DIVIDEND
PREFERRED STOCK
OF
EEX CAPITAL INC.
_________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
_________________________
EEX Capital Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the
State of Delaware, certifies that pursuant to the authority
contained in Article 4 of its Certificate of Incorporation (the
"Certificate of Incorporation") and in accordance with the
provisions of Section 151 of the General Corporation Law of the
State of Delaware, the Board of Directors of the Corporation by
unanimous written consent dated September 25, 1997 duly approved
and adopted the following resolution which resolution remains in
full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the
Board of Directors by its Certificate of Incorporation, the Board
of Directors does hereby designate, create, authorize and provide
for the issue of Class A Cumulative Perpetual Increasing Dividend
Preferred Stock (the "Class A Preferred Stock"), par value $0.001
per share, with a liquidation preference of $1,000.00 per share,
consisting of 150,000 shares, having the following voting powers,
preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions
thereof as follows:
1. Certain Definitions.
Unless the context otherwise requires, the terms
defined in this Section 1 shall have, for all purposes of this
resolution, the meanings herein specified (with terms defined in
the singular having comparable meanings when used in the plural):
Additional Costs. The term "Additional Costs" shall
have the meaning assigned to it in the Subscription Agreement.
Affiliate. The term "Affiliate" shall mean with
respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. For
purposes of the foregoing definition, "control" means the direct
or indirect ownership of more than 50% of the outstanding capital
stock or other equity interests having ordinary voting power.
Affiliate Transaction. The term "Affiliate
Transaction" shall have the meaning set forth in Section 7(n)
below.
Business Day. The term "Business Day" shall mean a day
other than a Saturday, a Sunday, any federal holiday or any day
on which dealings in U.S. dollar deposits are not carried out in
the London interbank market.
Capital Lease Obligation. The term "Capital Lease
Obligation" shall mean, with respect to EEX or any Subsidiary of
EEX, the obligations of such Person to pay rent or other amounts
under a lease of (or other agreement conveying the right to use)
real and/or personal property which obligations are required to
be classified and accounted for as a liability for a capital
lease on a balance sheet of such Person in accordance with GAAP
and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof.
Capital Stock. The term "Capital Stock" shall mean (i)
in the case of a corporation, corporate stock, (ii) in the case
of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a
partnership, partnership interests (whether general or limited)
and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
Change of Control. The term "Change of Control" shall
mean the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of the
Exchange) Act of 35% or more of the outstanding shares of voting
stock of EEX.
Change of Control Offer. The term "Change of Control
Offer" shall have the meaning set forth in Section 6(a) below.
Change of Control Payment. The term "Change of Control
Payment" shall have the meaning set forth in Section 6(a) below.
Change of Control Payment Date. The term "Change of
Control Payment Date" shall have the meaning set forth in Section
6(d)(ii) below.
Common Stock. The term "Common Stock" shall mean all
shares now or hereafter authorized of any class of common stock
of the Corporation, including the common stock, par value $100.00
per share, and any other stock of the Corporation, howsoever
designated, authorized after the Initial Issue Date, that have
the right (subject always to prior rights of any class or series
of preferred stock) to participate in the distribution of the
assets and earnings of the Corporation without limit as to per
share amount.
Debt. The term "Debt" shall mean for EEX and its
Subsidiaries (except the Corporation and MIStS Issuer), the sum
of the following (without duplication): (i) all obligations for
borrowed money or evidenced by bonds, debentures, mandatorily
redeemable preferred stock with maturities before the Revolving
Credit Termination Date (as defined in the EEX Credit Agreement),
notes or other similar instruments (excluding interest, fees and
charges); (ii) all obligations in respect of bankers'
acceptances, unreimbursed drawings on letters of credit, surety
or other bonds; (iii) all Capital Lease Obligations; (iv) all
Operating Lease Obligations; (v) all financial guaranties in
respect of Indebtedness of unconsolidated Affiliates and
unrelated Persons; (vi) all obligations secured by a Lien on any
asset, whether or not such Indebtedness is assumed, but excluding
obligations secured by Liens permitted by Sections 9.02(c), (e),
(f), (h), (i), (j), (k) and (l) of the EEX Credit Agreement;
(vii) all production payments in connection with oil and gas
properties; and (viii) all Indebtedness of Special Entities (as
defined in the EEX Credit Agreement) to the extent the
Corporation or any Subsidiary is liable for such Indebtedness and
is reflected on the consolidated balance sheet of EEX or any
Subsidiary; provided, however, such term shall not include
Permitted Subordinated Debt.
Debt to Capital Ratio. The term "Debt to Capital
Ratio" shall have the meaning set forth in Section 5(b) below.
Default. The term "Default" shall mean an Event of
Default or an event which with notice or lapse of time or both
would be an Event of Default.
Dividend. The term "Dividend" shall mean any dividend
payable in accordance with Section 2(a) below.
Dividend Payment Date. The term "Dividend Payment
Date" shall have the meaning set forth in Section 2(a) below.
Dividend Period. The term "Dividend Period" shall mean
the period from, and including, the Initial Issue Date to, but
not including, the first Dividend Payment Date and thereafter,
each period from, and including, the preceding Dividend Payment
Date to, but not including the next Dividend Payment Date.
EEX. The term "EEX" shall mean Enserch Exploration,
Inc., a Texas corporation.
EEX Capital Subordinated Note. The term "EEX
Capital Subordinated Note" means the subordinated promissory note
made by the Corporation in favor of MIStS Issuer, reevidencing
$75.0 million of Indebtedness, dated as of September 29, 1997.
EEX Capital Subordination Agreement. The term "EEX
Capital Subordination Agreement" shall mean the subordination
agreement dated as of September 29, 1997 issued by the MIStS
Issuer in favor of the administrative agent and the lenders under
the EEX Credit Agreement and subordinating the EEX Capital
Subordinated Note and the Guaranty Agreement to the "Superior
Indebtedness" (as defined in such subordination agreement.)
EEX Credit Agreement. The term "EEX Credit Agreement"
shall mean that certain Credit Agreement dated as of May 1, 1995
among EEX, as borrower, The Chase Manhattan Bank, as
Administrative Agent, and the lenders signatory thereto, as
amended by First Amendment dated September 19, 1996, and Second
Amendment dated June 27, 1997, and as modified by that certain
letter from EEX to the Administrative Agent and in effect on the
Closing Date together with such amendments thereto as may be
adopted in accordance therewith and consented to by the Majority
Holders.
EEX LLC. The term "EEX LLC" means EEX Capital L.L.C.,
a Delaware limited liability company that was merged with and
into EEX Preferred pursuant to the Merger, with EEX Preferred
being the surviving corporation and renamed EEX Capital Inc.
EEX Preferred. The term "EEX Preferred" means EEX
Preferred Capital Inc., a Delaware corporation now known as EEX
Capital Inc., into which EEX LLC was merged pursuant to the
Merger.
EEX Subordinated Note. The term "EEX Subordinated
Note" means the subordinated promissory note made by EEX in favor
of the Corporation reevidencing $150.0 million of Indebtedness,
dated as of September 29, 1997.
EEX Subordination Agreement. The term "EEX
Subordination Agreement" shall mean the subordination agreement
dated as of September 29, 1997 issued by the Corporation in favor
of the administrative agent and the lenders under the EEX Credit
Agreement and subordinating the EEX Subordinated Note to the
"Superior Indebtedness" (as defined in such subordination
agreement.)
Engagement Letter. The term "Engagement Letter" shall
mean that certain engagement letter agreement by and among UBS,
EEX, EEX Preferred, EEX LLC and MIStS Issuer, dated as of
September 24, 1997, as modified by letter agreement dated
September 29, 1997.
Equity Interests. The term "Equity Interests" shall
mean Capital Stock and all warrants, options or other rights to
acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
Event of Default. The term "Event of Default" shall
mean (i) an "Event of Default" as defined in the EEX Credit
Agreement, (ii) failure by the Corporation to pay any scheduled
Dividend on the Preferred Securities or any fee or other amount
owing to UBS or any of the Holders pursuant to the Transaction
Documents on or within 30 days after the same is due,
(iii) failure by the Corporation to cause either the merger of
MIStS Issuer with and into the Corporation or the redemption of
all of the Class A Preferred Stock and all of the Preferred
Interests on the Required Merger Date, (iv) failure by the
Corporation to make any Change of Control redemption within the
time periods specified in Section 6 hereof, (v) a Prohibited
Issuance, (vi) the occurrence of a Voting Rights Trigger Event,
(vii) breach of any other provision of this Certificate of
Designations or of the other Transaction Documents, as in effect
on the date hereof or as subsequently modified which is not cured
within 60 days (except that breach of the covenants described in
Sections 12.1 and 13.1 of the Subscription Agreement shall not be
entitled to any such cure period) and (viii) any representation
or warranty on the part of EEX or any Subsidiary of EEX in any
Transaction Document shall prove to have been false or misleading
in any material respect when made, deemed made or furnished.
Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
Executive Officer. The term "Executive Officer" shall
mean any officer of the Corporation that would be deemed to be an
"executive officer" within meaning of the rules and regulations
of the Securities and Exchange Commission.
Fee Letter. The term "Fee Letter" shall mean that
certain fee letter agreement by and among UBS, EEX, EEX
Preferred, EEX LLC and MIStS Issuer, dated as of September 24,
1997, as modified by letter agreement dated September 29, 1997.
GAAP. The term "GAAP" shall mean generally accepted
accounting principles in the United States of America in effect
from time to time.
Governmental Authority. The term "Governmental
Authority" shall mean any nation or government, any state or
other political subdivision thereof and any Person exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Government Securities. The term "Government
Securities" shall mean direct obligations of, or obligations
guaranteed by, the United States of America for the payment of
which obligations or guarantee the full faith and credit of the
United States of America is pledged.
Guarantee. The term "Guarantee" shall mean a guarantee
(other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of
all or any part of any Indebtedness.
Guaranty Agreement. The term "Guaranty Agreement"
shall mean that certain Amended and Restated Guaranty Agreement,
dated as of September 29, 1997 issued by EEX in favor of MIStS
Issuer guaranteeing the obligations of the Corporation to MIStS
Issuer under the EEX Capital Subordinated Note, as the same may
be further amended, modified or supplemented from time to time
with the consent of the Majority Holders.
Holder. The term "Holder" shall mean the record holder
of one or more shares of Class A Preferred Stock, as shown on the
books and records of the Corporation.
Indebtedness. The term "Indebtedness" of a Person
shall mean such Person's (i) obligations for borrowed money,
whether or not evidenced by a bond, note or similar instrument,
(ii) obligations representing the deferred purchase price of
property other than accounts payable arising in the ordinary
course of such Person's business on terms customary in the trade,
(iii) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments,
(v) Capital Lease Obligations, (vi) obligations for which such
Person is obligated pursuant to a Guarantee or pursuant to a
letter of credit, (vii) Hedging Obligations, and (viii)
Mandatorily Redeemable Obligations.
Initial Issue Date. The term "Initial Issue Date"
shall mean the date that shares of Class A Preferred Stock are
first issued by the Corporation.
Junior Securities. The term "Junior Securities" shall
mean any class of stock ranking junior to the Class A Preferred
Stock as to the payment of dividends and as to rights in
liquidation, dissolution or winding up of the affairs of the
Corporation.
Lien. The term "Lien" shall mean any interest in
Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not
limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security
purposes.
Liquidation Preference. The term "Liquidation
Preference" shall mean (i) $1,000.00 per share of Class A
Preferred Stock or (ii) $1,000.00 per share of Preferred
Interests.
LLC Agreement. The term "LLC Agreement" shall mean the
second amended and restated limited liability company agreement
of MIStS Issuer L.L.C., dated as of September 29, 1997.
Majority Holders. The term "Majority Holders" shall
mean a majority in aggregate liquidation preference of the
Holders of the Preferred Securities.
Mandatorily Redeemable Obligation. The term
"Mandatorily Redeemable Obligation" shall mean, with respect to
any Person, an obligation of such Person or any of its
Subsidiaries to the extent that it is redeemable, payable or
required to be purchased or otherwise retired or extinguished (a)
at a fixed or determinable date, whether by operation of a
sinking fund or otherwise, (b) at the option of any Person other
than such Person or such Subsidiary, or (c) upon the occurrence
of a condition not solely within the control of such Person or
such Subsidiary, such as a redemption required to be made out of
future earnings.
Material Adverse Effect. The term "Material Adverse
Effect" shall mean any material and adverse change in the
financial condition, business or results of operations of EEX and
its Subsidiaries taken as a whole which makes EEX unable to
perform its obligations under the Guaranty Agreement or the EEX
Subordinated Note.
Merger Notice. The term "Merger Notice" shall mean a
notice issued by UBS in accordance with the letter agreement
dated September 29, 1997, requiring MIStS Issuer to merge with
and into the Corporation, with the Corporation being the
servicing corporation.
MIStS Issuer. The term "MIStS Issuer" shall mean MIStS
Issuer L.L.C., a Delaware limited liability company, the common
membership interests of which are wholly owned by the
Corporation.
MIStS Issuer Voting Rights Trigger Event. The term
"MIStS Issuer Voting Rights Trigger Event" shall have the meaning
ascribed to "Voting Rights Trigger Event" in the LLC Agreement.
Obligations. The term "Obligations" shall mean any
principal, interest, penalties, fees (including, but not limited
to, reasonable fees and expenses of counsel), indemnifications,
reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
Officer's Certificate. The term "Officer's
Certificate" shall mean a certificate signed on behalf of the
Corporation by an officer of the Corporation who must be the
Chief Executive Officer, the Chief Financial Officer, the
Treasurer or the principal accounting officer of the Corporation
that meets the requirements of Section 9 hereof.
Operating Lease Obligations. The term "Operating Lease
Obligations" shall mean, as to the Corporation or any Subsidiary,
the obligations of such person to pay rent or other amounts under
a lease of (or other agreement conveying the right to use) real
and/or personal property which obligations are not required to be
classified and accounted for as a liability for a capital lease
on a balance sheet of such Person and, for purposes of this
Certificate of Designations, the amount of such obligations shall
be the discounted present value of the lease payments, discounted
in the same manner a capital lease would be discounted according
to GAAP.
Parity Securities. The term "Parity Securities" shall
mean any class or series of stock of the Corporation authorized
after the Initial Issue Date that is entitled to receive payment
of dividends and to receive assets upon liquidation, dissolution
or winding up of the affairs of the Corporation on a parity with
the Class A Preferred Stock.
Paying Agent. The term "Paying Agent" shall mean the
Corporation until such time, if any, as an additional or other
Paying Agent is appointed pursuant to Section 8(c).
Permits. The term "Permits" shall mean such material
permits, licenses, franchises, consents, approvals and
authorizations of Governmental Authorities as are necessary to
own, lease and operate the Corporation's Properties and to
conduct its business as presently conducted.
Permitted Subordinated Debt. The term "Permitted
Subordinated Debt" shall mean Indebtedness of EEX or a Subsidiary
owing to EEX or another Subsidiary subordinated to the "Superior
Indebtedness" (as such term is defined in the Subordination
Agreements) on terms substantially similar to the terms set forth
in the Subordination Agreements.
Person. The term "Person" shall mean any individual,
corporation, company, limited liability company, voluntary
association, partnership, joint venture, trust, unincorporated
organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.
Preferred Interests. The term "Preferred Interests"
shall mean the Cumulative Perpetual Increasing Dividend Preferred
Interests of MIStS Issuer.
Preferred Securities. The term "Preferred Securities"
shall mean the Preferred Interests and the Class A Preferred
Stock.
Preferred Stock. The term "Preferred Stock" of any
Person, shall mean Capital Stock of such Person of any class or
series (however designated) that ranks prior, as to payment of
dividends or as to the distribution of assets upon any voluntary
or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class or series
of such Person.
Prohibited Issuance. The term "Prohibited Issuance"
shall mean issuance by EEX, the Corporation, MIStS Issuer or any
of their respective Subsidiaries of subordinated debt or equity
securities in violation of the provisions under Article V of the
Subscription Agreement, the proceeds of which are not used to
fully redeem the Preferred Securities.
Property. The term "Property" shall mean any interest
in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.
Record Date. The term "Record Date" shall have the
meaning set forth in Section 2(a) below.
Redemption Date. The term "Redemption Date" shall have
the meanings set forth in Section 4(c) below.
Redemption Price. The "Redemption Price" shall be the
Liquidation Preference plus (i) Additional Costs and (ii) accrued
and unpaid dividends to the date of redemption.
Required Merger Date. The term "Required Merger Date"
shall mean the first Dividend Payment Date occurring at least
thirteen (13) Business Days after receipt by the Corporation of a
Merger Notice.
Securities Act. The term "Securities Act" shall mean
the Securities Act of 1933, as amended.
Senior Debt. The term "Senior Debt" means the
principal (whether denominated as principal, monthly rental or
other notional quantity), premium, if any, and unpaid interest
on, and any reasonable fees or costs related to, (a) any Debt of
EEX and its Subsidiaries (other than the Corporation and MIStS
Issuer), whether outstanding on the date hereof or hereafter
created, which is incurred, assumed, or guaranteed in compliance
with the EEX Credit Agreement, unless in the instrument creating
or evidencing the same or pursuant to which the same is
outstanding it is provided that such indebtedness is not superior
in right of payment to the EEX Subordinated Note, and (b)
renewals, extensions, modifications and refundings of any such
Debt. For the avoidance of doubt, Debt which is created,
incurred, assumed, or guaranteed in violation of terms of the EEX
Credit Agreement shall not constitute Senior Debt, and Debt which
is created, incurred, assumed, or guaranteed in compliance with
the terms of the EEX Credit Agreement Debt shall at all times
constitute Senior Debt, notwithstanding any event or circumstance
which may subsequently occur which would constitute the creation,
incurrence, assumption or guarantee of such Debt at such time a
violation of the EEX Credit Agreement.
Senior Securities. The term "Senior Securities" shall
mean any class or series of Capital Stock of the Corporation
authorized after the Initial Issue Date ranking senior to the
Class A Preferred Stock in respect of the right to receive
dividends and in respect of the right to participate in any
distribution upon liquidation, dissolution or winding up of the
affairs of the Corporation.
Stock Registration Rights Agreement. The term " Stock
Registration Rights Agreement" shall mean the registration
rights, agreement dated as of September 29, 1997, between, the
Corporation and the Placement Agent on behalf of UBS, pursuant to
which the Class A Preferred Stock is required to be registered
for public sale.
Subordinated Notes. The term "Subordinated Notes"
means, collectively, the EEX Capital Subordinated Note and the
EEX Subordinated Note.
Subordination Agreements. The term "Subordination
Agreements" means, collectively, the EEX Capital Subordination
Agreement and the EEX Subordination Agreement.
Subscription Agreement. The term "Subscription
Agreement" shall mean the Preferred Interest and Preferred Stock
Subscription Agreement, dated as of September 29, 1997, among
EEX, the Corporation, MIStS Issuer and UBS as Placement Agent for
the Holders of the Preferred Securities.
Subsidiary. The term "Subsidiary" shall mean, with
respect to any Person, (i) any corporation, association or other
business entity of which more than 50% of the total voting power
of shares of Voting Stock thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of
which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
Transaction Documents. The term "Transaction
Documents" shall mean the Subscription Agreement, the LLC
Agreement, the Certificate of Designations, the Class A Preferred
Stock, the Preferred Interests, the Engagement Letter, the Fee
Letter, the Stock Registration Rights Agreement, the Subordinated
Notes, the Guaranty Agreement, and the Subordination Agreements.
Transfer Agent. The term "Transfer Agent" shall mean
the entity designated from time to time by the Corporation to act
as the registrar and transfer agent for the Class A Preferred
Stock.
UBS. The term "UBS" shall mean UBS Securities LLC, a
Delaware limited liability company.
Voting Stock. The term "Voting Stock" shall mean with
respect to any specified Person, Capital Stock with voting power,
under ordinary circumstances and without regard to the occurrence
of any contingency, to elect the directors or other managers or
trustees of such Person.
Voting Rights Trigger Event. The term "Voting Rights
Trigger Event" shall have the meaning set forth in Section 5(b)
below.
2. Dividends.
(a) The Holders of shares of the Class A Preferred
Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the
Corporation legally available therefor, cumulative preferential
dividends from the date such shares of Class A Preferred Stock
are issued accruing, subject to Section 2(b), at a variable rate
per annum equal to the sum of (A) Union Bank of Switzerland's
three-month London interbank offered rate, reset quarterly, plus
(B) a spread equal to (i) 300 basis points for the period from
the Initial Issue Date to but excluding December 31, 1997, (ii)
400 basis points for the period from December 31, 1997, to but
excluding March 31, 1998, (iii) 500 basis points for the period
from March 31, 1998, to but excluding June 30, 1998, (iv) 600
basis points for the period from June 30, 1998, to but excluding
September 30, 1998, and (v) 700 basis points at all time from and
after September 30, 1998; provided, however, that upon the
occurrence and during the continuance of an Event of Default, the
spread otherwise applicable under this clause (B) shall increase
by 100 basis points. Dividends shall be payable quarterly in
arrears on the last Business Day of each March, June, September
and December in each year (each, a "Dividend Payment Date"), to
the Holders of record as of the tenth Business Day preceding such
Dividend Payment Date (each, a "Record Date"). Dividends will be
payable in cash. The first dividend payment will be payable on
December 31, 1997. Dividends payable on the Class A Preferred
Stock will be computed on the basis of a 360-day year and actual
days elapsed occurring in the period with respect to which such
dividends are payable.
(b) At any time after September 30, 1998, UBS may
elect to deliver a written notice (a "Rate Fixing Notice") fixing
the dividend rate, terms and condition on the Class A Preferred
Stock at the rate, terms and condition which UBS in good faith
determines in its sole discretion would be necessary to effect a
sale of the Class A Preferred Stock at par, whereupon the
dividend rate on all of the Class A Preferred Stock shall become
a fixed rate per annum; provided, however, that (i) such security
shall be of a perpetual nature and (ii) upon the occurrence and
during the continuance of an Event of Default, the dividend rate
specified in the Rate Fixing Notice shall increase by 100 basis
points.
(c) Dividends on the Class A Preferred Stock shall
accrue whether or not the Corporation has earnings or profits,
whether or not there are funds legally available for the payment
of such dividends and whether or not dividends are declared.
Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate.
Accumulated unpaid dividends will bear interest at the rate per
annum then applicable pursuant to Section 2(a) above. The
Corporation shall take all actions required or permitted under
Delaware law to permit the payment of dividends on the Class A
Preferred Stock.
(d) No dividend whatsoever shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any
outstanding Class A Preferred Stock with respect to any Dividend
Period unless all dividends for all preceding Dividend Periods
have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all
outstanding shares of Class A Preferred Stock. Unless full
cumulative dividends on all outstanding shares of Class A
Preferred Stock due for all past dividend periods shall have been
declared and paid, or declared and a sufficient sum for the
payment thereof set apart, then: (i) no dividend (other than a
dividend payable solely in shares of any Junior Securities) shall
be declared or paid upon, or any sum set apart for the payment of
dividends upon, any shares of Junior Securities; (ii) no other
distribution shall be made upon or any sum set apart for the
payment of any distribution upon, any shares of Junior
Securities; (iii) no shares of Junior Securities shall be
purchased, redeemed or otherwise acquired or retired for value
(excluding an exchange for shares of other Junior Securities) by
the Corporation or any of its Subsidiaries; and (iv) no monies
shall be paid into or set apart or made available for a sinking
or other like fund for the purchase, redemption or other
acquisition or retirement for value of any shares of Junior
Securities by the Corporation or any of its Subsidiaries.
Holders of the Class A Preferred Stock will not be entitled to
any dividends, whether payable in cash, property or stock, in
excess of the full cumulative dividends as herein described.
(e) The Corporation will not claim any deduction from
gross income for dividends paid on the Class A Preferred Stock in
any Federal income tax return, claim for refund, or other
statement, report or submission made to the Internal Revenue
Service, and will make any election or take any similar action to
effectuate the foregoing except, in each case, if there shall be
a change in law such that the Corporation may claim such
dividends as deductions from gross income without affecting the
ability of the Holders of the Class A Preferred Stock to claim
the dividends received deduction under Section 243(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision). At the reasonable request of any Holder of
Class A Preferred Stock (and at the expense of such Holder), the
Corporation will join in the submission to the Internal Revenue
Service of a request for a ruling that the dividends paid on
Class A Preferred Stock will be eligible for the dividends
received deduction under Section 243(a)(1) of the Code (or any
successor provision). In addition, the Corporation will
cooperate with any Holder of the Class A Preferred Stock (at the
expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received
deduction under Section 243(a)(1) of the Code (or any successor
provision) of any dividends (within the meaning of Section 316(a)
of the Code or any successor provision) paid on the Class A
Preferred Stock. To the extent possible, the principles of this
Section 2(e) shall also apply with respect to State and local
income taxes.
3. Distributions Upon Liquidation, Dissolution or
Winding Up.
Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation or reduction or
decrease in its Capital Stock resulting in a distribution of
assets to the holders of any class or series of the Corporation's
Capital Stock (a "reduction or decrease in Capital Stock"), each
Holder of shares of the Class A Preferred Stock shall be entitled
to payment out of the assets of the Corporation available for
distribution of an amount equal to the Liquidation Preference per
share of Class A Preferred Stock held by such Holder, plus
accrued and unpaid dividends to the date fixed for liquidation,
dissolution, winding up or reduction or decrease in Capital
Stock, before any distribution is made on any Junior Securities,
including, without limitation, Common Stock of the Corporation.
After payment in full of the Liquidation Preference and all
accrued dividends to which Holders of Class A Preferred Stock are
entitled, such Holders will not be entitled to any further
participation in any distribution of assets of the Corporation.
However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or
assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more corporations will be deemed
to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation or reduction or decrease in capital
stock, unless such sale, conveyance, exchange or transfer shall
be in connection with a liquidation, dissolution or winding up of
the business of the Corporation or reduction or decrease in
Capital Stock.
4. Redemption by the Corporation.
(a) The Class A Preferred Stock may be redeemed on any
Dividend Payment Date at the option of the Corporation upon ten
(10) Business Days' prior written notice (i) in whole or (ii)
ratably between the Preferred Stock and the Preferred Interests
in part (but not in increments of less than $25.0 million in the
aggregate for both types of Preferred Securities), in either case
at the Redemption Price.
(b) In case of redemption of less than all of the
shares of Class A Preferred Stock at the time outstanding, the
shares to be redeemed shall be selected pro rata or by lot as
determined by the Corporation in its sole discretion.
(c) Notice of any redemption shall be sent by or on
behalf of the Corporation ten (10) Business Days prior to the
date specified for redemption in such notice (the "Redemption
Date"), by either first class mail, postage prepaid, or facsimile
transmission to all Holders of record of the Class A Preferred
Stock at their respective last addresses as they shall appear on
the books of the Corporation; provided, however, that no failure
to give such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for the
redemption of any shares of Class A Preferred Stock except as to
the Holder to whom the Corporation has failed to give notice or
except as to the Holder to whom notice was defective. In
addition to any information required by law or by the applicable
rules of any exchange upon which Class A Preferred Stock may be
listed or admitted to trading, such notice shall state: (i) the
paragraph of this Certificate of Designations pursuant to which
the redemption is made; (ii) the Redemption Date; (iii) the
Redemption Price; (iv) the number of shares of Class A Preferred
Stock to be redeemed and, if less than all shares held by such
Holder are to be redeemed, the number of such shares to be
redeemed; (v) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price,
including any procedures applicable to redemptions to be
accomplished through book-entry transfers; and (vi) that
dividends on the shares to be redeemed will cease to accrue on
the Redemption Date. Upon the mailing of any such notice of
redemption, the Corporation shall become obligated to redeem at
the time of redemption specified thereon all shares called for
redemption.
(d) If notice has been mailed or transmitted in
accordance with Section 4(c) above and provided that on or before
the Redemption Date specified in such notice, all funds necessary
for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds in trust for the pro rata
benefit of the Holders of the shares so called for redemption, so
as to be, and to continue to be available therefor, then, from
and after the Redemption Date, dividends on the shares of the
Class A Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be
outstanding and shall not have the status of shares of Class A
Preferred Stock, and all rights of the Holders thereof as
stockholders of the Corporation (except the right to receive from
the Corporation the Redemption Price) shall cease. Upon
surrender, in accordance with said notice, of the certificates
for any shares so redeemed (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice
shall so state), such shares shall be redeemed by the Corporation
at the Redemption Price. In case fewer than all the shares
represented by any such certificate are redeemed, a new
certificate or certificates shall be issued representing the
unredeemed shares without cost to the Holder thereof.
(e) The deposit of any funds deposited with a bank or
trust company for the purpose of redeeming Class A Preferred
Stock shall be irrevocable except that:
(i) the Corporation shall be entitled to receive
from such bank or trust company the interest or other
earnings, if any, earned on any money so deposited in trust,
and the Holders of any shares redeemed shall have no claim
to such interest or other earnings; and
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the Holders of the Class A
Preferred Stock entitled thereto at the expiration of two
years from the applicable Redemption Date shall be repaid,
together with any interest or other earnings earned thereon,
to the Corporation, and after any such repayment, the
Holders of the shares entitled to the funds so repaid to the
Corporation shall look only to the Corporation for payment
without interest or other earnings.
(f) No Class A Preferred Stock may be redeemed except
with funds legally available for such purpose. The Corporation
shall take all actions required or permitted under Delaware Law
to permit any such redemption.
(g) Notwithstanding the foregoing provisions of this
Section 4, unless the full cumulative dividends on all
outstanding shares of Class A Preferred Stock shall have been
paid or contemporaneously are declared and paid for all past
dividend periods, none of the shares of Class A Preferred Stock
shall be redeemed unless all outstanding shares of Class A
Preferred Stock are simultaneously redeemed.
(h) All shares of Class A Preferred Stock redeemed
pursuant to this Section 4 shall be restored to the status of
authorized and unissued shares of preferred stock, without
designation as to series and may thereafter be reissued as shares
of any series of preferred stock other than shares of Class A
Preferred Stock.
5. Voting Rights.
(a) The Holders of record of shares of Class A
Preferred Stock shall not be entitled to any voting rights except
as hereinafter provided in this Section 5 or as otherwise
provided by law.
(b) If (i) the Corporation fails to declare or pay
dividends in full (including any arrearages and additional
dividends owed pursuant to Section 2(b)) on the Class A Preferred
Stock for any Dividend Period and such failure is not cured
within 30 days, (ii) the Corporation fails to consummate a Change
of Control Offer within 60 days of a Change of Control (or 90
days, if a consent is required after the occurrence of a Change
of Control), (iii) the Corporation breaches the covenant
described in Section 5.6 of the Subscription Agreement, (iv) a
Prohibited Issuance occurs, (v) EEX breaches the "Debt to Capital
Ratio" covenant described in Section 9.01 of the EEX Credit
Agreement or (vi) a MIStS Issuer Voting Rights Trigger Event
shall occur (each of (i), (ii), (iii), (iv), (v) and (vi) a
"Voting Rights Trigger Event"), then the authorized number of
members of the Corporation's Board of Directors will be
immediately and automatically increased by the Required Number
and the Holders of a majority of the outstanding shares of Class
A Preferred Stock, voting separately as a class, shall be
entitled to elect the Required Number of directors of the
Corporation, so as to gain and maintain majority voting control
of the Corporation. As used in the preceding sentence, "Required
Number" means the sum of (x) the authorized number of members of
the Corporation's Board of Directors immediately prior to the
increase of such number pursuant to such sentence and (y) one
(1).
(c) Whenever such voting right shall have vested, such
right may be exercised initially either at a special meeting of
the Holders of Class A Preferred Stock, called as hereinafter
provided, or at any annual meeting of stockholders held for the
purpose of electing directors, and thereafter at such annual
meetings or by the written consent of the Holders of Class A
Preferred Stock. Such right of the Holders of Class A Preferred
Stock to elect directors may be exercised until (i) all dividends
in arrears shall have been paid in full and (ii) all other Voting
Rights Trigger Events have been cured or waived, at which time
the right of the Holders of Class A Preferred Stock to elect such
number of directors shall cease, the term of such directors
previously elected shall thereupon terminate, and the authorized
number of directors of the Corporation shall thereupon return to
the number of authorized directors otherwise in effect, but
subject always to the same provisions for the renewal and
divestment of such special voting rights in the case of any such
future dividend default or defaults or any such failure to make
redemption payments.
(d) At any time when such voting right shall have
vested in the Holders of Class A Preferred Stock and if such
right shall not already have been initially exercised, a proper
officer of the Corporation shall, upon the written request of
Holders of record of 10% or more of the Class A Preferred Stock
then outstanding, addressed to the Secretary of the Corporation,
call a special meeting of Holders of Class A Preferred Stock.
Such meeting shall be held at the earliest practicable date upon
the notice required for annual meetings of stockholders at the
place for holding annual meetings of stockholders of the
Corporation or, if none, at a place designated by the Secretary
of the Corporation. If such meeting shall not be called by the
proper officers of the Corporation within 30 days after the
personal service of such written request upon the Secretary of
the Corporation, or within 30 days after mailing the same within
the United States, by registered mail, addressed to the Secretary
of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal
authorities), then the Holders of record of 10% of the shares of
Class A Preferred Stock then outstanding may designate in writing
a Holder of Class A Preferred Stock to call such meeting at the
expense of the Corporation, and such meeting may be called by
such person so designated upon the notice required for annual
meetings of stockholders and shall be held at the place for
holding annual meetings of the Corporation or, if none, at a
place designated by such Holder. Any Holder of Class A Preferred
Stock that would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of
causing a meeting of stockholders to be called pursuant to the
provisions of this Section. Notwithstanding the provisions of
this paragraph, however, no such special meeting shall be called
if any such request is received less than 30 days before the date
fixed for the next ensuing annual or special meeting of
stockholders.
(e) If any director so elected by the Holders of Class
A Preferred Stock shall cease to serve as a director before his
term shall expire, the Holders of Class A Preferred Stock then
outstanding may, at a special meeting of the Holders called as
provided above, elect a successor to hold office for the
unexpired term of the director whose place shall be vacant.
(f) The Corporation shall not, without the affirmative
vote or consent of the Holders of a majority of the then
outstanding shares of Class A Preferred Stock (with shares held
by the Corporation or any of its Affiliates not being considered
to be outstanding for this purpose) amend or otherwise alter its
Certificate of Incorporation in any manner that adversely affects
the rights of Holders of Class A Preferred Stock.
(g) Without the consent of each Holder of Class A
Preferred Stock affected, an amendment or waiver may not (with
respect to any shares of Class A Preferred Stock held by a
non-consenting Holder of Class A Preferred Stock):
(i) alter the voting rights with respect to the
Class A Preferred Stock or reduce the number of shares of
Class A Preferred Stock whose Holders must consent to an
amendment, supplement or waiver;
(ii) reduce the Liquidation Preference of any
share of Class A Preferred Stock or alter the provisions
with respect to the redemption of the Class A Preferred
Stock (other than provisions relating to the covenant
described in Section 6 hereof);
(iii) reduce the rate of or change the time
for payment of dividends on any share of Class A Preferred
Stock;
(iv) waive a default or event of default in the
payment of dividends on the Class A Preferred Stock;
(v) make any share of Class A Preferred Stock
payable in any form other than that stated in this
Certificate of Designations;
(vi) make any change in the provisions of this
Certificate of Designations relating to waivers of the
rights of Holders of Class A Preferred Stock to receive the
Liquidation Preference or dividends on the Class A Preferred
Stock;
(vii) waive a redemption payment with respect
to any share of Class A Preferred Stock (other than a
payment required by the covenant described in Section 6
hereof);
(viii) alter the effect of the Rate Fixing
Notice or the Merger Notice; or
(ix) make any change in the foregoing amendment
and waiver provisions.
(h) The Corporation shall not, without the consent of
at least 100% of the then outstanding shares of Class A Preferred
Stock (with shares held by the Corporation or its Affiliates not
being considered to be outstanding for this purpose), authorize,
create (by way of reclassification or otherwise) or issue any
securities or any obligation or security convertible or
exchangeable into or evidencing a right to purchase, shares of
any class or series of securities other than the initial issuance
of the Class A Preferred Stock to holders of Preferred Interests
of MIStS Issuer or an issuance of Class A Preferred Stock in
connection with a merger of MIStS Issuer with and into the
Corporation.
(i) The Corporation in its sole discretion may without
the vote or consent of any Holders of the Class A Preferred Stock
amend or supplement this Certificate of Designations:
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to provide for uncertificated Class A
Preferred Stock in addition to or in place of certificated
Class A Preferred Stock; or
(iii) to make any change that would provide
any additional rights or benefits to the Holders of the
Class A Preferred Stock or that does not adversely affect
the legal rights or benefits under this Certificate of
Designations of any such Holder.
6. Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder of Class A Preferred Stock shall have the right to require
the Corporation to repurchase all or any part of such Holder's
shares of Class A Preferred Stock (a "Change of Control Offer")
at an offer price in cash equal to 101% of the aggregate
Liquidation Preference thereof plus (i) accrued and unpaid
dividends, if any, thereon to the date of purchase and (ii) any
Additional Costs (together, the "Change of Control Payment").
(b) The Change of Control Offer shall include all
instructions and materials necessary to enable Holders to tender
their shares of Class A Preferred Stock.
(c) The Corporation shall comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
the shares of Class A Preferred Stock as a result of a Change of
Control.
(d) Within 30 days following any Change of Control,
the Corporation shall mail or deliver by facsimile transmission a
notice to each Holder stating:
(i) that the Change of Control Offer is being
made pursuant to this Section 6 and that all shares of Class
A Preferred Stock tendered will be accepted for payment;
(ii) the purchase price and the purchase date,
which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed (the "Change of
Control Payment Date");
(iii) that any share of Class A Preferred
Stock not tendered will continue to accrue dividends;
(iv) that, unless the Corporation fails to pay the
Change of Control Payment, all shares of Class A Preferred
Stock accepted for payment pursuant to the Change of Control
Offer shall cease to accrue dividends after the Change of
Control Payment Date;
(v) that Holders electing to have any shares of
Class A Preferred Stock purchased pursuant to a Change of
Control Offer will be required to surrender the shares of
Class A Preferred Stock, with the form entitled "Option of
Holder to Elect Purchase," which shall be included with the
Notice of Change of Control, completed, to the Paying Agent
at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of
Control Payment Date;
(vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than
the close of business on the second Business Day preceding
the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of
the Holder, the number of shares of Class A Preferred Stock
delivered for purchase, and a statement that such Holder is
withdrawing his election to have such shares purchased; and
(vii) the circumstances and relevant facts
regarding such Change of Control (including, but not limited
to, information with respect to pro forma historical
financial information after giving effect to such Change of
Control and information regarding the Person or Persons
acquiring control).
(e) On the Change of Control Payment Date, the
Corporation shall, to the extent lawful: (i) accept for payment
all shares of Class A Preferred Stock properly tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect
of all shares of Class A Preferred Stock so tendered and (iii)
deliver or cause to be delivered to the Transfer Agent shares of
Class A Preferred Stock so accepted together with an Officers'
Certificate stating the aggregate Liquidation Preference of the
shares of Class A Preferred Stock or portions thereof being
purchased by the Corporation. The Paying Agent shall promptly
mail to each Holder of Class A Preferred Stock so tendered the
Change of Control Payment for such Class A Preferred Stock and
the Transfer Agent will promptly authenticate and mail (or cause
to be transferred by book-entry) to each Holder a new certificate
representing the shares of Class A Preferred Stock equal in
Liquidation Preference amount to any unpurchased portion of the
shares of Class A Preferred Stock surrendered, if any. The
Corporation shall announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control
Payment Date.
(f) Prior to complying with the provisions of this
Section 6, but in any event within 90 days following a Change of
Control, the Corporation shall either repay all of its
outstanding Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Indebtedness, in
each case to the extent required to permit the repurchase of
Class A Preferred Stock required by this Section 6. The
Corporation will announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control
Payment Date.
(g) The Corporation shall not be required to make a
Change of Control Offer upon a Change of Control if a third party
makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this
Section 6 applicable to a Change of Control Offer made by the
Corporation and purchases all shares of Class A Preferred Stock
validly tendered and not withdrawn under such Change of Control
Offer.
7. Certain Covenants.
(a) Use of Proceeds.
The Corporation shall use the proceeds of the Class A
Preferred Stock solely to repay $75,000,000 of the outstanding
principal amount on that certain demand note dated August 4,
1995, issued by EEX LLC payable to the order of MIStS Issuer.
(b) Activities; Business.
The Corporation shall not, directly or indirectly, engage in
any activity or line of business other than (i) holding the EEX
Subordinated Note and enforcing remedies thereunder in accordance
with the terms thereof but subject to the EEX Subordination
Agreement, (ii) holding the Equity Interests of MIStS Issuer,
(iii) making payments on the Class A Preferred Stock and the EEX
Capital Subordinated Note and, if applicable, (iv) merging MIStS
Issuer with and into the Corporation.
(c) Subsidiaries.
The Corporation shall not, directly or indirectly, create or
form any Subsidiaries (other than MIStS Issuer).
(d) Capitalization; Restrictions on Certain
Amendments.
(i) The Corporation shall not issue or agree to
issue any Capital Stock (including treasury shares, but
excepting shares of Class A Preferred Stock issued (i) to
UBS on the Initial Issue Date or (ii) to holders of
Preferred Interests of MIStS Issuer, in connection with a
Merger) or other Equity Interests unless the net proceeds
from such issuance are used to redeem all outstanding
Preferred Securities.
(ii) The Corporation shall not amend its
organizational documents (including its Certificate of
Incorporation or bylaws) or any terms of its Capital Stock
or the Subordinated Notes.
(e) Liens.
The Corporation shall not directly or indirectly, create,
incur, assume or suffer to exist any Lien on any asset now owned
or hereafter acquired, or any income or profits therefrom.
(f) Corporate Existence; Compliance with Laws; Taxes.
(i) The Corporation shall do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate, partnership or other existence in
accordance with its organizational documents and its rights
(charter and statutory), licenses and franchises.
(ii) The Corporation shall comply in all material
respects with all statutes, laws, ordinances, or government
rules and regulations to which it is subject.
(iii) The Corporation shall pay prior to
delinquency all taxes, assessments, and governmental levies
except those contested in good faith and by appropriate
proceedings.
(g) Notice of Default and Related Matters.
The Corporation shall furnish to UBS and each of the Holders
of record of shares of Class A Preferred Stock written notice,
promptly upon any Officer of the Corporation becoming aware of
the existence thereof, of:
(i) any condition or event that constitutes a
Default or a Voting Rights Trigger Event, specifying the
nature and period of existence thereof and the action that
the Corporation is taking or proposes to take with respect
thereto;
(ii) the filing or commencement of, or any threat
or notice of intention of any Person to file or commence,
any action, suit or proceeding, whether at law or in equity
or by or before any Governmental Authority, against or
affecting the Corporation that, if adversely determined,
would constitute a Material Adverse Effect; and
(iii) any development that constitutes a
Material Adverse Effect.
(h) Authorizations and Approvals.
The Corporation shall promptly obtain, from time to
time, all such Permits, consents and approvals as may be required
to enable the Corporation to comply with its obligations under
the Transaction Documents and the Class A Preferred Stock.
(i) No Senior Indebtedness.
Notwithstanding any other provision hereof, the
Corporation shall not incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable for any
Indebtedness that is senior in any respect in right of payment to
the Class A Preferred Stock, other than Indebtedness owing to
Affiliates of up to $10.0 million in aggregate principal amount
(for both the Corporation and MIStS Issuer, taken as a whole)
unless, in each of the foregoing cases, the proceeds thereof are
used to repay the Preferred Securities in full.
(j) Liquidation.
The Corporation shall not adopt a plan of liquidation
or dissolution.
(k) Restricted Payments.
The Corporation shall not directly or indirectly: (i)
declare or pay any dividend or make any other payment or
distribution on account of the Corporation's Parity Securities or
Junior Securities (including, without limitation, any payment in
connection with any merger or consolidation involving the
Corporation) or to the direct or indirect holders of the
Corporation's Parity Securities or Junior Securities in their
capacity as such; or (ii) make any payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any
Junior Securities.
(l) Incurrence of Indebtedness and Issuance of
Preferred Stock.
The Corporation shall not, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness and the
Corporation shall not issue any Preferred Stock (other than the
Class A Preferred Stock issued to (i) UBS on the Initial Issue
Date or (ii) to holders of Preferred Interests of MIStS Issuer,
in connection with a Merger).
(m) Merger, Consolidation or Sale of Assets.
Except for any merger of MIStS Issuer with and into the
Corporation, the Corporation shall not consolidate or merge with
or into (whether or not the Corporation is the surviving
corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another
corporation, Person or entity.
(n) Transactions with Affiliates.
Neither the Corporation nor any Subsidiary will enter
into any material transaction, including, without limitation, any
purchase, sale, lease or exchange of Property including the
purchase or sale of oil and gas properties and hydrocarbons or
the rendering of any service, with any Affiliate unless such
transactions are in the ordinary course of its business and are
upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a
Person not an Affiliate. For the avoidance of doubt, each of the
transactions set forth in or required by the Transaction
Documents shall be deemed to satisfy the covenant set forth in
this Section 7(n).
(o) Payments for Consent.
The Corporation shall not, directly or indirectly, pay
or cause to be paid any consideration, whether by way of dividend
or other distribution, fee or otherwise, to any Holder of any
Class A Preferred Stock for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this
Certificate of Designations or the Class A Preferred Stock unless
such consideration is offered to be paid and is paid to all
Holders of the Class A Preferred Stock that consent, waive or
agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
(p) Reports.
(i) Whether or not required by the rules and
regulations of the Securities and Exchange Commission (the
"Commission"), so long as any shares of Class A Preferred
Stock are outstanding, the Corporation shall furnish to the
Holders of Class A Preferred Stock all quarterly and annual
financial information that would be required to be contained
in a filing by EEX with the Commission on Forms 10-Q and 10-K
if EEX were required to file such Forms, including
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual
information only, a report thereon by EEX's certified
independent accountants; and
(ii) The Corporation shall deliver to the Holders,
within 120 days after the end of each fiscal year, an
unaudited financial statement prepared in accordance with
GAAP together with an Officer's Certificate stating that a
review of the activities of the Corporation and its
Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing officers with a view to
determining whether the Corporation has kept, observed,
performed and fulfilled its obligations under this
Certificate of Designations and further stating, that to the
best of his or her knowledge the Corporation has kept,
observed, performed and fulfilled each and every covenant
contained in this Certificate of Designations and is not in
default in the performance or observance of any of the
terms, provisions and conditions of this Certificate of
Designations (or, if any such default shall have occurred,
describing all such defaults of which he or she may have
knowledge and what action the Corporation is taking or
proposes to take with respect thereto) and that to the best
of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the
Liquidation Preference of or dividends, if any, on the Class
A Preferred Stock is prohibited or if such event has
occurred, a description of the event and what action the
Corporation is taking or proposes to take with respect
thereto.
(iii) The Corporation shall, so long as any of
the shares of Class A Preferred Stock are outstanding,
deliver to the Holders, forthwith upon any Executive Officer
of the Corporation becoming aware of any default under this
Certificate of Designations, an Officers' Certificate
specifying such default and what action the Corporation is
taking or proposes to take with respect thereto.
(q) Conflicts with By-laws.
If any provisions of the Corporation's By-laws conflict
in any way with this Certificate of Designations, the Corporation
shall, so long as any of the shares of Class A Preferred Stock
are outstanding, take all necessary actions to amend such By-laws
and thereby resolve the conflict.
(r) Compliance with Engagement Letter and Fee Letter.
The Corporation shall, and shall cause its Subsidiaries
to comply with, the provision of the Engagement Letter and Fee
Letter.
(s) Merger upon Merger Notice.
If UBS delivers a Merger Notice, then either (i) the
Corporation and MIStS Issuer shall merge, with the Corporation
being the surviving corporation or (ii) the Corporation shall
redeem all of the Class A Preferred Stock and cause MIStS Issuer
to redeem all of the Preferred Interests such that no Event of
Default will result from the failure to so merge or redeem.
8. Payment.
(a) All amounts payable in cash with respect to the
Class A Preferred Stock shall be payable in United States dollars
at the office or agency of the Corporation maintained for such
purpose within the City and State of New York or, at the option
of the Corporation, payment of dividends may be made by check
mailed to the Holders of the Class A Preferred Stock at their
respective addresses set forth in the register of Holders of
Class A Preferred Stock maintained by the Transfer Agent,
provided that all cash payments with respect to the Global Shares
(as defined below) and shares of Class A Preferred Stock the
Holders of which have given wire transfer instructions to the
Corporation will be required to be made by wire transfer of
immediately available funds to the accounts specified by the
Holders thereof. Unless otherwise designated by the Corporation,
the Corporation's office or agency in New York shall be the
office of the Paying Agent maintained for such purpose.
(b) Any payment on the Class A Preferred Stock due on
any day that is not a Business Day need not be made on such day,
but may be made on the next succeeding Business Day with the same
force and effect as if made on such due date.
(c) The Corporation has initially appointed the
Transfer Agent to act as the Paying Agent. The Corporation may
at any time terminate the appointment of any Paying Agent and
appoint additional or other Paying Agents, provided that until
the Class A Preferred Stock has been delivered to the Corporation
for cancellation, or moneys sufficient to pay the Liquidation
Preference and accrued dividends on the Class A Preferred Stock
have been made available for payment and either paid or returned
to the Corporation as provided in this Certificate of
Designations, it shall maintain an office or agency in the
Borough of Manhattan, The City of New York for surrender of Class
A Preferred Stock.
(d) Dividends payable on the Class A Preferred Stock
on any redemption date or repurchase date that is a Dividend
Payment Date will be paid to the Holders of record as of the
immediately preceding Record Date.
(e) All moneys deposited with any Paying Agent or then
held by the Corporation in trust for the payment of the
Liquidation Preference and dividends on any shares of Class A
Preferred Stock which remain unclaimed at the end of two years
after such payment has become due and payable will be repaid to
the Corporation, and the Holder of such shares of Class A
Preferred Stock will thereafter look only to Corporation for
payment thereof.
9. Officer's Certificate.
Each Officer's Certificate provided for in this
Certificate of Designations shall include:
(a) a statement that the officer making such certi-
ficate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of such officer,
he or she has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion
of such officer, such condition or covenant has been
satisfied.
10. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares
of Class A Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other
special rights, other than those specifically set forth in this
Certificate of Designations (as such Certificate of Designations
may be amended from time to time) and in the Certificate of
Incorporation. The shares of Class A Preferred Stock shall have
no preemptive or subscription rights.
11. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
12. Severability of Provisions.
If any voting powers, preferences and relative,
participating, optional and other special rights of the Class A
Preferred Stock and qualifications, limitations and restrictions
thereof set forth in this resolution (as such resolution may be
amended from time to time) is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all
other voting powers, preferences and relative, participating,
optional and other special rights of Class A Preferred Stock and
qualifications, limitations and restrictions thereof set forth in
this resolution (as so amended) which can be given effect without
the invalid, unlawful or unenforceable voting powers, preferences
and relative, participating, optional and other special rights of
Class A Preferred Stock and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Class A
Preferred Stock and qualifications, limitations and restrictions
thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating,
optional or other special rights of Class A Preferred Stock and
qualifications, limitations and restrictions thereof unless so
expressed herein.
13. Form of Class A Preferred Stock.
(a) The shares of Class A Preferred Stock will bear a
legend to the following effect, unless the Corporation determines
otherwise in compliance with applicable law:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NEITHER BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
NOR BE OFFERED, SOLD OR OTHERWISE TRANSFERRED TO
ANY PERSON OR ENTITY PRINCIPALLY ENGAGED, DIRECTLY
OR INDIRECTLY, IN THE OIL AND GAS EXPLORATION
INDUSTRY OTHER THAN THE CORPORATION OR ANY OF ITS
AFFILIATES. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE CORPORATION
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, OR (c) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE CORPORATION SO REQUESTS), (2) TO
THE CORPORATION OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(b) Upon surrender of any share of Class A Preferred
Stock by a holder for registration of transfer or exchange, the
Corporation will execute and deliver in exchange therefor a new
certificate or certificates representing shares of Class A
Preferred Stock of the same aggregate tenor and Liquidation
Preference, registered in such names and in such denominations as
such holder may request. The Corporation may require
certificates of transferrers and transferees of shares of Class A
Preferred Stock, or an opinion of counsel, in order to establish
compliance with the Securities Act. The Corporation may require
payment by such holder of a sum sufficient to cover any stamp tax
or governmental charge imposed in respect of any such transfer.
(c) The Corporation shall maintain a register (the
"Class A Preferred Stock Register") of the holders of all the
shares of Class A Preferred Stock issued pursuant to this
Certificate of Designations. The Corporation will allow any
Holder of record of shares of Class A Preferred Stock to inspect
and copy such register at the Corporation's principal place of
business during normal business hours.
14. Notice.
Any notice or communication by the Corporation to UBS
is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the following address:
UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Telecopier No.: (212) 821-6119
Attention: James A. Ajello,
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telecopier No.: (212) 751-4864
Attention: Nancy L. Schimmel
15. Subordination of EEX Subordinated Note.
(a) The Corporation, for itself, its successors and
assigns, covenants and agrees, and each Holder of the Class A
Preferred Stock, by its acceptance thereof, likewise covenants
and agrees, that payment by EEX of the principal of and premium,
if any, and interest on the EEX Subordinated Note, and any fees
or costs related thereto, is hereby expressly subordinated, to
the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Debt. The
provisions of this Section 15 are made for the benefit of all
holders of Senior Debt and any such holder may proceed to enforce
such provisions.
(b) During such time as any Senior Debt remains unpaid and
an Event of Default (under and as defined in the EEX Credit
Agreement) exists and is continuing, the Corporation will not ask
for, demand, sue for, take, receive or accept from EEX, by set-off
or in any other manner, any payment or distribution on
account of the EEX Subordinated Note, or present any instrument
evidencing the EEX Subordinated Note for payment (other than such
presentment as may be necessary to prevent discharge of EEX or
other liable parties on such instrument).
(c) In the event that the Corporation shall receive any
payment or distribution on account of the EEX Subordinated Note
which the Corporation is not entitled to receive under the
provisions of this Section 15, the Corporation will hold any such
amount so received in trust for the holders of the Senior Debt
and will forthwith turn over such payment to any court of
competent jurisdiction in the form received by the Corporation
(together with any necessary endorsement) to be applied ratably
to the Senior Debt.
<signature page follows>
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be duly executed by Joseph T. Leary, its Vice
President, Finance and Treasure, this 29th day of September,
1997.
EEX Capital Inc.
By:/s/ Joseph T. Leary
----------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and
Treasurer
<PAGE>
EXHIBIT 4.3
PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of September 29, 1997
by and between
EEX Capital Inc.
and
UBS Securities LLC
<PAGE>
<PAGE>
This Registration Rights Agreement (this "Agreement") is
made and entered into as of September 29, 1997, by and between
EEX Capital Inc., a Delaware corporation (the "Company"), and UBS
Securities LLC, as Placement Agent for the Holders (as defined
below) of the Company's Class A Cumulative Perpetual Increasing
Dividend Preferred Stock (the "Preferred Stock"), issued pursuant
to the Subscription Agreement (as defined below).
RECITALS:
This Agreement is made pursuant to the Subscription
Agreement, dated September 29, 1997 (the "Subscription
Agreement"), by and among Enserch Exploration, Inc. a Texas
corporation ("EEX"), the Company, MIStS Issuer L.L.C., a Delaware
limited liability company, and UBS. In order to induce UBS to
purchase the Preferred Stock, the Company has agreed to provide
the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the
obligations of UBS as set forth in the Subscription Agreement.
Capitalized terms used herein and not otherwise defined shall
have the meaning assigned to them in the Subscription Agreement.
AGREEMENT:
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 promulgated under the
Act.
Certificate of Designations. The Certificate of
Designations, Preferences and Relative, Participating, Optional
and other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions thereof relating to the Preferred
Stock.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Effectiveness Deadline: As defined in Section 3(a).
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exempt Resales: The transactions in which UBS propose to
sell the Preferred Stock to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, to
certain "accredited investors," as such term is defined in Rule
501(a)(1), (2), (3), (5) and (7) of Regulation D under the Act
and pursuant to Regulation S under the Act.
Holders: As defined in Section 2.
Indemnified Holder: As defined in Section 7(a).
Indemnified Party: As defined in Section 7(c).
Indemnified Person: As defined in Section 7(c).
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared
effective, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including post-
effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 5(c).
Registration Default: As defined in Section 4.
Registration Statement: Any registration statement of the
Company relating to the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration
Statement (i) that is filed pursuant to the provisions of this
Agreement and (ii) including the preliminary prospectus or the
Prospectus, as the case may be, included therein, all amendments
and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Shelf Registration Statement: As defined in Section 3.
Suspension Notice: As defined in Section 5(c).
Transfer Restricted Securities: Each share of Preferred
Stock, until the earliest to occur of (a) the date on which such
share of Preferred Stock has been disposed of pursuant to a Shelf
Registration Statement or (b) the date on which such share of
Preferred Stock is distributed in accordance with to Rule 144.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "Holder") whenever such Person owns Transfer
Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. The Company shall:
(i) cause to be filed, on or prior to September 30,
1998 a shelf registration statement pursuant to Rule 415
under the Act (the "Shelf Registration Statement"), relating
to all then outstanding Transfer Restricted Securities, and
(ii) shall use its reasonable best efforts to cause
such Shelf Registration Statement to become effective on or
prior to September 30, 1998 (the "Effectiveness Deadline").
The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement required by this Section 3(a)
continuously effective, supplemented and amended as required by
and subject to the provisions of Sections 5(a) and (b) hereof to
the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to
the benefit of this Section 3(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced
from time to time, for a period of at least two years (as
extended pursuant to Section 5(b)(i)) following the date on which
such Shelf Registration Statement first becomes effective under
the Act, or such shorter period as will terminate when all of the
then outstanding Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of
Transfer Restricted Securities may include any of its Transfer
Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 10 days after receipt of a
request therefor, the information required by Item 507 or 508 of
Regulation S-K, as applicable, of the Act for use in connection
with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages
pursuant to Section 4 unless and until such Holder shall have
provided all such information. Each selling Holder agrees to
promptly furnish additional information required to be disclosed
in order to make the information previously furnished to the
Company by such Holder not materially misleading.
SECTION 4. LIQUIDATED DAMAGES
If (i) the Registration Statement required by this Agreement
is not filed with the Commission on or prior to the Effectiveness
Deadline, (ii) such Registration Statement has not been declared
effective by the Commission on or prior to the Effectiveness
Deadline (except where such delay is caused by a Holder of
Transfer Restricted Securities) or (iii) the Registration
Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to
be usable for its intended purpose without being succeeded timely
by a post-effective amendment to such Registration Statement that
cures such failure and that is timely declared effective (each
such event referred to in clauses (i) through (iii), a
"Registration Default"), then the Company hereby agrees to pay to
each Holder of Transfer Restricted Securities affected thereby
liquidated damages in an amount equal to 50 basis points per
annum on the Liquidation Preference of Transfer Restricted
Securities held by such Holder for the first 90-day period
immediately following the occurrence of such Registration
Default. The amount of the liquidated damages shall increase by
an additional 50 basis points per annum on the Liquidation
Preference of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of liquidated damages of 200
basis points per annum on the Liquidation Preference of Transfer
Restricted Securities; provided, however, the Company shall in no
event be required to pay liquidated damages for more than one
Registration Default at any given time. Notwithstanding anything
to the contrary set forth herein, (1) upon filing of the Shelf
Registration Statement, in the case of (i) above, (2) upon the
effectiveness of the Shelf Registration Statement, in the case of
(ii) above or (3) upon the filing of a post-effective amendment
to the Registration Statement or an additional Registration
Statement that causes the Shelf Registration Statement to again
be declared effective or made usable in the case of (iii) above,
the liquidated damages payable with respect to the Transfer
Restricted Securities as a result of such clause (i), (ii) or
(iii), as applicable, shall cease.
All accrued but unpaid liquidated damages shall be paid to
the Holders entitled thereto, in the manner provided for the
payment of dividends in the Certificate of Designations, on the
next regular Dividend Payment Date (as defined in Section 2(a) of
the Certificate of Designations). All obligations of the Company
set forth in the preceding paragraph that are outstanding with
respect to any then outstanding Transfer Restricted Security at
the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations
with respect thereto have been satisfied in full.
SECTION 5. REGISTRATION PROCEDURES
(a) Shelf Registration Statement. In connection with the
Shelf Registration Statement, the Company shall comply with all
the provisions of Section 5(b) below and shall use its reasonable
best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to
Section 3(b) hereof), and pursuant thereto the Company will
prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the
Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and
otherwise in accordance with the provisions hereof.
(b) General Provisions. In connection with any
Registration Statement and any related Prospectus required by
this Agreement, the Company shall:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide
all requisite financial statements for the period specified
in Section 3 of this Agreement. Upon the occurrence of any
event that would cause any such Registration Statement or
the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall
file promptly an appropriate amendment to such Registration
Statement curing such defect, and, if Commission review is
required, use its reasonable best efforts to cause such
amendment to be declared effective as soon as practicable.
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration
Statement effective for the period set forth in Section 3;
cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act, and to comply fully with
Rules 424, 430A and 462, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by
such Registration Statement during the period in accordance
with the intended method or methods of distribution by the
selling Holder named in such Registration Statement or
supplement to the Prospectus;
(iii) advise the selling Holders promptly and, if
requested by such Persons, confirm such advice in writing,
(A) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for
offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event known to
the Company that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment
or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement in
order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; if at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of such order at
the earliest possible time;
(iv) subject to Section 5(b)(i), if any fact or event
contemplated by Section 5(b)(iii)(D) above shall exist or
have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading;
(v) furnish to UBS and each selling Holder named in
any Registration Statement or Prospectus in connection with
such sale, if any, before filing with the Commission, copies
of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing
of such Registration Statement), which documents will be
subject to the review and comment of such Holders in
connection with such sale, if any, for a period of at least
three Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to
which the selling Holders of the Transfer Restricted
Securities covered by such Registration Statement in
connection with such sale, if any, shall reasonably object
within three Business Days; a selling Holder shall be deemed
to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with the
applicable requirements of the Act;
(vi) promptly prior to the filing of any document that
is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document to
the selling Holders in connection with such sale, if any,
make the Company's representatives available for discussion
of such document and other customary due diligence matters;
(vii) make available at reasonable times for inspection
by the selling Holders participating in any disposition
pursuant to such Registration Statement and any attorney or
accountant retained by such selling Holders, all financial
and other records, pertinent corporate documents of the
Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by
any such selling Holder, attorney or accountant in
connection with such Registration Statement or any post-
effective amendment thereto subsequent to the filing thereof
and prior to its effectiveness; provided, however, no such
information shall be required to be made available, unless
such Selling Holders enter into customary confidentiality
agreements;
(viii) if requested by any selling Holders in connection
with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-
effective amendment if necessary, such information as such
Selling Holders may reasonably request to have included
therein, including without limitation, information relating
to the "Plan of Distribution" of the Transfer Restricted
Securities; provided, however, if the Company reasonably
objects to the inclusion of such information, it shall be
excluded; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to
be included in such Prospectus supplement or post-effective
amendment;
(ix) furnish to each selling Holder in connection with
such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission,
and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits
(including exhibits incorporated therein by reference);
(x) deliver to each selling Holder, without charge, as
many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consent
to the use (in accordance with law) of the Prospectus and
any amendment or supplement thereto by each of the selling
Holders in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;
(xi) upon the request of any selling Holder, enter into
such agreements (including underwriting agreements) and make
such representations and warranties and take all such other
actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably
requested by any Holder of Transfer Restricted Securities in
connection with any sale or resale pursuant to any
Registration Statement and in such connection, the Company
shall:
(A) upon request of any selling Holder, furnish (or
in the case of paragraphs (2) and (3), use its reasonable
best efforts to cause to be furnished) to each selling
Holder, upon the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated such date, signed on
behalf of the Company by (x) the President or any Vice
President and (y) a principal financial or accounting
officer of the Company, confirming, as of the date
thereof, such matters as the selling Holders may
reasonably request;
(2) an opinion, dated the date of effectiveness
of the Shelf Registration Statement of counsel for the
Company covering customary matters subject to customary
qualifications and exceptions; and
(3) a customary comfort letter, subject to and in
accordance with applicable Statements on Auditing
Standards and related pronouncements dated the date of
effectiveness of the Shelf Registration Statement from
the Company's independent accountants, in the customary
form and covering matters of the type customarily
covered in comfort letters to underwriters in
connection with underwritten offerings; and
(B) deliver such other documents and certificates
as may be reasonably requested by the selling Holders to
evidence compliance with clause (A) above and with any
customary conditions contained in the any agreement
entered into by the Company pursuant to this clause (xi);
(xii) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders
and their counsel in connection with the registration and
qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the
selling Holders may request and do any and all other acts or
things necessary or advisable to enable the disposition in
such jurisdictions of the Transfer Restricted Securities
covered by the Registration Statement; provided, however,
that neither the Company shall be required to register or
qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so
subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer
being Transfer Restricted Securities, cooperate with the
selling Holders to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities
in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiv) use its reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by
the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (xii)
above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a
Registration Statement covering such Transfer Restricted
Securities and provide printed certificates for the Transfer
Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xvi) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the
Commission, and make generally available to its security
holders with regard to any Registration Statement, as soon
as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective
date of the Registration Statement (as such term is defined
in paragraph (c) of Rule 158 under the Act);
(xvii) make appropriate officers of the Company
reasonably available to the selling Holders for meetings
with prospective purchasers of the Transfer Restricted
Securities and prepare and present to potential investors
customary "road show" material in a manner consistent with
other new issuances of other securities similar to the
Transfer Restricted Securities; and
(xviii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange
Act.
(c) Restrictions on Holders. Each Holder agrees by
acquisition of a Transfer Restricted Security that, upon receipt
of the notice referred to in Section 5(b)(i) or any notice from
the Company of the existence of any fact of the kind described in
Section 5(b)(iii)(D) hereof (in each case, a "Suspension
Notice"), such Holder will immediately discontinue distribution
of Transfer Restricted Securities pursuant to the Registration
Statement until (i) such Holder's has received copies of the
supplemented or amended Prospectus contemplated by Section
5(b)(iv), or (ii) such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus (in each case,
the "Recommencement Date"). Each Holder receiving a Suspension
Notice hereby agrees that it will either (i) promptly destroy any
Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with
more recently dated Prospectuses or (ii) deliver to the Company
all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of
the Suspension Notice. The time period regarding the
effectiveness of such Registration Statement set forth in Section
3, shall be extended by a number of days equal to the number of
days in the period from and including the date of delivery of the
Suspension Notice to the Recommencement Date.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of
or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing
fees and expenses; (ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company; (v) all application and
filing fees in connection with listing the Preferred Stock on a
national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort
letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses,
including the expenses of any annual audit and the fees and
expenses of any special experts, retained by the Company.
(b) In connection with any Registration Statement required
by this Agreement, the Company will reimburse the Purchasers and
the Holders of Transfer Restricted Securities being registered
pursuant to the Shelf Registration Statement for the reasonable
fees and disbursements of not more than one counsel, who shall be
Latham & Watkins, unless another firm shall be chosen by the
Holders of a majority in Liquidation Preference of the Transfer
Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 7. INDEMNIFICATION
(a) The Company agrees, to indemnify and hold harmless (i)
each Holder and (ii) each person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an "Indemnified Holder"),
from and against any and all losses, claims, damages,
liabilities, judgments, (including without limitation, any legal
or other expenses incurred in connection with investigating or
defending any matter, including any action that could give rise
to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, or
Prospectus (or any amendment or supplement thereto) provided by
the Company to any holder or any prospective purchaser of
Preferred Stock, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments
are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to
any of the Holders furnished in writing to the Company by any of
the Holders.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the
Company, and its directors and officers, and each person, if any,
who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company, to the same extent
as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with reference to information
relating to such Indemnified Holder furnished in writing to the
Company by such Indemnified Holder expressly for use in any
Registration Statement. In no event shall any Indemnified Holder
be liable or responsible for any amount in excess of the amount
by which the total amount received by such Indemnified Holder
with respect to its sale of Transfer Restricted Securities
pursuant to a Registration Statement exceeds (i) the amount paid
by such Indemnified Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such
Indemnified Holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission.
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to
Section 7(a) or 7(b) (the "indemnified party"), the indemnified
party shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees
and expenses of such counsel, as incurred (except that in the
case of any action in respect of which indemnity may be sought
pursuant to both Sections 7(a) and 7(b), an Indemnified Holder
shall not be required to assume the defense of such action
pursuant to this Section 7(c), but may employ separate counsel
and participate in the defense thereof, but the fees and expenses
of such counsel, except as provided below, shall be at the
expense of the Indemnified Holder). Any indemnified party shall
have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party,
unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party,
(ii) the indemnifying party shall have failed to assume the
defense of such action or employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such
action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified
party shall have been advised by such counsel that there may be
one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party
(in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of the indemnified
party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for
the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by a majority
of the Indemnified Holders, in the case of the parties
indemnified pursuant to Section 7(a), and by the Company, in the
case of parties indemnified pursuant to Section 7(b). The
indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of
any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall
have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case
where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment
with respect to, any pending or threatened action in respect of
which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability on claims that are or
could have been the subject matter of such action and (ii) does
not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in
this Section 7 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities or judgments referred
to therein, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or (ii) if the
allocation provided by clause 7(d)(i) is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 7(d)(i)
above but also the relative fault of the Company, on the one
hand, and of the Indemnified Holder, on the other hand, in
connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well
as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnified
Holder, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the
Company, on the one hand, or by the Indemnified Holder, on the
other hand, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and
judgments referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of Section
7(a), any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any
action or claim.
The Company and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
any matter, including any action that could have given rise to
such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 7, no Holder or
its related Indemnified Holders shall be required to contribute,
in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its
Transfer Restricted Securities pursuant to a Registration
Statement exceeds the sum of (A) the amount paid by such Holder
for such Transfer Restricted Securities plus (B) the amount of
any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 7(c) are
several in proportion to the respective Liquidated Preference
amount of Transfer Restricted Securities held by each of the
Holders hereunder and not joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during
any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act, to make available, upon
request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4)
under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 9. "PIGGY-BACK" RIGHTS
9.1 Registration Rights.
(a) Piggyback Rights. If at any time during the period
commencing on September 30, 1998 until eligible for resale
pursuant to 144(k), but not to exceed two years, the Company
shall file a registration statement (other than on Form S-4, Form
S-8, or any successor form) with the Commission, the Company
shall give all the then holders of any Shares of Preferred Stock
(the "Eligible Holders") at least 30 days prior written notice of
the filing of such registration statement. If requested by any
Eligible Holder in writing within 30 days after receipt of any
such notice, the Company shall, at the Company's sole expense
(other than the fees and disbursements of counsel for the
Eligible Holders and the underwriting discounts payable in
respect of the Shares of Preferred Stock sold by any Eligible
Holder), register or qualify all or, at each Eligible Holder's
option, any portion of the Shares of Preferred Stock of any
Eligible Holders who shall have made such request, concurrently
with the registration of such other securities, all to the extent
requisite to permit the public offering and sale of the Shares of
Preferred Stock through the facilities of all appropriate
securities exchanges and the over-the-counter market, and will
use its best efforts through its officers, directors, auditors
and counsel to cause such registration statement to become
effective as promptly as practicable. Notwithstanding the
foregoing, if the managing underwriter of any such offering shall
advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Shares of Preferred Stock
requested to be included in the registration concurrently with
the securities being registered by the Company would materially
adversely affect the distribution of such securities by the
Company for its own account, then the Company shall not be
required to include such Shares of Preferred Stock in such
registration, provided that any such reduction shall be on a pro
rata basis among all selling shareholders; provided, however, (i)
that in the event that the Company does not intend to include all
of the requested Shares of Preferred Stock in the registration
statement due to such advice received from the managing
underwriter, if the Company includes in the registration
statement any securities other than securities being offered by
the Company for its own account, then the Company shall include
any of the Shares of Preferred Stock requested to be included in
such registration statement by the Eligible Holders and any such
other securities on a pro rata basis and (ii) if the Company does
not include all of the requested Shares of Preferred Stock in the
registration statement, then, if requested by the Eligible
Holders, the Company will within six months after the
registration statement becomes effective file at its sole expense
a new registration statement relating to those Shares of
Preferred Stock which the Company did not include in the prior
registration statement and the Company will use its best efforts
to cause the registration statement to become effective as
promptly as practical.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any
failure by the Company to comply with its obligations under
Sections 3 hereof may result in material irreparable injury to
UBS or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, UBS or any
Holder may obtain such relief as may be required to specifically
enforce the Company's obligations under Sections 3 hereof. The
Company further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on
or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way materially
conflict with and are not materially inconsistent with the rights
granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof
may not be given unless (i) in the case of Section 4 hereof and
this Section 10(c)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer Restricted
Securities and (ii) in the case of all other provisions hereof,
the Company has obtained the written consent of Holders of a
majority of the outstanding Liquidated Preference amount of
Transfer Restricted Securities (excluding Transfer Restricted
Securities held by the Company of its Affiliates).
(d) Third Party Beneficiary. The Holders shall be third
party beneficiaries to the agreements made hereunder between the
Company, on the one hand, and UBS, on the other hand, and shall
have the right to enforce such agreements directly to the extent
they may deem such enforcement necessary or advisable to protect
its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Company under the Preferred Stock Register;
and
(ii) if to the Company, to it c/o:
Enserch Exploration, Inc.
2500 City West Boulevard, Suite 1400
Houston, Texas 77042
Telecopier No.: (281) 271-3416
Attention: Treasurer
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, LLP
1900 Pennzoil - South Tower
711 Louisiana Street
Houston, Texas 77002
Telecopier No.: (713) 236-0822
Attention: William D. Morris
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to
an air courier guaranteeing overnight delivery.
Upon the date of filing of the Shelf Registration Statement
notice shall be delivered to UBS Securities LLC, on behalf of
Holders (in the form attached hereto as Exhibit A) and shall be
addressed to: Attention: James A. Ajello, 299 Park Avenue, New
York, New York 10171-0026.
(f) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of
each of the parties, including without limitation and without the
need for an express assignment, subsequent Holders of Transfer
Restricted Securities; provided, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Securities in violation of the terms hereof
or of the Subscription Agreement or the Certificate of
Designations. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by
operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted
Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the
Subscription Agreement, and such Person shall be entitled to
receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
referred to herein with respect to the registration rights
granted with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
EEX Capital Inc.
By:/s/ Joseph T. Leary
-----------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and
Treasurer
UBS Securities LLC
By: /s/ James A. Ajello
------------------------
Name: James A. Ajello
Title: Managing Director
By: /s/ Jeffrey Donahue
------------------------
Name: Jeffrey Donahue
Title: Director
<PAGE>
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
REGISTRATION STATEMENT
To: UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Attention: _______________ (Compliance Department)
Fax: (212) 821-3285
From: EEX Capital Inc.
Class A Cumulative Perpetual Increasing Dividend
Preferred Stock
Date:___, 199__
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, the Company filed a Shelf Registration
Statement with the Securities and Exchange Commission. The
Company anticipates the Registration Statement to be declared
effective on or before _______________.
<PAGE>
EXHIBIT 4.4
CUMULATIVE PERPETUAL INCREASING DIVIDEND PREFERRED INTERESTS
AND
CLASS A CUMULATIVE PERPETUAL INCREASING DIVIDEND
PREFERRED STOCK
SUBSCRIPTION AGREEMENT
among
EEX Capital Inc., MIStS Issuer L.L.C.,
UBS Securities LLC,
as Placement Agent for the Holders from time
to time of the Preferred Securities,
and
Enserch Exploration, Inc.
(not an issuer)
_____________________________
Dated as of September 29, 1997
_____________________________
<PAGE>
<PAGE>
PREFERRED INTERESTS AND PREFERRED STOCK SUBSCRIPTION AGREEMENT
PREFERRED INTERESTS AND PREFERRED STOCK SUBSCRIPTION
AGREEMENT, dated as of September 29, 1997 (this "Agreement"),
among MIStS Issuer L.L.C., a Delaware limited liability company
("MIStS Issuer"), EEX Capital Inc., a Delaware corporation (the
surviving corporation of the merger between EEX Preferred Capital
Inc. and EEX Capital L.L.C.) ("EEX Capital"), each directly or
indirectly wholly owned subsidiaries of Enserch Exploration,
Inc., a Texas corporation ("EEX"), and UBS Securities LLC
individually ("UBS") and as placement agent for the holders from
time to time of the Preferred Interests (as defined below) and
the Preferred Stock (as defined below) (in such capacity, the
"Placement Agent").
RECITALS
EEX Capital has (i) authorized 150,000 shares and (ii)
authorized the execution and issuance of 75,000 shares, in each
case, of its Class A Cumulative Perpetual Increasing Dividend
Preferred Stock (the "Preferred Stock") to facilitate the
financing of the redemption (the "Redemption") by MIStS Issuer of
its outstanding Minority Interest Structured Securities (the
"MIStS").
MIStS Issuer has authorized the execution and issuance
of 75,000 shares of its Cumulative Perpetual Increasing Dividend
Preferred Interests (the "Preferred Interests" and, together with
the Preferred Stock, the "Preferred Securities") to facilitate
the financing of the Redemption.
The Preferred Stock will be issued pursuant to a
certificate of designations, preferences and relative,
participating, optional and other special rights of preferred
stock and qualifications, limitations and restrictions thereof
(the "Certificate of Designations"), to be filed with the
Secretary of State of the State of Delaware on or before the
Closing Date (as defined below).
The Preferred Interests will be issued pursuant to a
second amended and restated limited liability company agreement
of MIStS Issuer (the "LLC Agreement"), to be executed on or
before the Closing Date.
This Agreement sets forth, inter alia, the terms and
conditions upon which UBS will purchase the Preferred Interests
and the Preferred Stock.
AGREEMENT
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used in this
Agreement, the following terms shall have the meanings specified
below:
"Action" has the meaning specified in Section 10.2.
"Additional Costs" means costs indemnified under
Section 10.4.
"Affected Party" means any Holder, any beneficial owner
of any Holder, and their respective successors and assigns.
"Affiliate" means with respect to any Person, any other
Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person. For purposes of the foregoing
definition, "control" means the direct or indirect ownership of
more than 50% of the outstanding capital stock or other equity
interests having ordinary voting power.
"Bankruptcy Law" means Title 11, United States Code, or
any similar federal or state law for the relief of debtors.
"beneficial owner" has the meaning as defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act.
"Board" means the Board of Governors of the Federal
Reserve System of the United States or any successor.
"Business Day" mean a day other than a Saturday, a
Sunday, any federal holiday or any day on which dealings in U.S.
dollar deposits are not carried out in the London interbank
market.
"Capital Lease Obligations" means, with respect to EEX
or any Subsidiary of EEX (including EEX Capital and MIStS
Issuer), the obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the right
to use) real and/or personal property which obligations are
required to be classified and accounted for as a liability for a
capital lease on a balance sheet of such Person in accordance
with GAAP and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, (iii)
in the case of a partnership, partnership interests (whether
general or limited) and (iv) any other interest or participation
that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing
Person.
"Certificate of Designations" has the meaning specified
in the recitals to this Agreement and is in the form attached
hereto as Exhibit A.
"Change of Control" means the acquisition by any
Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of the Exchange Act) of 35% or more
of the outstanding shares of voting stock of EEX.
"Closing" has the meaning specified in Section 6.1.
"Closing Date" has the meaning specified in Section
6.1.
"Code" means the Internal Revenue Code of 1986, as
amended, and any regulation promulgated thereunder.
"Commitment" means the commitment to purchase Preferred
Interests in the Liquidation Preference amount or Preferred Stock
in the Liquidation Preference amount in each case as set forth on
the signature pages hereto opposite UBS' name.
"Common Interests" means all interests now or hereafter
authorized of any class of common interests of MIStS Issuer,
including the common interests and any other interests of MIStS
Issuer, howsoever designated, authorized after the Initial Issue
Date, that have the right (subject always to prior rights of any
class or series of Preferred Interests) to participate in the
distribution of the assets and earnings of MIStS Issuer without
limit as to per share amount.
"Common Stock" means all shares now or hereafter
authorized of any class of common stock of EEX Capital, including
the common stock, par value per share $100.00, and any other
stock of EEX Capital, howsoever designated, authorized after the
Initial Issue Date, that have the right (subject always to prior
rights of any class or series of preferred stock) to participate
in the distribution of the assets and earnings of EEX Capital.
"Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy
Law.
"Debt" shall mean for EEX and its Subsidiaries (except
EEX Capital and MIStS Issuer), the sum of the following (without
duplication): (i) all obligations for borrowed money or
evidenced by bonds, debentures, mandatorily redeemable preferred
stock with maturities before the Revolving Credit Termination
Date (as defined in the EEX Credit Agreement), notes or other
similar instruments (excluding interest, fees and charges); (ii)
all obligations in respect of bankers acceptances, unreimbursed
drawings on letters of credit, surety or other bonds; (iii) all
Capital Lease Obligations; (iv) all Operating Lease Obligations;
(v) all financial guaranties in respect of Indebtedness of
unconsolidated Affiliates and unrelated Persons; (vi) all
obligations secured by a Lien on any asset, whether or not such
indebtedness is assumed, but excluding obligations secured by a
Lien permitted by Sections 9.02(c), (e), (f), (h), (i), (j), (k)
and (l) of the EEX Credit Agreement; (vii) all production
payments in connection with oil and gas properties; and (viii)
all Indebtedness of Special Entities (as defined in the EEX
Credit Agreement) to the extent EEX Capital or MIStS Issuer is
liable for such Indebtedness under GAAP or such Indebtedness is
reflected on the consolidated balance sheet of EEX or any
Subsidiary; provided however, such term shall not include
Permitted Subordinated Debt.
"Default" means any event that is, or after the passage
of time or the giving of notice (or both) would be, an Event of
Default.
"EEX" means Enserch Exploration, Inc., a Texas
corporation.
"EEX Capital" has the meaning specified in the preamble
to this Agreement, which is the surviving entity of the Merger.
"EEX Capital Subordinated Note" means the subordinated
promissory note made by EEX Capital in favor of MIStS Issuer,
reevidencing $75.0 million of Indebtedness, dated as of September
29, 1997.
"EEX Capital Subordinated Note" means the subordination
agreement dated as of September 29, 1997 issued by EEX Capital in
favor of the administrative agent and the lenders under the EEX
Credit Agreement and subordinating the EEX Capital Subordinated
Note and the Guaranty Agreement to the "Superior Indebtedness"
(as defined in such subordination agreement).
"EEX Credit Agreement" means that certain Credit
Agreement dated as of May 1, 1995 among EEX, as borrower, The
Chase Manhattan Bank, as Administrative Agent, and the lenders
signatory thereto, as amended by the First Amendment dated
September 19, 1996, and the Second Amendment dated June 27, 1997,
and as modified by that certain letter from EEX to the
Administrative Agent and in effect on the Closing Date, together
with such amendments thereto as may be both adopted in accordance
therewith and consented to by the Majority Holders.
"EEX LLC" means EEX Capital L.L.C., a Delaware limited
liability company that was merged with and into EEX Preferred
pursuant to the Merger, with EEX Preferred being the surviving
corporation and renamed EEX Capital Inc.
"EEX Preferred" means EEX Preferred Capital Inc., a
Delaware corporation now known as EEX Capital Inc., into which
EEX LLC was merged pursuant to the Merger.
"EEX Subordinated Note" means the amended and restated
subordinated demand note made by EEX in favor of EEX Capital,
reevidencing $150.0 million of Indebtedness, dated as of
September 29, 1997.
"EEX Subordination Agreement" means the subordination
agreement dated as of September 29, 1997 issued by EEX Capital in
favor of the administrative agent and the lenders under the EEX
Credit Agreement and subordinating the EEX Subordinated Note to
the "Superior Indebtedness" (as such term is defined in such
subordination agreement).
"Engagement Letter" means that certain engagement
letter agreement by and among UBS EEX, EEX Preferred, EEX LLC and
MIStS Issuer, dated as of September 24, 1997, as modified by
letter agreement dated September 29, 1997.
"Equity Interests" means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
"Event of Default" means any event specified in Section
8.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fee Letter" means that certain fee letter agreement by
and among UBS, EEX, EEX preferred, EEX LLC and MIStS Issuer,
dated as of September 24, 1997, as modified by letter agreement
dated September 29, 1997.
"GAAP" means generally accepted accounting principles
in the United States of America in effect from time to time.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof and
any Person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the
payment of which obligations or guarantee the full faith and
credit of the United States of America is pledged.
"Guarantee" means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part
of any Indebtedness.
"Guaranty Agreement" shall mean that certain Amended
and Restated Guaranty Agreement; dated as of September 29, 1997,
issued by EEX in favor of MIStS Issuer guaranteeing the
obligations of EEX Capital to MIStS Issuer under the EEX Capital
Subordinated Note, as the same may be further amended, modified
or supplemented from time to time with the consent of the
Majority Holders.
"Holder" means the record holder of one or more (i)
shares of Preferred Stock, as shown on the books and records of
EEX Capital, or (ii) interests of Preferred Interests, as shown
on the books and records of MIStS Issuer.
"Incur" has the meaning specified in Section 5.3.
"Indebtedness" of a Person shall mean such Person's (i)
obligations for borrowed money, whether or not evidenced by a
bond, note or similar instrument, (ii) obligations representing
the deferred purchase price of property other than accounts
payable arising in the ordinary course of such Person's business
on terms customary in the trade, (iii) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by
such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) Capital Lease Obligations,
(vi) obligations for which such Person is obligated pursuant to a
Guarantee or pursuant to a letter of credit, (vii) Hedging
Obligations, and (viii) Mandatorily Redeemable Obligations.
"Indemnified Party" has the meaning specified in
Section 10.1.
"Indemnifying Parties" has the meaning specified in
Section 10.1
"Lien" means any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner
of the Property, whether such interest is based on the common
law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes.
"Liquidated Damages" means any and all liquidated
damages then owing pursuant to any of the Transaction Documents.
"Liquidation Preference" means (i) $1,000.00 per
Preferred Interest or (ii) $1,000.00 per share of Preferred
Stock, as the case may be.
"LLC Agreement" has the meaning specified in the
recitals to this Agreement and is attached as Exhibit B hereto.
"Loan Documents" has the meaning specified in Section
2.1.
"Majority Holders" means a majority in Liquidation
Preference of the Holders of the Preferred Securities.
"Mandatorily Redeemable Obligation" shall mean, with
respect to any Person, an obligation of such Person or any of its
Subsidiaries to the extent that it is redeemable, payable or
required to be purchased or otherwise retired or extinguished (a)
at a fixed or determinable date, whether by operation of a
sinking fund or otherwise, (b) at the option of any Person other
than such Person or such Subsidiary, or (c) upon the occurrence
of a condition not solely within the control of such Person or
such Subsidiary, such as a redemption required to be made out of
future earnings.
"Material Adverse Effect" means any material and
adverse change in the financial condition, business or results of
operations of EEX and its Subsidiaries (including EEX Capital and
MIStS Issuer) taken as a whole which makes EEX unable to perform
its obligations under the Guaranty Agreement or the EEX
Subordinated Note.
"Merger" means the merger of EEX LLC with and into
Enserch Preferred on September 26, 1997, with Enserch Preferred
being the surviving corporation and renamed EEX Capital Inc.
"Merger Notice" has the meaning specified in Section
5.6.
"MIStS" has the meaning specified in the recitals to
this Agreement.
"Net Cash Proceeds" means the aggregate cash proceeds
received (including any cash payments received by way of deferred
payment of principal pursuant to a promissory note or installment
receivable or otherwise, but only as and when received) from any
Capital Market Transaction, net of (i) all commissions (including
any underwriters' discounts) and (ii) other ordinary and
reasonable fees and expenses (including legal fees and expenses)
incurred as a consequence of such Capital Market Transaction.
"Obligations" means any principal, interest, penalties,
fees (including, but not limited to, reasonable fees and expenses
of counsel), indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing and
Indebtedness.
"Officer" means, with respect to any Person, the
Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial
Officer, the Managing Member, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Vice-President of
such Person.
"Officer's Certificate" means, with respect to any
Person, a certificate signed on behalf of such Person by an
Officer of such Person, who must be the Chief Executive officer,
the Chief Financial officer, the Treasurer or the Principal
accounting officer of the Corporation that meets the requirements
of Section 14.4.
"Operating Lease Obligations" shall mean, as to EEX or
any direct or indirect Subsidiary, the obligations of such person
to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which
obligations are not required to be classified and accounted for
as a liability for a capital lease on a balance sheet of such
Person and, the purposes of this Agreement, the amount of such
obligations shall be the discounted present value of the lease
payments, discounted in the same manner a capital lease would be
discounted according to GAAP.
"Opinion of Counsel" means, with respect to any Person,
an opinion from legal counsel to such Person that is reasonably
acceptable to the Placement Agent and meets the requirements of
Section 14.4.
"Permanent Securities" means any securities or other
obligation issued by the Company to redeem or otherwise retire
the Preferred Securities in accordance with the terms and
conditions of the Fee Letter.
"Permitted Subordinated Debt" means Debt of EEX or
another Subsidiary subordinated to the Indebtedness on terms
substantially similar to the terms set forth in the Subordination
Agreements.
"Person" means any individual, corporation, company,
limited liability company, voluntary association, partnership,
joint venture, trust, unincorporated organization or government
or any agency, instrumentality or political subdivision thereof,
or any other form of entity.
"Placement Agent" has the meaning specified in the
preamble to this Agreement.
"Preferred Securities" has the meaning specified in the
recitals to this Agreement.
"Preferred Interests" has the meaning specified in the
recitals to this Agreement.
"Preferred Stock" has the meaning specified in the
recitals to this Agreement.
"Preferred Stock Register" means the register
maintained by EEX Capital pursuant to the Certificate of
Designations.
"Prohibited Issuance" means an issuance of securities
or incurrence of Indebtedness in violation of the covenant set
forth in Section 5.3.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Redemption Price" means the Liquidation Preference,
plus (i) accrued and unpaid dividends to the date of redemption
and (ii) any Additional Costs.
"Relevant Parties" means EEX, EEX Capital, MIStS Issuer
and each of their respective Subsidiaries (if any).
"Required Merger Date" means the first dividend payment
date occurring at least thirteen (13) Business Days after receipt
by EEX Capital and/or MIStS Issuer of a Merger Notice.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Significant Subsidiary" means any Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such Regulation is in effect on the date hereof.
"Stock Registration Rights Agreement" means the
registration rights agreement, dated as of September 29, 1997,
between EEX Capital and the Placement Agent on behalf of the
Holders, in the form attached as Exhibit D.
"Subordinated Notes" means, collectively, the EEX
Capital Subordinated Note and the EEX Subordinated Note.
"Subordinated Agreements" means, collectively, the EEX
Capital Subordination Agreement and the EEX Subordination
Agreement.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more
than 50% of the total voting power of shares of Voting Stock
thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii)
any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such
person or (b) the only general partners of which are such Person
or of one or more Subsidiaries of such Person (or any combination
thereof).
"Transaction Documents" means this Agreement, the LLC
Agreement, the Certificate of Designations, the Preferred Stock,
the Preferred Interests, the Engagement Letter, the Fee Letter,
the Stock Registration Rights Agreement, the Subordinated Notes,
the Guaranty Agreement and the Subordination Agreements.
"UBS" means UBS Securities LLC, a Delaware limited
liability company.
"Voting Stock" means, with respect to any Person at any
time, the Capital Stock of such Person that is at such time
entitled to vote in the election of the board of directors of
such Person.
"Voting Rights Trigger Event" means a voting rights
trigger event as defined in the Certificate of Designations and
the LLC Agreement.
Section 0.1. Interpretation. In this Agreement, the
singular includes the plural and the plural includes the
singular; words implying any gender include the other genders;
references to any section, exhibit or schedule are to sections,
exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to; references to "writing" include printing,
typing, lithography and other means of reproducing words in a
visible form; "including" following a word or phrase shall not be
construed to limit the generality of such word or phrase; and an
accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP as in effect from time to time.
ARTICLE I
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date (after
giving pro forma effect to the Merger and the Transaction
Documents, the issuance of the Preferred Interests and the
Preferred Stock and the application of the proceeds thereof, and
the transactions contemplated hereby and thereby), each of EEX,
EEX Capital and MIStS Issuer hereby agrees with, and represents
and warrants to, the Placement Agent and any subsequent Holder as
follows:
Section 1.1. Incorporation of Guaranty Agreement
Representations and Warranties. Each of the representations and
warranties made by EEX under its Guaranty Agreement (i) is
incorporated mutatis mutandis by this reference into this
Agreement with the same effect as if set forth herein except that
references in the Guaranty Agreement to "Loan Documents" shall be
deemed to references to the Transaction Documents as defined
herein and any references in the Guaranty Agreement to "this
Agreement" and "the date hereof" shall be deemed to be references
to this Agreement and the date hereof, (ii) is made by EEX, EEX
Capital and MIStS Issuer and (iii) is true and correct as of the
date hereof and the Closing Date.
Section 1.2. Due Authorization and Enforceability.
(a) Each of the Transaction Documents (i) has
been duly authorized, executed and delivered by each
Relevant Party to the extent a party thereto and (ii)
constitutes a valid and binding obligation of such Relevant
Party, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at
law or in equity).
(b) The shares of Preferred Stock have been duly
authorized by EEX Capital and, when issued and paid for in
accordance with the terms hereof will be fully paid,
nonassessable and entitled to the rights, privileges and
preferences set forth in the Certificate of Designations,
and the issuance of such shares will not be subject to any
preemptive or similar rights.
(c) The Certificate of Designations has been duly
authorized by all necessary corporate and stockholder
action.
(d) The Preferred Interests have been duly
authorized by MIStS Issuer and, when issued and paid for in
accordance with the terms hereof will be fully paid,
nonassessable and entitled to the rights, privileges and
preferences set forth in the LLC Agreement, and the issuance
of such interests will not be subject to any preemptive or
similar rights.
(e) The LLC Agreement has been duly authorized by
all necessary member action.
Section 1.3. Private Offering; Rule 144A Matters.
(a) Based in part on the accuracy of the
representations of UBS in Section 7.1, the sale of the
Preferred Securities hereunder is and will be exempt from
the registration and prospectus delivery requirements of the
Securities Act. Each Preferred Security shall bear the
following legend.
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NEITHER BE OFFERED, SOLD NOR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM NOR BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED TO ANY PERSON OR
ENTITY PRIMARILY ENGAGED, DIRECTLY OR INDIRECTLY,
IN THE OIL AND GAS EXPLORATION INDUSTRY OTHER THAN
THE CORPORATION OR ANY OF ITS AFFILIATES. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, OR (c) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES AT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE
ISSUER OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(b) The Preferred Securities will be eligible for
resale pursuant to Rule 144A under the Securities Act.
ARTICLE II
SALE AND OPTIONAL REPAYMENT OF PREFERRED STOCK
Section 2.1. Sale of the Preferred Stock. On the
basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, EEX Capital
agrees to sell to UBS, and UBS agrees to purchase from EEX
Capital, shares of Preferred Stock with an aggregate Liquidation
Preference equal to UBS' Commitment, at an aggregate purchase
price equal to 100% of such Liquidation Preference, payable on
the Closing Date in accordance with Section 6.1.
Section 2.2. Indemnity. EEX and EEX Capital jointly
and severally agree to indemnify each Affected Party and to hold
each Affected Party harmless from and against any loss or expense
which such Holder may sustain or incur as a consequence of (a)
the failure by EEX Capital to issue the Preferred Stock on the
Closing Date after EEX Capital has given a notice with respect
thereof in accordance with Section 6.1, (b) default by EEX
Capital in making any redemption after EEX Capital has given a
notice thereof in accordance with the provisions of the
Certificate of Designations, or (c) the making of any dividend or
redemption payment on any date other than a dividend payment
date. Such indemnification may include an amount equal to such
Affected Party's actual loss and expenses incurred (excluding
lost profits) in connection with, or by reason of, any of the
foregoing events. A certificate as to any amounts payable
pursuant to this Section 3.2 submitted to EEX Capital by any
Affected Party shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this
Agreement and the redemption of all outstanding shares of the
Preferred Stock and all other amounts payable hereunder.
Section 2.3. Method of Payment. Except as otherwise
set forth in the Certificate of Designations, all obligations
arising under the Transaction Documents shall be payable by wire
transfer in immediately available funds to the account of the
Holder, designated in a written notice to EEX Capital at least
three Business Days prior to the due date therefor.
Section 2.4. Payment on Business Days. If any
payment to be made hereunder or under any share of Preferred
Stock shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and
such extension of time shall be included in computing dividends
in connection with such payment).
ARTICLE III
SALE AND OPTIONAL REPAYMENT PREFERRED INTERESTS
Section 3.1. Sale of the Preferred Interests. On the
basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, MIStS
Issuer agrees to sell to UBS, and UBS agrees to purchase from
MIStS Issuer, shares of Preferred Interests with an aggregate
Liquidation Preference equal to UBS' Commitment, at an aggregate
purchase price equal to 100% of such Liquidation Preference,
payable on the Closing Date in accordance with Section 6.1.
Section 3.2. Indemnity. EEX and MIStS Issuer jointly
and severally agree to indemnify each Affected Party and to hold
each Affected Party harmless from and against any loss or expense
which such Holder may sustain or incur as a consequence of (a)
the failure by MIStS Issuer to issue the Preferred Interests on
the Closing Date after MIStS Issuer has given a notice with
respect thereof in accordance with Section 6.1, (b) default by
MIStS Issuer in making any redemption after MIStS Issuer has
given a notice thereof in accordance with the provisions of the
LLC Agreement, or (c) the making of any dividend or redemption
payment on any date other than a dividend payment date. Such
indemnification may include an amount equal to such Affected
Party's actual loss and expenses incurred (excluding lost
profits) in connection with, or by reason of, any of the
foregoing events. A certificate as to any amounts payable
pursuant to this Section 4.3 submitted to MIStS Issuer by any
Affected Party shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this
Agreement and the redemption of all outstanding shares of the
Preferred Interests and all other amounts payable hereunder.
Section 3.3. Method of Payment. Except as otherwise
set forth in the LLC Agreement, all obligations arising under the
Transaction Documents shall be payable by wire transfer in
immediately available funds to the account of the Holder,
designated in a written notice to MIStS Issuer at least three
Business Days prior to the due date therefor.
Section 3.4. Payment on Business Days. If any
payment to be made hereunder or under any share of Preferred
Interests shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and
such extension of time shall be included in computing dividends
in connection with such payment).
ARTICLE IV
COVENANTS
So long as any of the Preferred Securities are
outstanding or any obligation in respect of any of the Preferred
Securities shall be unpaid, EEX, EEX Capital and MIStS Issuer
covenant and agree with the Placement Agent and each Holder as
follows:
Section 4.1. Use of Proceeds. EEX Capital shall use
the proceeds of the sale of the Preferred Stock to repay $75.0
million of the $150.0 million principal outstanding under that
certain demand note dated August 4, 1995, issued by EEX Capital
in favor of MIStS Issuer. MIStS Issuer shall use the proceeds of
(i) the sale of the Preferred Interests and (ii) the $75.0
million repayment described in the preceding sentence to redeem
all of the then outstanding Preferred Securities of MIStS Issuer
and (iii) amend and restate the LLC Agreement.
Section 4.2. Compliance with Engagement Letter and
Fee Letter. EEX, EEX Capital and MIStS Issuer shall, and shall
cause each of their respective Subsidiaries to comply with the
provisions of the Engagement Letter and Fee Letter.
Section 4.3. Limitation on Incurrence of Additional
Indebtedness and/or Debt and Issuance of Capital Stock.
(a) Except as contemplated by the Transaction
Documents, EEX Capital and MIStS Issuer shall not directly
or indirectly, create, incur, issue, assume, guarantee or
otherwise become liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness or issue
any shares of Capital Stock (other than (i) the issuance of
the Permanent Securities and (ii) the incurrence of
Indebtedness owing to Affiliates of up to $10.0 million in
aggregate principal amount for both EEX Capital and MIStS
Issuer, taken as a whole) unless, in each of the foregoing
cases, the proceeds thereof are used to redeem the Preferred
Securities in full.
(b) Notwithstanding the fact that the EEX
Agreement may permit incurrences and issuances by EEX of
Permitted Subordinated Debt and Capital Stock, EEX shall
not, directly or indirectly, incur subordinated Debt or
issue any shares of Capital Stock (other than (i) treasury
stock or issuances of common stock of EEX employee benefit
plans) unless, in each of the foregoing cases, the proceeds
thereof are used to repay the Preferred Securities in full.
Section 4.4. Line of Business.
(a) EEX Capital and MIStS Issuer shall not
directly or indirectly, engage in any line of business other
than the businesses conducted on the Closing Date and
businesses reasonably related thereto or incidental thereto.
(b) Except as contemplated by the Transaction
Documents, EEX Capital and MIStS Issuer shall not, directly
or indirectly, engage in any activity or line of business
other than holding the Subordinated Notes, the Guaranty
Agreement or the Common Interests of MIStS Issuer, as the
case may be, and enforcing remedies thereunder in accordance
with the terms thereof but subject to the Subordination
Agreements.
Section 4.5. Payments for Consents. EEX Capital and
MIStS Issuer shall not directly or indirectly, pay or cause to be
paid as consideration, whether by way of divided, fee or
otherwise, to any Holder of any Preferred Securities for or as an
inducement to any consent, waiver or amendment of any of the
terms or provisions of the LLC Agreement, the Certificate of
Designations, this Agreement, the Preferred Interests or the
Preferred Stock unless such consideration is offered to be paid
or is paid to all Holders of Preferred Securities that consent,
waive or agree to amend in the time fame set forth in the
solicitation documents relating to such consent, waiver or
amendment.
Section 4.6. Springing Merger. If at any time after
September 30, 1998 UBS delivers a written notice (a "Merger
Notice") requiring MIStS Issuer to consummate a merger by the
Required Merger Date with and into EEX Capital pursuant to and in
accordance with the merger agreement in the form attached hereto
as Exhibit F, with EEX Capital being the surviving corporation.
Section 4.7. Notice of Default. EEX, EEX Capital
and/or MIStS Issuer shall provide written notice to the Placement
Agent of any of the Default or Event of Default under any of the
Transaction Documents or the EEX Credit Agreement at the same
time such entity provides such notice to the agent under the EEX
Credit Agreement or any similar entity.
ARTICLE V
CONDITIONS TO UBS' OBLIGATIONS
Section 5.1. Closing. Upon satisfaction of the
conditions set forth herein, and subject to the terms and
conditions of the Fee Letter and the Commitment Letter, UBS shall
pay the purchase price of the Preferred Securities, as set forth
in Sections 3.1 and 4.1, by wire transfer of immediately
available funds to the account designated by either EEX Capital
or MIStS Issuer, as the case may be, in New York, New York,
against delivery to the Placement Agent of Preferred Securities
in the names and denominations specified by the Placement Agent
(the "Closing"). EEX shall give the Placement Agent at least one
Business Day, notice of the expected date of such Closing (the
"Closing Date"). The Closing shall take place at such place as
shall be agreed upon by the Placement Agent and EEX.
Section 5.2. Conditions of UBS' Obligations. The
obligation of UBS to purchase and pay for the Preferred
Securities to be purchased by it hereunder on the Closing Date
subject to the prior or concurrent satisfaction on the Closing
Date of each of the following conditions:
(a) Capitalization. The Relevant Parties shall not
have any outstanding Indebtedness (except permitted
Indebtedness of entities other than EEX Capital or MIStS
Issuer under the EEX Credit Agreement), Capital Lease
Obligations or other Obligations other than as presented in
the latest financial statements and notes thereto, adjusted
for an equity reduction by EEX as contemplated by the letter
agreement by and among UBS, EEX, MIStS Issuer, EEX Capital
and EEX Preferred, dated September 29, 1997, and no material
inaccuracy in such financial statements shall exist.
(b) Absence of Certain Changes. No Material Adverse
Effect shall have occurred with respect to the Relevant
Parties other than the anticipated write-down of EEX's
shareholders' equity as contemplated by the letter agreement
by and among UBS, EEX, MIStS Issuer, EEX Capital and EEX
Preferred, dated September 29, 1997. The Relevant Parties
shall have no material liabilities except those set forth on
the most recent quarterly balance sheets of such entities
provided to UBS prior to September 4, 1997.
(c) Documentation; Legal Matters, Etc. All matters
relating to the transactions contemplated hereby shall be
satisfactory to UBS, and UBS shall have received such
additional certificates, legal and other opinions and
documentation as they shall reasonably request. The
Subordinated Notes and the Guaranty Agreement shall have
been subordinated to "Superior Indebtedness" under and as
defined in the Subordination Agreements.
(d) Market Disruption. There shall not have occurred
any disruption or adverse change in the financial or capital
markets generally, in the market for new issues of high
yield debt, preferred or common equity securities in
particular or affecting the syndication or funding of the
shares of Preferred Securities (or the refinancing thereof),
and a banking moratorium shall not have been declared by
Federal or New York State banking officials.
(e) Net Capital. There shall not have occurred any
change in law or regulation (or interpretation thereof) that
could result in any Holder's Commitment to provide, or any
Holder's providing, the financing contemplated by this
Agreement being a charge to the net capital of such Holder's
parent or affiliates.
(f) Engineering Report. UBS shall have received a
copy of EEX's engineers' reserve report as of
August/September 1997, and shall be satisfied with the
results thereof and shall have been afforded sufficient
opportunity to verify the conclusions expressed therein and
to discuss the same with EEX and EEX's engineers.
(g) Financial Statements. UBS shall have received the
most recent audited and unaudited historical consolidated
financial statements of the Relevant Parties (including pro
forma financial statements, if any) meeting the requirements
for filing with the Commission.
(h) No Conflicts. The execution, delivery and
performance of this Agreement, the Engagement Letter and the
other Transaction Documents and the consummation of the
Merger and all other the transactions contemplated hereby or
thereby will not conflict with, constitute a default under
or violate (i) any of the terms, conditions or provisions of
the certificate of incorporation, by-laws, certificate of
formation or operating agreement of the Relevant Parties,
(ii) any of the terms, conditions or provisions of any
material document, agreement or other instrument filed with
the Securities and Exchange Commission (iii) any applicable
foreign, federal, state or local statute, published rule or
regulation or (iv) any judgment, writ injunction, decree,
order or ruling of any court or governmental authority
binding on any of the Relevant Parties where such conflict,
default or violation would have a Material Adverse Effect on
the Relevant Parties, taken as a whole.
(i) Approvals and Consent. All governmental,
quasi-governmental, equity holder and third-party approvals and
consents necessary or desirable in connection with the
transactions contemplated hereby shall have been received
and shall be in full force and effect.
(j) Litigation, etc. There shall not exist any
action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator
or governmental authority that, in the opinion of UBS,
affects the transactions contemplated hereby, or that could
have a Material Adverse Effect on the Relevant Parties
(including any such action, suit, investigation, litigation
or proceeding which, in the reasonable opinion of UBS, is
likely to result in such a Material Adverse Effect) or any
of the transactions contemplated hereby.
(k) Legal Opinions. The Placement Agent shall have
received such legal opinions as it may reasonably request
(including opinions from counsel to EEX, EEX Capital and
MIStS Issuer), as Exhibit E and satisfactory to the
Placement Agent.
(l) Subordination and Modification of Intercompany
Subordinated Notes and Guaranty Agreement. The Subordinated
Notes and the Guaranty Agreement shall have been
subordinated to the "Senior Debt" specified by the EEX
Credit Agreement. In addition, the Guaranty Agreement will
have been amended and restated to include a prohibition on
the issuance of additional Subordinated Indebtedness or
equity securities (except treasury stock and issuances
pursuant to an employee benefit plan) by EEX while the
Preferred Securities remain outstanding unless the proceeds
thereof are used to fully redeem the Preferred Securities.
(m) The Merger. The Merger shall have been
consummated.
(n) Payment of Fees and Expenses. The Commitment and
takedown fee described in Section 1(a) of the Fee Letter due
to UBS on or before the Closing Date shall have been paid
in full.
Section 5.3. Representations and Warranties as to
Closing. The sale of Preferred Securities by EEX Capital or
MIStS Issuer, as the case may be, on the Closing Date shall
constitute a representation and warranty by EEX Capital or MIStS
Issuer, as the case may be, to the effect that the applicable
conditions precedent set forth in this Article VI are satisfied
on the Closing Date.
ARTICLE VI
TRANSFER OF THE PREFERRED SECURITIES;
REPRESENTATIONS OF HOLDERS
Section 6.1. Transfer of Preferred Securities. UBS
represents and agrees that it is purchasing the Preferred
Securities for its own account and with investment intent and
that it will not, directly or indirectly, transfer, sell, assign,
pledge or otherwise dispose of such Preferred Securities unless
such transfer, sale, assignment, pledge or other disposition is
made (i) pursuant to an effective registration statement under
the Securities Act or (ii) pursuant to an available exemption
from registration under, or otherwise in compliance with, the
Securities Act. UBS also represents and warrants to EEX Capital
and MIStS Issuer that it (i) is an "accredited investor" (as that
term is defined in Rule 501 of Regulation D promulgated under the
Securities Act) (ii) has been given or has had access to the
information described in Rule 502 of Regulation D promulgated
under the Securities Act, and (iii) has been given the
opportunity to ask any question of management of the Relevant
Parties that UBS may have. UBS and each of the Interim Purchasers
acknowledges that the Preferred Securities certificates will bear
a legend (as set forth in Exhibit A to the LLC Agreement or
Section 13(a) of the Certificate of Designations, as the case may
be) restricting the transfer thereof for so long as may be
required by the Securities Act.
Subject to the provisions of the previous paragraph
(including the terms of the legend referred to therein and
applicable law), each of the Relevant Parties agrees that UBS and
each subsequent Holder will be free to sell or transfer all or
any part of the Preferred Securities to any third party and to
pledge any or all of the Preferred Securities to any commercial
bank, other institutional lender, qualified institutional buyer
or accredited investor.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default. An "Event of
Default" with respect to the Preferred Securities shall occur if:
(a) an "Event of Default" as defined in the EEX Credit
Agreement;
(b) EEX Capital fails to pay any dividend on any of
the shares of Preferred Stock, in each case on or within 30
days after the same is due;
(c) MIStS Issuer fails to pay any dividend on any of
the shares of Preferred Interests, in each case on or within
30 days after the same is due;
(d) EEX, EEX Capital and MIStS Issuer fail to
consummate either (i) a merger of MIStS Issuer with and into
EEX Capital or the redemption of all Preferred Securities on
the Required Merger Date;
(e) EEX Capital and MIStS Issuer fail to make any
Change of Control redemption within the time periods
provided in the Certificate of Designations and the LLC
Agreement, as applicable;
(f) EEX, EEX Capital and MIStS Issuer consummate a
Prohibited Issuance;
(g) any "Event of Default" under and as defined in the
EEX Capital Subordinated Note or a "Maturity Event" under
and as defined in the EEX Subordinated Note shall occur; or
(h) any of the Relevant Parties fails to observe or
perform any of its covenants or agreements (other than those
set forth in clauses (a) through (g) above) contained in any
of the Transaction Documents and such failure continues for
a period of 60 Business Days following the earlier of
(i) written notice to EEX Capital and MIStS Issuer of such
failure by the Placement Agent or any Holder of outstanding
Preferred Securities or (ii) the date on which such failure
is discovered by such Relevant Party; (except that breach of
the covenants described in Sections 12.1 and 13.1 hereof
shall not be entitled to any such cure period).
Section 7.2. Rights and Remedies. The occurrence of
an Event of Default under this Agreement shall trigger those
rights and remedies available to Holders pursuant to the
provisions of the LLC Agreement or the Certificate of
Designations, as applicable.
Section 7.3. Rights and Remedies Cumulative. No
right or remedy herein conferred upon or reserved to the
Placement Agent or Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent or subsequent assertion or employment
of any other appropriate right or remedy.
Section 7.4. Delay or Omission Not Waiver. No delay
or omission by the Placement Agent or any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Placement Agent or the
Holders may be exercised from time to time, and as often as may
be deemed expedient, by the Placement Agent or the Holders.
Section 7.5. Waiver of Past Defaults. Subject to
Section 14.3, the Holders of a majority in aggregate Liquidation
Preference of the then outstanding Preferred Securities by
written notice to EEX Capital and MIStS Issuer may rescind an
acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events
of Default have been cured or waived.
Section 7.6. Rights of Holders to Receive Payment.
Notwithstanding anything to the contrary contained in this
Agreement, the LLC Agreement or the Certificate of Designations,
the right of any Holder to receive payment of dividends on the
Preferred Securities held by such Holder, on or after the
respective due dates expressed in the Preferred Securities, or to
bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without
the consent of such Holder.
ARTICLE VIII
TERMINATION
Section 8.1. Termination. Unless otherwise extended
by UBS, this Agreement and the obligations of UBS to purchase of
Preferred Securities shall terminate on 5:00 p.m., New York City
time, on September 30, 1997.
Section 8.2. Liability. If this Agreement is
terminated pursuant to Section 9.1, such termination shall be
without liability of any party to any other party, except that,
whether or not the transactions contemplated by this Agreement
are consummated: (i) each of EEX, EEX Capital and MIStS Issuer,
jointly and severally, agrees to reimburse the Placement Agent
for all its reasonable out-of-pocket expenses pursuant to Section
14.1 and the Commitment Letter and (ii) the indemnity provisions
contained in Article X shall remain operative and in full force
and effect.
ARTICLE IX
INDEMNITY
Section 9.1. Indemnification. EEX, EEX Capital and
MIStS Issuer (each, an "Indemnifying Party" and, collectively,
the "Indemnifying Parties") jointly and severally agree to
indemnify and hold harmless the Placement Agent, UBS and all
subsequent the Holders, each of their respective controlling
persons and each director, officer, employee, affiliate and agent
thereof (each, an "Indemnified Party") from and against any and
all losses, claims, damages and liabilities, joint or several, to
which any Indemnified Party may become subject relating to or
arising out of or in connection with the transactions
contemplated by the Transaction Documents (including the use of
the proceeds from the sale of the Preferred Securities) or any
related transaction, and to reimburse each Indemnified Party,
promptly upon demand, for expenses (including reasonable counsel
fees and expenses) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or
threatened loss, claim, damage or liability, or any litigation,
proceeding or other action in respect thereof, including any
amount paid in settlement of any litigation, proceeding or other
action (commenced or threatened) to which the Indemnifying
Parties shall have consented in writing (such consent not to be
unreasonably withheld) whether or not any Indemnified Party is a
party and whether or not liability resulted; provided, however,
that the indemnity contained in this Article X will not apply to
any Indemnified Party with respect to losses, claims, damages,
liabilities or related expenses arising from the willful
misconduct or gross negligence of such Indemnified Party.
Section 9.2. Notice of Action. (a) Promptly after
receipt by an Indemnified Party of written notice with respect to
the commencement of any investigation, claim, litigation,
proceeding or other action (collectively, an "Action") with
respect to which such Indemnified Party may seek indemnification
hereunder, such Indemnified Party shall notify the Indemnifying
Parties in writing of such Action; but the omission so to notify
the Indemnifying Party shall not relieve the Indemnifying Parties
from any liability that the Indemnifying Parties may have
hereunder to such Indemnified Party unless such failure results
in material prejudice to the Indemnifying Parties, defenses in
such Action.
(b) Upon receipt of such notice by an Indemnifying
Party, such Indemnifying Party will be entitled to participate in
any Action and, to the extent it wishes, to assume the defense
thereof, and after notice from the Indemnifying Party to such
Indemnified Party of its election to assume the defense thereof,
the Indemnifying Party will not be liable to such Indemnified
Party under this indemnity for any legal expenses subsequently
incurred by such Indemnified Party in connection with such
defense; provided, however, that such Indemnified Party will have
the right to employ its own counsel in any such Action, and the
fees and expenses of such counsel will be at the expense of such
Indemnified Party; provided, further, that if (i) the employment
of such counsel has been authorized by such Indemnifying Party in
connection with the defense of such Action, which authorization
shall not be unreasonably withheld, or (ii) the named parties in
any such Action (including any impleaded parties) include any
Indemnified Party and such Indemnifying Party and such
Indemnified Party will have been advised by such counsel that
there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those
available to the Indemnifying Party (in which case the
Indemnifying Party will not have the right to assume the defense
of such Action on behalf of such Indemnified Party) or (iii) such
Indemnifying Party shall not have assumed the defense of such
Action and employed counsel therefor reasonably satisfactory to
such Indemnified Party within a reasonable time after notice of
commencement of such action, such fees and expenses will be borne
by the Indemnifying Party, it being understood that such
Indemnifying Party will not, in connection with any one such
Action, be liable for the fees and expenses of more than one firm
of attorneys in any one jurisdiction.
Section 9.3. Indemnity Not Available. If
indemnification were for reason of public policy not to be
available, the Indemnifying Parties and the Holders agree to
contribute (in proportion to their respective commitments in the
case of the Holders) to the losses, claims, damages, liabilities
or expenses (or Actions in respect thereof) for which such
indemnification is held unavailable in such proportion as is
appropriate to reflect the relative benefits to the Indemnifying
Party, on the one hand, and the Holders, on the other hand, in
connection with the matter giving rise to such losses, claims,
damages, liabilities or expenses (or actions in respect thereof).
Section 9.4. Indemnity for Taxes, Reserves and
Expenses. If after the date hereof, the adoption of any law or
guideline or any amendment or change in the administration,
interpretation or application of any existing or future law or
guideline by any Governmental Authority charged with the
administration, interpretation or application thereof, or the
compliance with any request or directive of any Governmental
Authority (whether or not having the force of law):
(a) subjects an Affected Party to any tax or
changes the basis of taxation with respect to this Agreement
or the Preferred Securities or payments of amounts due
hereunder or thereunder or with respect to this Agreement or
the Transaction Documents, (including, without limitation,
any sales, gross receipts, general corporate, withholding,
personal property, privilege or license taxes, and including
claims, losses and liabilities arising from any failure to
pay or delay in paying any such tax (unless such failure or
delay results solely from such Affected Party's gross
negligence or willful misconduct), but excluding federal,
state or local taxes based on income or franchise taxes
imposed in lieu of income taxes) incurred by such Affected
Party arising out of or as a result of this Agreement or the
Transaction Documents;
(b) imposes, modifies or deems applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets held
by, credit extended by, deposits with or for the account of,
or other acquisition of funds by, an Affected Party;
(c) shall change the amount of capital maintained
or requested or directed to be maintained by an Affected
Party; or
(d) imposes upon an Affected Party any other
condition or expense (including, without limitation,
(i) loss of margin and (ii) attorneys' fees and expenses,
expenses incurred by officers or employees of an Affected
Party (or any successor thereto) and expenses of litigation
or preparation therefor in contesting any of the foregoing)
with respect to this Agreement or the Transaction Documents
or the purchase, maintenance or funding of the purchase of
the Preferred Securities by an Affected Party, and the
result of any of the foregoing is to increase the cost to,
reduce the income receivable by, reduce the rate of return
on capital of, or impose any expense (including loss of
margin) upon, an Affected Party with respect to this
Agreement, the obligations hereunder, the Transaction
Documents or the funding of the purchase of the Preferred
Securities hereunder, the Affected Party may notify the
Indemnifying Parties of the amount of such increase,
reduction, or imposition, and the Indemnifying Parties shall
pay to the Affected Party the amount the Affected Party
deems necessary to compensate the Affected Party for such
increase, reduction or imposition. Any Affected Party
claiming additional compensation under this Section 10.4
shall deliver to EEX a certificate setting forth any
additional amounts that such Affected party is entitled to
receive, including a calculation thereof in reasonable
detail, such certificate to be conclusive absent manifest
error. Such amounts shall be due and payable by the
Indemnifying Parties five (5) Business Days after such
certificate is delivered.
(e) To avoid doubt, the parties hereto
acknowledge and agree that none of EEX, EEX Capital, MIStS
Issuer or their Affiliates have made any representations or
warranties to the Placement Agent or any Affected Party
concerning the availability, or lack thereof, of the
"dividend received deduction under the Code." Accordingly,
no indemnification with respect to any taxes owed, or
purported to be owed, relating to such deduction shall be
available under this Agreement or any Transaction Document.
Section 9.5. Survivorship of Indemnification. The
provisions contained in this Article X and in Sections 3.3 and
4.3 shall remain in full force and effect whether or not any of
the transactions contemplated hereby are consummated and
notwithstanding the termination of this Agreement. The amounts
payable by any Indemnifying Party under this Article X shall be
payable whether or not any of the transactions contemplated under
this Agreement are consummated.
Section 9.6. Liability Not Exclusive; Payments. The
agreements of each Indemnifying Party in this Article X shall be
in addition to any liability that each may otherwise have. All
amounts due under this Article X shall be payable as incurred
within five (5) Business Days after such written notice is
delivered.
ARTICLE X
THE PLACEMENT AGENT
Section 10.1. Appointment of Placement Agent. In
order to expedite the transactions contemplated by the
Transaction Documents, UBS is hereby appointed to act as the
Placement Agent on behalf of the Holders. Each Holder by its
acceptance of Preferred Securities, irrevocably authorizes the
Placement Agent to take such actions on behalf of the Holders and
to exercise such powers as are specifically delegated to the
Placement Agent by the terms and provisions of the Transaction
Documents, together with such actions and powers as are
reasonably incidental thereto. The Placement Agent is expressly
authorized by each Holder hereby, and by each Holder upon its
acceptance of Preferred Securities without hereby limiting any
implied authority, (a) to receive on behalf of such Holder all
payments, Liquidation Preference and dividends on the Preferred
Securities and all other amounts due to such Holder hereunder or
under any Transaction Document, and promptly to distribute to
each Holder its proper share of each payment so received; (b) to
give notice on behalf of such Holder to EEX Capital and MIStS
Issuer of any Event of Default specified in this Agreement of
which the Placement Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to
each Holder copies of all notices, financial statements and other
materials delivered by any of the Relevant Parties pursuant to
this Agreement and the other Transaction Documents as received by
the Placement Agent.
Section 10.2. No Liability as Placement Agent.
Neither the Placement Agent nor any of its directors, officers,
employees, beneficial owners or agents shall be liable as such to
any Holder for any action taken or omitted by any of them except
for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein
or the contents of any document delivered in connection herewith,
or be required to ascertain or to make any inquiry concerning the
performance or observance by any of the Relevant Parties of any
of the terms, conditions, covenants or agreements contained
herein. The Placement Agent shall not be responsible to the
Holders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the
Transaction Documents or any other instruments or agreements.
The Placement Agent shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written
instructions signed by any Holder and, except as otherwise
specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Holders.
The Placement Agent shall, in the absence of knowledge to the
contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to
have been signed or sent by the proper Person or Persons.
Neither the Placement Agent nor any of its directors, officers,
employees or agents shall have any responsibility to EEX, EEX
Capital or MIStS Issuer on account of the failure of or delay in
performance or breach by any Holder of any of its obligations
hereunder or to any Holder on account of the failure of or delay
in performance or breach by any other Holder or any of the
Relevant Parties or any of their respective obligations under the
Transaction Documents or in connection herewith or therewith.
The Placement Agent may execute any and all duties hereunder by
or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action
taken or suffered in good faith by it in accordance with the
advice of such counsel.
Section 10.3. No Duty to Act. Each Holder by its
acceptance of Preferred Securities, acknowledges that the
Placement Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Transaction Document unless it shall
be requested in writing to do so by a majority in Liquidation
Preference of the Holders of Preferred Securities.
Section 10.4. Successor Placement Agent. Subject to
the appointment and acceptance of a successor Placement Agent as
provided below, the Placement Agent may resign at any time by
notifying the Holders and EEX, EEX Capital or MIStS Issuer. Upon
any such resignation, the Holders shall have the right to appoint
a successor. If no successor shall have been so appointed by the
Holders and shall have accepted such appointment within 30 days
after the retiring Placement Agent files notice of its
resignation, then the retiring Placement Agent may, on behalf of
the Holders, appoint a successor Placement Agent, which shall be
a bank having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the
acceptance of any appointment as Placement Agent hereunder by a
successor bank, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Placement Agent, and the retiring Placement Agent shall
be discharged from its duties and obligations hereunder. After
the Placement Agent's resignation hereunder, the provisions of
this Article XI and Article X hereof shall continue in effect for
its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Placement Agent.
Section 10.5. Rights Placement Agent as Holder of
Preferred Securities. With respect to its Commitment made in its
capacity as a Holder, the Placement Agent in its individual
capacity and not as Placement Agent shall have the same rights
and powers as any other Holder and may exercise the same as
though it were not the Placement Agent, and the Placement Agent
and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Relevant
Parties or other Affiliate thereof as if it were not the
Placement Agent.
Section 10.6. Expenses of Placement Agent. Each
Holder by acceptance of Preferred Securities, agrees that (a) the
Placement Agent shall be reimbursed, on demand, for any expenses
incurred for the benefit of the Holders by the Placement Agent,
including reasonable counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Holders,
that shall not have been reimbursed by EEX, EEX Capital or MIStS
Issuer and (b) to indemnify and hold harmless the Placement Agent
and its beneficial owners, directors, officers, employees or
agents, on demand, from and against any and all suits, costs,
expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by or asserted against it in its
capacity as the Placement Agent or any of them in any way
relating to or arising out this Agreement or any other
Transaction Document or any action taken or omitted by it or any
of them under this Agreement or any other Transaction Document,
to the extent the same shall not have been reimbursed by EEX, EEX
Capital or MIStS Issuer; provided, however, no Holder shall be
liable to the Placement Agent or any such other indemnified
Person for any portion of such liabilities, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements that are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of the Placement
Agent or any of its directors, officers, employees or agents. If
no Preferred Securities are then outstanding, each Holder shall
contribute an amount equal to its pro rata share of the aggregate
Commitment of all of the Holders to any amounts payable to the
Placement Agent pursuant to this paragraph. If any Preferred
Securities are then outstanding, each Holder shall contribute an
amount equal to its pro rata share of the aggregate Liquidation
Preference, of all outstanding Preferred Securities to any
amounts payable to the Placement Agent pursuant to this
paragraph.
Section 10.7. Due Diligence by Holders. Each Holder
by its acceptance of Preferred Securities, acknowledges that it
has, independently and without reliance upon the Placement Agent,
or any other Holder, and based on such documents and information
as it has deemed appropriate, made its own investment analysis
and decision to purchase the Preferred Securities. Each Holder
by its acceptance of Preferred Securities, also acknowledges that
it (i) will, independently and without reliance upon the
Placement Agent or any other Holder, and based on such documents
and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action
under or based upon this Agreement, the Transaction Documents or
any related agreement or any document furnished hereunder or
thereunder and (ii) has reviewed publicly available information
filed with the SEC.
ARTICLE XI
EEX SUBORDINATED NOTE
Section 11.1. Covenants With Respect to EEX
Subordinated Note. EEX Capital hereby agrees to deliver prompt
written notice to the Placement Agent of the occurrence of a
Voting Rights Trigger Event and to defend the EEX Subordinated
Note against all claims and demands of all Persons at any time
claiming the same or any interest therein except as expressly
provided in this Article XII. Upon demand by the Placement Agent
after the occurrence of a Voting Rights Trigger Event, EEX
Capital agrees to deliver to the Placement Agent the originals of
the EEX Subordinated Note and the EEX Subordination Agreement.
EEX Capital hereby further agrees that at any time while the
Preferred Stock remains outstanding, EEX Capital will not,
without the prior written consent of the Placement Agent, in any
way encumber, or hypothecate, or create or permit to exist any
lien, security interest or encumbrance on or other interest in
the EEX Subordinated Note except for the rights granted to the
Placement Agent, for the benefit of the Holders, under this
Article XII, nor will EEX Capital sell, transfer, assign,
exchange or otherwise dispose of the EEX Subordinated Note or any
interest therein.
Section 11.2. Power of Attorney. EEX Capital hereby
irrevocably appoints the Placement Agent as EEX Capital's agent
and attorney-in-fact, coupled with an interest, with full power
and authority in the place and stead of EEX Capital and in the
name of EEX Capital or otherwise, from and after the occurrence
of a Voting Rights Trigger Event in the Placement Agent's
reasonable discretion, but at EEX's and EEX Capital's joint and
several cost and expense, to:
(a) make demand for payment under the EEX
Subordinated Note,
(b) take any actions necessary or desirable, in
the Placement Agent's sole discretion, to collect, on
behalf of EEX Capital, the amounts due to EEX Capital
under the EEX Subordinated Note, including compromising
any amounts due thereunder and acknowledging
satisfaction of the maker's liability thereunder,
(c) instruct EEX, as the maker of the EEX
Subordinated Note, to pay all sums payable thereunder
to EEX Capital,
(d) endorse, cash, sue upon, collect and
otherwise enforce, the EEX Subordinated Note and all
instruments made payable to EEX Capital representing
any payment of principal or interest thereon or any
part thereof and to give full discharge for the same,
and
(e) pay all reasonable costs and expenses
incurred in the exercise or enforcement of its rights
hereunder, including reasonable attorneys' fees,
subject, in each of the foregoing cases, to the provisions of the
EEX Subordination Agreement. EEX Capital shall send to the
Placement Agent a copy of any written payment notice given to EEX
with respect to the EEX Subordinated Note, concurrently with
sending such notice to EEX. The Placement Agent shall only be
accountable for monies which it actually receives as
attorney-in-fact for EEX Capital from or out of the EEX
Subordinated Note.
The power of attorney granted herein shall automatically
terminate and be of no further force and effect upon redemption
for value of the Preferred Stock and payment of all accrued and
unpaid dividends thereon and any other fees, expenses, LIBOR
breakage fees and Additional Costs owing to the Placement Agent
or the Holders in accordance with this Agreement in connection
with the Preferred Stock. EEX hereby acknowledges receipt of
notice of the foregoing power of attorney, agrees to comply with
any payment instructions it receives from the Placement Agent
following a Voting Rights Trigger Event, as attorney-in-fact for
EEX Capital, and hereby agrees that it will not assert against
the EEX Subordinated Note any right of setoff, defense or
counterclaim it may have against EEX Capital, whether or not such
right, defense or counterclaim arises out of the loan evidenced
by the EEX Subordinated Note or otherwise.
ARTICLE XII
EEX CAPITAL SUBORDINATED NOTE AND GUARANTY AGREEMENT
Section 12.1 Covenants With Respect to EEX Capital
Subordinated Note and Guaranty Agreement. MIStS Issuer hereby
agrees to deliver prompt written notice to the Placement Agent of
the occurrence of a Voting Rights Trigger Event and to defend the
EEX Capital Subordinated Note and Guaranty Agreement against all
claims and demands of all persons at any time claiming the same
or any interest therein except as expressly provided in this
Article XIII. Upon demand by the Placement Agent after the
occurrence of a Voting Rights Trigger Event, MIStS Issuer agrees
to deliver to the Placement Agent, the originals of the EEX
Capital Subordinated Note, the Guaranty Agreement and the EEX
Capital Subordination Agreement. MIStS Issuer hereby further
agrees that at any time while the Preferred Interests remain
outstanding, MIStS Issuer will not, without the prior written
consent of the Placement Agent, in any way encumber, or
hypothecate, or create or permit to exist any lien, security
interest or encumbrance on or other interest in the EEX Capital
Subordinated Note or the Guaranty Agreement except for the rights
granted to the Placement Agent, for the benefit of the Holders,
under this Article XIII, nor will MIStS Issuer sell, transfer,
assign, exchange or otherwise dispose of the EEX Capital
Subordinated Note or the Guaranty Agreement or any interest
therein.
Section 13.2 Power of Attorney. MIStS Issuer hereby
irrevocably appoints the Placement Agent as MIStS Issuer's agent
and attorney-in-fact, coupled with an interest, with full power
and authority in the place and stead of MIStS Issuer and in the
name of MIStS Issuer or otherwise, from and after the occurrence
of a Voting Rights Trigger Event in the Placement Agent's
reasonable discretion, but at EEX's and MIStS Issuer's joint and
several cost and expense, to:
(a) make demand for payment under the EEX Capital
Subordinated Note and/or the Guaranty Agreement,
(b) take any actions necessary or desirable, in
the Placement Agent's sole discretion, to collect, on
behalf of MIStS Issuer, the amounts due to MIStS Issuer
under the EEX Capital Subordinated Note and the
Guaranty Agreement, including compromising any amounts
due thereunder and acknowledging satisfaction of the
maker's liability thereunder,
(c) instruct EEX Capital, as the maker of the EEX
Capital Subordinated Note, and EEX, as the maker of the
Guaranty Agreement, to pay all sums payable thereunder
to MIStS Issuer,
(d) endorse, cash, sue upon, collect and
otherwise enforce, the EEX Capital Subordinated Note
and the Guaranty Agreement and all instruments made
payable to MIStS Issuer representing any payment of
principal or interest thereon or any part thereof and
to give full discharge for the same, and
(e) pay all reasonable costs and expenses
incurred in the exercise or enforcement of its rights
hereunder, including reasonable attorneys' fees,
subject, in each of the foregoing cases, to the provisions of the
EEX Capital Subordination Agreements. MIStS Issuer shall send to
the Placement Agent a copy of any written payment notice given to
EEX Capital with respect to the EEX Capital Subordinated Note or
to EEX with respect to the Guaranty Agreement, concurrently with
sending such notice to EEX Capital or EEX, as the case may be.
The Placement Agent shall only be accountable for monies which it
actually receives as attorney-in-fact for MIStS Issuer from or
out of the EEX Capital Subordinated Note and the Guaranty
Agreement. The power of attorney granted herein shall
automatically terminate and be of no further force and effect
upon redemption for value of the Preferred Interests and payment
of all accrued and unpaid dividends thereon and any other fees,
expenses, LIBOR breakage fees and Additional Costs owing to the
Placement Agent or the Holders in accordance with this Agreement
in connection with the Preferred Interests. Each of EEX Capital
and EEX hereby acknowledges receipt of notice of the foregoing
power of attorney, agrees to comply with any payment instructions
it receives from the Placement Agent following a Voting Rights
Trigger Event, as attorney-in-fact for MIStS Issuer, and hereby
agrees that it will not assert against the EEX Capital
Subordinated Note or the Guaranty Agreement any right of setoff,
defense or counterclaim it may have against MIStS Issuer, whether
or not such right, defense or counterclaim arises out of the loan
evidenced by the EEX Capital Subordinated Note, the Guaranty
Agreement or otherwise.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Expenses; Documentary Taxes. EEX, EEX
Capital and MIStS Issuer jointly and severally agree to pay,
within 30 days of the date of invoice, (a) all reasonable
out-of-pocket expenses (including, without limitation, expenses
incurred
in connection with due diligence of the Holders) associated with
the preparation, execution and delivery, administration, waiver,
enforcement or modification and enforcement of the documentation
contemplated hereby and (b) the reasonable fees and disbursements
of Latham & Watkins and Richards, Layton & Finger legal counsel
to the Placement Agent and the Holders in connection with the
transactions contemplated herein. EEX, EEX Capital and MIStS
Issuer jointly and severally agree to indemnify the Placement
Agent and the Holders against any transfer taxes, documentary
taxes, assessments or charges made by any Governmental Authority
by reason of the execution and delivery, or the terms, of this
Agreement or the Transaction Documents.
Section 13.2. Notices. All notices and other
communications pertaining to this Agreement, the LLC Agreement,
any Preferred Interests, the Certificate of Designations or any
share of Preferred Stock shall be in writing and shall be
delivered in person, with receipt acknowledged, or by facsimile
and confirmed immediately in writing by a copy mailed by
registered or certified mail, return receipt requested, postage
prepaid, addressed as hereafter set forth, or mailed by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(i) If to the Placement Agent or the Holders, to
them at:
UBS Securities LLC
229 Park Avenue
New York, New York 10171-0026
Attention: James A. Ajello
Facsimile No.: (212) 821-6119
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Nancy L. Schimmel, Esq.
Facsimile No.: (212) 751-4864
(ii) If to EEX, EEX Capital or MIStS Issuer, to it
at:
c/o Enserch Exploration, Inc.
2500 City West Boulevard, Suite 1400
Houston, Texas 77042
Attention: Joseph T. Leary
Facsimile No.: (281) 271-3416
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil-South Tower
711 Louisiana Street
Houston, Texas 77002
Attention: William D. Morris, Esq.
Facsimile No.: (713) 236-0822
or to such other Person or address as shall be furnished to the
other parties in compliance with this Section 14.2.
Section 13.3. Consent to Amendments and Waivers. (a)
Except as provided in Section 14.3(b), this Agreement may be
amended or supplemented with the consent of each of EEX, EEX
Capital and MIStS Issuer and the Holders of at least a majority
in Liquidation Preference of the Preferred Securities then
outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer
for, Preferred Securities), and any event of default or
compliance with any provision of this Agreement or the Preferred
Securities may be waived with the consent of the Holders of a
majority in Liquidation Preference of the then outstanding
Preferred Securities (including consents obtained in connection
with a purchase of, or tender offer or exchange offer for
Preferred Securities). Preferred Stock held by EEX, EEX Capital
or MIStS Issuer or any of its Affiliates will not be deemed to be
outstanding for purposes of this Section 14.3.
(b) None of the Relevant Parties shall, directly or
indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder for or as an
inducement to any consent, waiver or amendment permitted by
Section 14.3(a) unless such consideration is offered to be paid
or is paid to all Holders that consent, waive or agree to amend
in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
Section 13.4. Statements Required in Officer's
Certificate and Opinion. Each Officer's Certificate with respect
to compliance provided for in this Agreement shall include:
(a) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the
statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person,
he or she has made such examination or
investigation as is necessary to enable him or her
to express an informed opinion as to whether or
not such covenant or condition has been complied
with; and
(d) a statement as to whether, in such Person's
opinion, such condition or covenant has been
complied with.
Section 13.5. Parties. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and each
subsequent Holder and each of their respective successors and
assigns. Except as otherwise expressly provided in Sections 3.2
and 4.2 and Article X in the preceding sentence, nothing
expressed or mentioned in this Agreement is intended or shall be
construed to give any Person, other than the parties hereto, the
Holders and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. Except as otherwise
expressly provided in Sections 3.2 and 4.2 and Article X in the
preceding sentence, all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of UBS, the
parties hereto and the affiliates and beneficial owners of the
Holders, and any subsequent Holder of any of the Preferred
Securities and their respective successors and assigns, and for
the benefit of no other person.
Section 13.6. New York Law; Submission to
Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN SUCH STATE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PLACEMENT AGENT, EEX, EEX CAPITAL AND
MIStS ISSUER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN NEW YORK CITY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE PROVISIONS OF THIS
AGREEMENT AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT. EACH OF THE PLACEMENT AGENT, EEX, EEX CAPITAL
AND MIStS ISSUER WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 13.7. Successors and Assigns. Whenever in
this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns
of such party; and all covenants and agreements of EEX, EEX
Capital and MIStS Issuer or of the Placement Agent, UBS or any
subsequent Holder in this Agreement or any Preferred Securities
shall bind their respective successors and assigns. Except in
accordance with a merger pursuant to a Merger Notice, neither
EEX, EEX Capital and MIStS Issuer may assign or transfer any of
its rights or obligations hereunder (by operation of law or
otherwise) without the prior written consent of the Holders of at
least a majority in Liquidation Preference of Preferred
Securities then outstanding. Prior to purchase of the Preferred
Securities, UBS may not assign or transfer any of its rights or
obligations hereunder (by operation of law or otherwise) without
the prior written consent of EEX.
Section 13.8. Severability Clause. In case any
provision in this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby and such provision shall be
ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
Section 13.9. Representations, Warranties and
Agreements to Survive Delivery. All representations, warranties
and agreements contained in or incorporated into this Agreement,
or contained in Officers' Certificates submitted pursuant hereto,
shall remain operative and in full force and effect until the
Preferred Securities have been repaid in full, regardless of any
investigation made by or on behalf of the Holders or any
controlling person of the Interim Purchasers, or by or on behalf
of the Company, and shall survive delivery of the Preferred
Securities.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.
Enserch Exploration, Inc.
By:/s/ Joseph T. Leary
-------------------------------
Name: Joseph T. Leary
Title: Vice President, Finance
and Treasurer
EEX Capital Inc.
By:/s/ Joseph T. Leary
-------------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and Treasurer
MIStS Issuer L.L.C.
By: EEX Capital Inc., its
common member
By:/s/ Joseph T. Leary
--------------------------------
Name: Joseph T. Leary
Title: Vice President,
Finance and Treasurer
UBS Securities LLC, as Placement
Agent
By:/s/ James A. Ajello
---------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey M. Donahue
---------------------------------
Name: Jeffrey M. Donahue
Title: Director
<PAGE>
<PAGE>
PREFERRED STOCK:
Commitment UBS Securities LLC
$75,000,000.00
(75,000 Shares)
By:/s/ James A. Ajello
---------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey M. Donahue
---------------------------------
Name: Jeffrey M. Donahue
Title: Director
Wire Transfer Instructions
Account Name: UBS Securities LLC
Name of Bank: The Chase Manhattan
Bank
ABA#: 021000021
Account No.: 140083231
Attention: Bruce J. Burmester
<PAGE>
<PAGE>
PREFERRED INTERESTS:
Commitment UBS Securities LLC
$75,000,000.00
(75,000 Shares)
By:/s/ James A. Ajello
-------------------------------
Name: James A. Ajello
Title: Managing Director
By:/s/ Jeffrey Donahue
-------------------------------
Name: Jeffrey Donahue
Title: Director
Wire Transfer Instructions
Account Name: UBS Securities LLC
Name of Bank: The Chase Manhattan
Bank
ABA#: 021000021
Account No.: 140083231
Attention: Bruce J. Burmester
<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 1
Section 1.1. Defined Terms. . . . . . . . . . . . . . . 1
Section 1.2. Interpretation . . . . . . . . . . . . . . 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Incorporation of Guaranty
Agreement Representations and
Warranties . . . .. . . . . . . . . . . . . . . . . 9
Section 2.2. Due Authorization and Enforceability . . 9
Section 2.3. Private Offering; Rule 144A
Matters . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
. . . . . . . . . . . . . . . 11
Section 3.1. Sale of the Preferred Stock. . . . . . . 11
Section 3.2. Indemnity. . . . . . . . . . . . . . . . 11
Section 3.3. Method of Payment. . . . . . . . . . . . 11
Section 3.4. Payment on Business Days . . . . . . . . 11
ARTICLE IV
SALE AND OPTIONAL REPAYMENT
Section 4.1. Sale of the Preferred Interests. . . . . 12
Section 4.2. Indemnity. . . . . . . . . . . . . . . . 12
Section 4.3. Method of Payment. . . . . . . . . . . . 12
Section 4.4. Payment on Business Days . . . . . . . . 12
ARTICLE V
COVENANTS
Section 5.1. Use of Proceeds. . . . . . . . . . . . . 12
Section 5.2. Compliance with Engagement Letter
and Fee Letter . . . . . . . . . . . . . . . . . . 13
Section 5.3. Limitation on Incurrence of
Additional Indebtedness and/or
Debt and Issuance of Capital Stock . . . . . . . . 13
Section 5.4. Line of Business . . . . . . . . . . . . 13
Section 5.5. Payments for Consents. . . . . . . . . . 13
Section 5.6. Springing Merger . . . . . . . . . . . . 13
Section 5.7. Notice of Default. . . . . . . . . . . . 14
ARTICLE VI
CONDITIONS TO UBS' OBLIGATIONS
Section 6.1. Closing. . . . . . . . . . . . . . . . . 14
Section 6.2. Conditions of UBS' Obligations . . . . . 14
Section 6.3. Representations and Warranties as
to Closing . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TRANSFER OF THE PREFERRED SECURITIES;
REPRESENTATIONS OF HOLDERS
Section 7.1. Transfer of Preferred Securities . . . . 16
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1. Events of Default. . . . . . . . . . . . 17
Section 8.2. Rights and Remedies. . . . . . . . . . . 17
Section 8.3. Rights and Remedies Cumulative . . . . . 17
Section 8.4. Delay or Omission Not Waiver . . . . . . 18
Section 8.5. Waiver of Past Defaults. . . . . . . . . 18
Section 8.6. Rights of Holders to Receive
Payment. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
TERMINATION
Section 9.1. Termination. . . . . . . . . . . . . . . 18
Section 9.2. Liability. . . . . . . . . . . . . . . . 18
<PAGE>
ARTICLE X
INDEMNITY
Section 10.1. Indemnification . . . . . . . . . . 18
Section 10.2. Notice of Action. . . . . . . . . . 19
Section 10.3. Indemnity Not Available . . . . . . 19
Section 10.4. Indemnity for Taxes, Reserves and
Expenses . . . . . . . . . . . . . . . . . . . . . 20
Section 10.5. Survivorship of Indemnification . . 21
Section 10.6. Liability Not Exclusive; Payments . 21
ARTICLE XI
THE PLACEMENT AGENT
Section 11.1. Appointment of Placement Agent. . . 21
Section 11.2. No Liability as Placement Agent . . 21
Section 11.3. No Duty to Act. . . . . . . . . . . 22
Section 11.4. Successor Placement Agent . . . . . 22
Section 11.5. Rights Placement Agent as Holder
of Preferred . . . . . . . . . . . . . . . . . . . 22
Section 11.6. Expenses of Placement Agent . . . . 22
Section 11.7. Due Diligence by Holders. . . . . . 23
ARTICLE XII
EEX SUBORDINATED NOTE
Section 12.1. Covenants With Respect to
EEX Subordinated Note. . . . . . . . . . . . . . . 23
Section 12.2. Power of Attorney. . . . . . . . 23
ARTICLE XIII
EEX CAPITAL SUBORDINATED NOTE AND GUARANTY AGREEMENT
Section 13.1 Covenants With Respect to EEX
Capital Subordinated Note and
Guaranty Agreement . . . . . . . . . . . . . . . . 24
Section 13.2 Power of Attorney. . . . . . . . . . . . 25
ARTICLE XIV
MISCELLANEOUS
Section 14.1. Expenses; Documentary Taxes . . . . 26
Section 14.2. Notices . . . . . . . . . . . . . . 26
Section 14.3. Consent to Amendments and Waivers . 27
Section 14.4. Statements Required in Officer's
Certificate and Opinion. . . . . . . . . . . . . . 27
Section 14.5. Parties . . . . . . . . . . . . . . 28
Section 14.6. New York Law; Submission to
Jurisdiction; Waiver of Jury
Trial. . . . . . . . . . . . . . . . . . . . . . . 28
Section 14.7. Successors and Assigns. . . . . . . 28
Section 14.8. Severability Clause . . . . . . . . 29
Section 14.9. Representations, Warranties and
Agreements to Survive
Delivery . . . . . . . . . . . . . . . . . . . . . 29
EXHIBITS
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of LLC Agreement
Exhibit C - Form of LLC Registration Rights Agreement
Exhibit D - Form of Stock Registration Rights Agreement
Exhibit E - Form of Legal Opinion
Exhibit F - Form of Springing Merger Agreement
<PAGE>
EXHIBIT 4.5
$150,000,000 Dallas, Texas September 29, 1997
ENSERCH EXPLORATION, INC., a Texas corporation
("Maker"), for value received, promises and agrees to pay on
demand, or if no demand has been made, on August 4, 2005, to the
order of EEX CAPITAL INC., a Delaware corporation ("Payee") as
successor by merger to EEX Capital L.L.C., a Delaware limited
liability company, in lawful money of the United States of
America the sum of ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000.00), together with interest thereon from and after
the date hereof until maturity. Capitalized terms used and not
otherwise defined herein shall have the meanings attributed
thereto in that certain Subordinated Promissory Note dated
September 29, 1997 made by Payee in favor of MIStS Issuer L.L.C.
("MIStS Issuer") in the principal amount of $75,000,000 (the "EEX
Capital Subordinated Note").
From and after the date hereof, this Subordinated
Promissory Note: (a) shall be subject to the terms of that
certain Subordination Agreement dated as of September 29, 1997
executed by Payee in favor of The Chase Manhattan Bank, as
Administrative Agent and for the benefit of the Lenders from time
to time party to the EEX Credit Agreement hereinafter described
(the "Subordination Agreement"), and (b) shall replace that
certain demand note dated June 5, 1997 in the original face
principal amount of $150,000,000 made by Maker in favor of Payee
(the "Existing Note") and to re-evidence the loan evidenced by
the Existing Note, which loan remains outstanding as of the date
hereof. Notwithstanding the execution of the replacement of the
Existing Note with this Subordinated Promissory Note, any accrued
and unpaid interest under the Existing Note as of the date hereof
shall remain outstanding and shall be payable in full on the next
Interest Payment Date hereunder.
Section 1. Interest and Payment. Subject in each of
the following cases to the terms of the Subordination Agreement:
(a) Interest shall accrue on the unpaid principal
balance of this Subordinated Promissory Note for each Interest
Period at the rate of interest equal to the lesser of (i) the sum
of the Dividends and Additional Amounts owing for the continuous
Dividend Period for the Preferred Securities whether or not such
Dividends or Additional Amounts are described or paid and (ii)
the Maximum Rate (defined below);
(b) The outstanding principal balance of this
Subordinated Promissory Note shall be due and payable on demand,
but if no demand has been made, on August 4, 2005. Interest on
the unpaid principal balance of this Subordinated Promissory Note
shall be due and payable on each Interest Payment Date,
commencing on the Interest Payment Date occurring on December 31,
1997, until the maturity hereof (whether due to demand, a
Maturing Event, or expiration of term), at which time all unpaid
principal of and accrued interest on this Subordinated Promissory
Note shall be due and payable; and
(c) Maker may prepay principal on this Subordinated
Promissory Note upon ten (10) Business Days' prior notice to
Payee and the Placement Agent which notice shall specify the
prepayment date (which shall be a Dividend Payment Date) and the
amount of the prepayment (which shall be at least $10,000,000 or
any whole multiple of $100,000 in excess thereof or the remaining
aggregate principal balance outstanding on this Subordinated
Promissory Note) and shall be irrevocable and effective only upon
receipt by Payee and the Placement Agent, provided that interest
on the principal prepaid, accrued to the prepayment date, shall
be paid on the prepayment date.
Section 2. General Provisions.
All principal, interest and other sums payable under
this Subordinated Promissory Note shall be paid on the day when
due in immediately available funds in lawful money of the United
States of America. All payments made as scheduled on this
Subordinated Promissory Note shall be applied, to the extent
thereof, first to accrued but unpaid interest and the balance to
unpaid principal.
Notwithstanding the failure of the holder hereof to
make prior actual demand hereon, this Subordinated Promissory
Note shall mature and, subject to the Subordination Agreement, be
due and payable at once, without demand, upon the occurrence of
any of the following events (each, a "Maturing Event"):
(a) If Maker shall fail to pay when due any principal of or
interest on this Subordinated Promissory Note and such failure
shall continue unremedied for a period of thirty (30) days; or
(b) If Maker, Payee or MIStS Issuer shall admit in
writing its inability to, or be generally unable to, pay its
debts as such debts become due; or
(c) If Maker, Payee or MIStS Issuer shall (i) apply
for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its Property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition, as debtor, seeking to
take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Federal
Bankruptcy Code, or (vi) take any corporate or partnership action
for the purpose of effecting any of the foregoing;
(d) If a proceeding or case shall be commenced,
without the application or consent of Maker, Payee or MIStS
Issuer in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of
a trustee, receiver, custodian, liquidator or the like of Maker,
Payee or MIStS Issuer of all or any substantial part of its
Property, or (iii) similar relief in respect of Maker, Payee or
MIStS Issuer under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect,
for a period of 60 days; or (iv) an order for relief against
Maker, Payee or MIStS Issuer shall be entered in an involuntary
case under the Federal Bankruptcy Code; or
(e) If any "Event of Default" under and as defined in
the EEX Capital Subordinated Note shall occur which is not
covered by the foregoing subparagraph (b), (c) or (d).
Upon the occurrence of a Maturing Event under
subparagraph (a) or (e) above, subject to the terms of the
Subordination Agreement, Payee shall have the right to declare
the unpaid principal balance and accrued but unpaid interest on
this Subordinated Promissory Note at once due and payable (and
upon such declaration, the same shall be at once due and payable)
and to exercise any of its other rights, powers and remedies
under this Subordinated Promissory Note or at law or in equity.
Upon the occurrence of a Maturing Event under subparagraph (b),
(c) or (d) above, the entire unpaid principal balance of this
Subordinated Promissory Note and all accrued but unpaid interest
thereon shall automatically be accelerated and immediately due
and payable in full, without notice, presentment, protest, demand
or notice of any kind, each of which is hereby expressly waived
by Maker.
Subject to the terms of the Subordination Agreement,
this Subordinated Promissory Note is a demand note subject to
being called at any time without reason upon actual demand by the
holder hereof. The inclusion of a payment schedule and maturity
clause in this Subordinated Promissory Note is merely to provide
terms for payment and acceleration in the absence of actual
demand, and does not affect or impair the holder's absolute
right, subject to the Subordination Agreement, to demand payment
of this Subordinated Promissory Note at any time without reason.
Maker has agreed that the holder may delay demand until, or make
demand at any time before, the maturity date otherwise specified
above.
Neither the failure by the holder hereof to exercise,
nor delay by the holder hereof in exercising, the right to
accelerate the maturity of this Subordinated Promissory Note or
any other right, power or remedy upon any Maturing Event shall be
considered as a waiver of such Maturing Event or as a waiver of
the right to exercise any such right, power or remedy at any
time. Without limiting the generality of the foregoing
provisions, the acceptance by Payee from time to time of any
payment under this Subordinated Promissory Note which is past due
or which is less than the payment in full of all amounts due and
payable at the time of such payment, shall not constitute a
waiver of or impair or establish any right or remedy of Payee.
It is the intent of Payee and Maker in the execution of
this Subordinated Promissory Note to contract in strict
compliance with applicable usury law. In furtherance thereof,
Payee and Maker stipulate and agree that none of the terms and
provisions contained in this Subordinated Promissory Note, or in
any other instrument executed in connection herewith, shall ever
be construed to create a contract to pay for the use, forbearance
or detention of money, or interest at a rate in excess of the
Maximum Rate; that neither Maker nor any guarantors, endorsers or
other parties now or hereafter becoming liable for payment of
this Subordinated Promissory Note shall ever be obligated or
required to pay interest on this Subordinated Promissory Note at
a rate in excess of the Maximum Rate; and that the provisions of
this paragraph shall control over all other provisions of this
Subordinated Promissory Note and any other instruments now or
hereafter executed in connection herewith which may be in
apparent conflict herewith. The holder of this Subordinated
Promissory Note expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the
event demand is made prior to the maturity date hereof or if the
maturity of this Subordinated Promissory Note is accelerated. If
demand shall be made, or if the maturity of this Subordinated
Promissory Note shall be accelerated for any reason or if the
principal of this Subordinated Promissory Note is paid prior to
maturity of this Subordinated Promissory Note, and as a result
thereof the interest received for the actual period of existence
of the loan evidenced by this Subordinated Promissory Note
exceeds the Maximum Rate, the holder of this Subordinated
Promissory Note shall, at its option, either refund to Maker the
payment of such excess or credit the amount of such excess
against the principal balance of this Subordinated Promissory
Note then outstanding and thereby shall render inapplicable any
and all penalties of any kind provided by applicable law as a
result of such excess interest. In the event that Payee or any
other holder of this Subordinated Promissory Note shall contract
for, charge or receive any amount or amounts and/or any other
thing of value which is determined to constitute interest which
would increase the effective interest rate on this Subordinated
Promissory Note to a rate in excess of the Maximum Rate, an
amount equal to interest in excess of the Maximum Rate shall,
upon such determination, at the option of the holder of this
Subordinated Promissory Note, be either immediately returned to
Maker or credited against the principal balance of this
Subordinated Promissory Note then outstanding, in which event any
and all penalties of any kind under applicable law a result of
such excess interest shall be inapplicable. As used herein, the
term "Maximum Rate" means the maximum nonusurious rate of
interest per annum permitted by Texas law, including to the
extent permitted by applicable law, any amendments thereof
hereafter or any new law hereafter coming into effect to the
extent a higher Maximum Rate is permitted thereby. To the
extent, if any, that Chapter One ("Chapter One") of Title 79,
Texas Revised Civil Statutes, 1925, as amended, establishes the
Maximum Rate, the Maximum Rate shall be the "indicated rate
ceiling" (as defined in Chapter One) in effect from time to time.
The Maximum Rate shall be applied by taking into account all
amounts characterized by applicable law as interest on the debt
evidenced by this Subordinated Promissory Note, so that the
aggregate of all interest does not exceed the maximum nonusurious
amount permitted by applicable law.
Maker waives demand (unless upon occurrence of the
stated maturity date), presentment for payment, notice of
dishonor, protest and notice of protest, diligence in collecting
or in bringing suit against any party to this Subordinated
Promissory Note, and the application of any bank balance or
collateral security or the proceeds therefrom as payment or part
payment on this obligation or as an offset to this note, and
agrees to all extensions and partial payments, with or without
notice, before or after maturity (whether due to demand, a
Maturing Event or expiration of term).
All of the covenants, stipulations, promises, and
agreements contained in this Subordinated Promissory Note by or
on behalf of Maker shall bind its successors and assigns.
THIS SUBORDINATED PROMISSORY NOTE, AND ITS VALIDITY,
ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY TEXAS LAW.
Time shall be of the essence in this Subordinated
Promissory Note with respect to all of Maker's obligations
hereunder.
THIS NOTICE REPRESENTS THE FINAL AGREEMENT BETWEEN
MAKER AND PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF MAKER AND PAYEE.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.
ENSERCH EXPLORATION, INC.
By:/s/ J. T. Leary
-----------------------------
J.T. Leary
Vice President-Finance
<PAGE>
EXHIBIT 4.6
SUBORDINATED PROMISSORY NOTE
$75,000,000 September 29, 1997
EEX CAPITAL INC., a Delaware corporation ("EEX Capital"), as
successor by merger to EEX Capital L.L.C., a Delaware limited
liability company, for value received, promises and agrees to pay
on demand or, if no demand has been made, on August 4, 2005, to
the order of MIStS ISSUER L.L.C., a Delaware limited liability
company ("MIStS Issuer"), at its account with The Chase Manhattan
Bank, account number 910-2-745156, 1 Chase Manhattan Plaza, New
York, New York 10005, in lawful money of the United States of
America the sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000),
together with interest thereon from and after the date hereof
until maturity as specified in Section 2.02 below.
From and after the date hereof, this Subordinated Promissory
Note: (a) shall be subject to the terms of that certain
Subordination Agreement dated as of September 29, 1997 executed
by MIStS Issuer in favor of The Chase Manhattan Bank, as
Administrative Agent, for the benefit of the lenders from time to
time party to the EEX Syndicated Credit Agreement hereinafter
described (the "Subordination Agreement"), and (b) shall be
deemed to replace that certain demand note dated August 4, 1995,
and amended on October 31, 1996 and June 27, 1997, in the
original face principal amount of $150,000,000 made by EEX
Capital L.L.C. in favor of MIStS Issuer (the "Existing Note") on
which a principal payment of $75,000,000 was made and received as
of the date hereof; provided, however, that nothing herein shall
be deemed to compromise or otherwise forgive any accrued and
unpaid interest under the Existing Note.
ARTICLE I
Definitions
Section 1.01 Certain Defined Terms. As used herein,
(a) capitalized terms used and not otherwise defined herein shall
have the meanings attributed thereto in the Subscription
Agreement, and (b) the following terms shall have the following
meanings (all terms defined in this Article I or in other
provisions of this Subordinated Promissory Note in the singular
to have the same meanings when used in the plural and vice versa):
"Additional Amounts" shall mean, collectively, (a)
all "Additional Dividends" under and as defined in the
MIStS Issuer LLC Agreement, and (b) all "Additional
Costs" under and as defined in the Subscription
Agreement.
"Affiliate" shall mean with respect to any Person,
any other Person that, directly or indirectly, through
one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person. For
purposes of the foregoing definition, "control" means
the direct or indirect ownership of more than 50% of
the outstanding capital stock or other equity interests
having ordinary voting power.
"Business Day" shall have the meaning assigned in
the Subscription Agreement.
"Certificate of Designations" shall have the
meaning assigned in the Subscription Agreement.
"Closing Date" shall mean September 29, 1997.
"Collection Account" shall have the meaning
assigned in the MIStS Issuer LLC Agreement.
"Debt" shall have the meaning assigned in the
Subscription Agreement.
"Default" shall mean an Event of Default or an
event which with notice or lapse of time or both would
become an Event of Default.
"Designated Subsidiary" shall have the meaning
assigned in the EEX Syndicated Credit Agreement.
"Dividend Payment Date" shall have the meaning
assigned in the MIStS Issuer LLC Agreement.
"Dividend Period" shall have the meaning assigned
in the MIStS Issuer LLC Agreement.
"Dividends" shall mean, collectively, (a)
"Dividends" under and as defined in the MIStS Issuer
LLC Agreement, and (b) "Dividends" under and as defined
in the Certificate of Designations.
"Dollars" and "$" shall mean lawful money of the
United States of America.
"EEX" shall mean Enserch Exploration, Inc., a
Texas corporation.
"EEX Guaranty Agreement" shall mean the Amended
and Restated Guaranty Agreement dated as of September
29, 1997 executed by EEX guaranteeing the payment of
this Subordinated Promissory Note, as the same may be
amended, supplemented, restated or replaced from time
to time.
"EEX Subordinated Note" shall mean that certain
Subordinated Promissory Note dated September 29, 1997
executed by EEX in favor of EEX Capital in the face
principal amount of $75,000,000, as the same may be
amended, supplemented, restated or replaced from time
to time.
"EEX Syndicated Credit Agreement" shall mean that
certain Credit Agreement dated as of May 1, 1995 among
EEX, as borrower, The Chase Manhattan Bank, as
Administrative Agent and the lenders signatory thereto,
as amended by First Amendment dated September 19, 1996,
and Second Amendment dated June 27, 1997, and in effect
on the Closing Date, together with such amendments
thereto as be adopted in accordance therewith and
consented to by the Majority Holders.
"Event of Default" shall have the meaning assigned
such term in Section 5.01 of this Subordinated
Promissory Note.
"GAAP" shall mean generally accepted accounting
principles in the United States of America in effect
from time to time.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision
thereof and any Person exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Governmental Requirement" shall mean 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.
"Guarantors" shall mean EEX and the Subsidiary
Guarantors.
"Guaranty Agreements" shall mean the EEX Guaranty
Agreement and the Subsidiary Guaranty Agreements.
"Hedging Agreements" shall mean any commodity,
interest rate or currency swap, rate cap, rate floor,
rate collar, forward agreement or other exchange or
rate protection agreements or any option with respect
to any such transaction.
"Holders" shall have the meaning specified in the
Subscription Agreement.
"Indebtedness" shall have the meaning specified in
the Subscription Agreement.
"Interest Payment Date" shall mean a day which is
a Dividend Payment Date.
"Interest Periods" shall mean the periods (i) in
the case of the first Interest Period, from the date
hereof to but excluding December 31, 1997, and in the
case of each subsequent Interest Period, from the last
Business Day of a calendar quarter to but excluding the
last Business Day of the following calendar quarter or,
if earlier, the maturity date of this Subordinated
Promissory Note.
"Lien" shall mean, with respect to EEX Capital or
MIStS Issuer, 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 (i) 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 or (ii) production
payments and the like payable out of Properties. For
the purposes of this Subordinated Promissory Note, each
of EEX Capital and MIStS Issuer shall be deemed to be
the owner of any Property which it has acquired or
holds subject to a conditional sale agreement, or
leases under a financing lease or other arrangement
pursuant to which title to the Property has been
retained by or vested in some other Person in a
transaction intended to create a financing.
"Majority Holders" shall mean, on any date of
determination, Holders holding more than fifty percent
(50%) of the aggregate Liquidation Preference of the
Preferred Securities then outstanding, considered as if
such securities were of a single class and a single
issuer.
"Material Adverse Effect" shall mean any material
and adverse change in the financial condition, business
or results of operations of EEX and its Subsidiaries
taken as a whole which makes them unable to perform
their obligations under the Operative Documents.
"MIStS Issuer LLC Agreement" shall mean the Second
Amended and Restated Limited Liability Company
Agreement of MIStS Issuer dated as of September 29,
1997, as the same may be amended or restated from time
to time.
"Operative Documents" shall mean the documents
described on Schedule 1 of this Subordinated Promissory
Note and all amendments, supplements, renewal,
extensions, rearrangements, and replacements thereof.
"Person" shall mean any individual, corporation,
company, limited liability company, voluntary
association, partnership, joint venture, trust,
unincorporated organization or government or any
agency, instrumentality or political subdivision
thereof, or any other form of entity.
"Placement Agent" shall mean UBS Securities LLC,
in such capacity under the Subscription Agreement and
any successors in such capacity.
"Preferred Securities" shall mean, collectively,
on any date of determination, the issued and
outstanding Preferred Stock and the issued and
outstanding Preferred Interests, each as defined in the
Subscription Agreement.
"Prohibited Indebtedness" shall mean any
Indebtedness of or guaranteed by EEX Capital or MIStS
Issuer other than (a) the Indebtedness evidenced by
this Subordinated Promissory Note (and subordinated
promissory notes issued in replacement hereof in
accordance with Section 4.02), (b) additional
Indebtedness of EEX Capital and/or MIStS Issuer to EEX,
one another or another Affiliate not to exceed
$10,000,000 in aggregate principal amount, and (c)
Hedging Obligations permitted under Section 4.03(f) of
this Subordinated Promissory Note.
"Property" shall mean any interest in any kind of
property or asset, whether real, personal or mixed, or
tangible or intangible.
"Responsible Officer" shall mean, 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.
"Special Entity" shall mean 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.
"Subscription Agreement" shall mean the Preferred
Interests and Preferred Stock Subscription Agreement
dated as of September 29, 1997 by and among EEX, EEX
Capital, MIStS Issuer and UBS Securities, LLC,
individually and as Placement Agent for the holders of
the Preferred Securities, as the same may be amended,
supplemented, restated or replaced from time to time.
"Subsidiary" shall mean, with respect to any
Person, (i) any corporation, association or other
business entity of which more than 50% of the total
voting power of shares of Voting Stock thereof is at
the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the
managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general
partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Guarantor" shall mean any Subsidiary
or Special Entity that has executed a Subsidiary
Guaranty Agreement.
"Subsidiary Guaranty Agreement" shall mean any
Guaranty Agreement executed by a Subsidiary or a
Special Entity as required by Section 3.08 of Schedule
1 of the EEX Guaranty Agreement as such agreement may
be amended, supplemented or restated from time to time.
Article II
Payments of Principal and Interest
Section 2.01 Repayment. Subject to the Subordination
Agreement, EEX Capital will pay to MIStS Issuer the aggregate
principal amount outstanding under this Subordinated Promissory
Note upon demand, or if no demand has been made, on August 4,
2005.
Section 2.02 Interest.
(a) Regular Interest. Subject to the Subordination
Agreement, EEX Capital will pay to MIStS Issuer interest on
the unpaid principal amount of this Subordinated Promissory
Note for each Interest Period equal to the sum of the
Dividends and Additional Amounts owing for the coterminous
Dividend Period for the Preferred Interests whether or not
such Dividends or Additional Amounts are declared or paid.
(b) Interest Payments. Accrued interest on this
Subordinated Promissory Note shall be payable on each
Interest Payment Date, commencing on the Interest Payment
Date occurring on December 31, 1997.
Section 2.03 Prepayments. Subject to the terms of the
Subordination Agreement:
(a) Optional Prepayments. EEX Capital may prepay
principal on this Subordinated Promissory Note upon ten (10)
Business Days' prior notice to MIStS Issuer and the
Placement Agent which notice shall specify the prepayment
date (which shall be a Dividend Payment Date) and the amount
of the prepayment (which shall be at least $5,000,000 or any
whole multiple of $100,000 in excess thereof or the
remaining aggregate principal balance outstanding on this
Subordinated Promissory Note) and shall be irrevocable and
effective only upon receipt by MIStS Issuer, provided that
interest on the principal prepaid, accrued to the prepayment
date, shall be paid on the prepayment date.
(b) Penalties; Premium. Prepayments permitted under
this Section 2.03 shall be without premium or penalty,
except for an amount equal to any Additional Amounts
required to be paid by MIStS Issuer in connection with a
corresponding redemption of the Preferred Interests.
Section 2.04 Payments. Except to the extent otherwise
provided herein, all payments of principal, interest and other
amounts to be made by EEX Capital under this Subordinated
Promissory Note shall be made in Dollars, in immediately
available funds, to the Collection Account, not later than 1:00
p.m. (Central time) on the date on which such payments shall
become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding
Business Day). Such payments shall be made without (to the
fullest extent permitted by applicable law) defense, set-off or
counterclaim. If the due date of any payment under this
Subordinated Promissory Note would otherwise fall on a day which
is not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.
Section 2.05 Taxes.
(a) Payments Free and Clear. Any and all payments by
EEX Capital hereunder shall be made free and clear of and
without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, including, taxes
imposed on MIStS Issuer's income, and franchise or similar
taxes imposed on MIStS Issuer, (all such taxes, levies,
imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If EEX Capital
shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to MIStS Issuer (i) the
sum payable shall be increased by the amount necessary so
that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 2.05) MIStS Issuer shall receive an amount equal to
the sum it would have received had no such deductions been
made, (ii) EEX Capital shall make such deductions and
(iii) EEX Capital shall pay the full amount deducted to the
relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, EEX Capital agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Subordinated Promissory Note (hereinafter referred to
as "Other Taxes").
(c) indemnification. to the fullest extent permitted by applicable
law, EEX Capital will indemnify MIStS Issuer for the full amount of Taxes
and Other Taxes (including, but not limited to, any Taxes or Other Taxes
imposed by any Governmental Authority on amounts payable under this section
2.05) paid by MIStS Issuer and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
unless the payment of such Taxes was not correctly or legally asserted and
MIStS Issuer's payment of such Taxes or Other Taxes was the result of its
gross negligence or willful misconduct. any payment pursuant to such
indemnification shall be made within thirty (30) days after the date MIStS
Issuer makes written demand therefor. if MIStS Issuer receives a refund
or credit in respect of any Taxes or Other Taxes for which EEX Capital has
received payment from EEX Capital it shall promptly notify EEX Capital of
such refund or credit and shall, if no default has occurred and is
continuing, within thirty (30) days after receipt of a request by EEX
Capital (or promptly upon receipt, if EEX Capital, has requested
application for such refund or credit pursuant hereto), pay an amount equal
to such refund or credit to EEX Capital, without interest (but with any
interest so refunded or credited), provided that EEX Capital agrees to
return such refund or credit (plus penalties, interest or other charges) to
MIStS Issuer in the event MIStS Issuer is required to repay such refund
or credit.
ARTICLE III
Representations and Warranties
EEX Capital represents and warrants to MIStS Issuer that:
Section 3.01 Corporate Existence. EEX Capital:
(i) is duly organized, legally existing and in good standing as a
corporation under the laws of Delaware; (ii) has all requisite
corporate 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 3.02 No Breach. Neither the execution and
delivery of this Subordinated Promissory Note, 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 Closing Date under, the certificate of
incorporation of EEX Capital, or any Governmental Requirement or
any agreement or instrument for borrowed money to which EEX
Capital 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 Capital
pursuant to the terms of any such agreement or instrument.
Section 3.03 Authority. EEX Capital has all necessary
power and authority to execute, deliver and perform its obliga-
tions under this Subordinated Promissory Note; and the execution,
delivery and performance by EEX Capital of this Subordinated
Promissory Note have been duly authorized by all necessary action
on its part; and this Subordinated Promissory Note constitutes
the legal, valid and binding obligation of EEX Capital, enforce-
able in accordance with its 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 3.04 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 Capital of this Subordinated Promissory
Note or for the validity or enforceability thereof.
Section 3.05 Use of Proceeds. The proceeds of the
Existing Note were used to purchase preferred stock from EEX with
EEX receiving all of the $150,000,000. EEX Capital is not
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation G, U or X of the Board of
Governors of the Federal Reserve System). Following application
of the proceeds of this Subordinated Promissory Note, not more
than 25 percent of the value of the assets of EEX Capital, which
are subject to any arrangement with MIStS Issuer (herein or
otherwise) whereby EEX Capital's right or ability to sell, pledge
or otherwise dispose of assets is in any way restricted, will be
margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System).
ARTICLE IV
Covenants
EEX Capital covenants and agrees that, until payment in full
of the principal outstanding on the Subordinated Promissory Note,
all interest thereon and all other amounts payable by EEX Capital
under this Subordinated Promissory Note:
Section 4.01 Maintenance, Etc. EEX Capital shall
preserve and maintain its corporate existence and all of its
material rights, privileges and franchises and comply with all
Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect.
Section 4.02 Further Assurances. EEX Capital will
cure promptly any defects in the creation and issuance of this
Subordinated Promissory Note. At the request of MIStS Issuer,
EEX Capital will promptly issue a new subordinated promissory
note to replace this Subordinated Promissory Note upon the same
terms as set forth herein, but dated as of the date requested by
MIStS Issuer.
Section 4.03 Indebtedness, Liens, Etc.. EEX Capital
will not, and will not permit MIStS Issuer to:
(a) create, incur, assume or suffer to exist any
Prohibited Indebtedness or any Lien on any of its Properties
(now owned or hereafter acquired);
(b) make or permit to remain outstanding any loans or
advances to or investments in any Person, except for (i) in
the case of EEX Capital, the EEX Subordinated Note and the
common membership of MIStS Issuer, and (ii) in the case of
MIStS Issuer, this Subordinated Promissory Note;
(c) declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its stock now or
hereafter outstanding, return any capital to its members or
make any distribution of its assets to its members, in each
case, expect (i) in the case of EEX Capital, as provided in
the Certificate of Designations, and (ii) in the case of
MIStS Issuer, as provided in the MIStS Issuer LLC Agreement;
(d) conduct any business other than as permitted in
(i) in the case of EEX Capital, the Certificate of
Designations, and (ii) in the case of MIStS Issuer, the
MIStS Issuer LLC Agreement;
(e) own any Property other than (i) in the case of EEX
Capital, its common membership of MIStS Issuer and the EEX
Subordinated Note, and (ii) in the case of MIStS Issuer,
this Subordinated Promissory Note and the EEX Guaranty
Agreement;
(f) create, incur, assume or suffer to exist any
lease obligation or suffer to exist any Hedging Agreements
except Hedging Agreements relating to interest rates which,
when in effect, have, in the aggregate, a notional amount
not in excess of the principal amount of this Subordinated
Promissory Note;
(g) merge into or consolidate with any Person except
that MIStS Issuer may merge with and into EEX Capital, or
sell any of its Property if such merger, consolidation or
sale would result in a Default or Event of Default
hereunder;
(h) issue any equity securities other than the
Preferred Securities and the equity securities issued to EEX
at the formation of EEX Capital L.L.C.; or
(i) create any partnership, joint venture, limited
liability company or partnership, subsidiary or any other
Person of any kind, other than MIStS Issuer.
ARTICLE V
Events of Default; Remedies
Section 5.01 Events of Default. One or more of the
following events shall constitute an "Event of Default":
(a) EEX Capital shall default in the payment or
prepayment of any principal, interest or other amounts owing
under this Subordinated Promissory Note when due and such
default shall continue unremedied for a period of thirty
(30) days; or
(b) a "Maturing Event" under and as defined in the EEX
Subordinated Note shall occur, a "Voting Rights Trigger
Event" under and as defined in Section 8.1(b) of the MIStS
Issuer LLC Agreement shall occur, or an "Event of Default"
under and as defined in the EEX Syndicated Credit Agreement
shall occur; or
(c) any representation, warranty or certification made
or deemed made herein or in any other Operative Documents by
EEX, any Subsidiary, EEX Capital or MIStS Issuer, or any
certificate furnished to MIStS Issuer pursuant to the
provisions hereof or any other Operative Documents, shall
prove to have been false or misleading as of the time made,
deemed made or furnished in any material adverse respect; or
(d) EEX Capital or MIStS Issuer shall incur any
Prohibited Indebtedness; or
(e) EEX or any of its Subsidiaries shall default in
the performance of any of its obligations under any other
Operative Document or EEX Capital shall default in the
performance of any of its obligations under any other
Section of this Subordinated Promissory Note not covered by
Section 5.01(a), (b), (c) or (d) and such default shall
continue unremedied for a period of sixty (60) days after
the earlier to occur of (i) notice thereof to EEX by MIStS
Issuer or the Placement Agent, as MIStS Issuer's attorney-in-fact, or
(ii) a Responsible Officer of EEX otherwise
becoming aware of such default; or
(f) EEX, EEX Capital or MIStS Issuer shall admit in
writing its inability to, or be generally unable to, pay its
debts as such debts become due; or
(g) EEX, EEX Capital or MIStS Issuer shall (i) apply
for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its Property,
(ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition, as debtor, seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, or
(vi) take any corporate or partnership action for the
purpose of effecting any of the foregoing;
(h) a proceeding or case shall be commenced, without
the application or consent of EEX, EEX Capital or MIStS
Issuer in any court of competent jurisdiction, seeking (i)
its liquidation, reorganization, dissolution or winding-up,
or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or
the like of EEX, EEX Capital or MIStS Issuer of all or any
substantial part of its Property, or (iii) similar relief in
respect of EEX, EEX Capital or MIStS Issuer under any law
relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in
effect, for a period of 60 days; or (iv) an order for relief
against EEX, EEX Capital or MIStS Issuer shall be entered in
an involuntary case under the Federal Bankruptcy Code; or
(i) the Guaranty Agreements after delivery thereof
shall for any reason, except to the extent permitted by the
terms thereof, cease to be in full force and effect and
valid, binding and enforceable in accordance with their
terms, except to the extent permitted by the terms of this
Subordinated Promissory Note, or EEX or any Subsidiary
Guarantor shall so state in writing, or EEX or any
Subsidiary Guarantor shall default on any of its obligations
and covenants thereunder; or
(j) either (i) EEX shall cease to own 100% of the
common stock of EEX Capital, or (ii) EEX Capital shall cease
to own 100% of the common membership interests of MIStS
Issuer (other than as a result of a merger of MIStS Issuer
with and into EEX Capital); or
(k) any Change of Control shall occur.
Section 5.02 Remedies.
(a) In the case of an Event of Default other than one
referred to in clauses (f), (g), or (h) of Section 5.01,
subject to the terms of the Subordination Agreement, MIStS
Issuer may declare (or the Placement Agent, as MIStS
Issuer's attorney-in-fact, may declare), by notice to EEX
Capital the principal amount then outstanding of, and the
accrued interest on, this Subordinated Promissory Note and
all other amounts payable by EEX Capital hereunder and under
this Subordinated Promissory Note to be forthwith due and
payable, whereupon such amounts shall, subject to the terms
of the Subordination Agreement, be immediately due and
payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other
formalities of any kind, all of which are hereby expressly
waived by EEX Capital.
(b) In the case of the occurrence of an Event of
Default referred to in clauses (f), (g), or (h) of Section
5.01, the principal amount then outstanding of, and the
accrued interest on, this Subordinated Promissory Note and
all other amounts payable by EEX Capital hereunder and under
this Subordinated Promissory Note shall become
automatically, immediately due and, subject to the terms of
the Subordination Agreement, payable without presentment,
demand, protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which
are hereby expressly waived by EEX Capital.
(c) All proceeds received after maturity of this
Subordinated Promissory Note, whether by acceleration or
otherwise, shall be applied first to reimbursement of
expenses and indemnities provided for in this Subordinated
Promissory Note; second to accrued interest on this
Subordinated Promissory Note; third to principal outstanding
on this Subordinated Promissory Note; and any excess shall
be paid to EEX Capital or as otherwise required by any
Governmental Requirement.
Article VI
Miscellaneous
Section 6.01 Waiver. EEX Capital hereby expressly
waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of intent
to accelerate the maturity hereof, notice of the acceleration of
the maturity hereof, bringing of suit and diligence in taking any
action to collect amounts called for hereunder and in the
handling of securities at any time existing in connection
herewith. No failure on the part of MIStS Issuer or the
Placement Agent, as MIStS Issuer's attorney-in-fact, to exercise
and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under this Subordinated
Promissory Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under
this Subordinated Promissory Note preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. EEX Capital agrees
that the statute of limitations for any action to enforce payment
of this Subordinated Promissory Note shall not begin to run until
the earlier of August 4, 2005 or the date that a payment under
this Subordinated Promissory Note is actually demanded in writing
by MIStS Issuer or the Placement Agent, as MIStS Issuer's
attorney-in-fact.
Section 6.02 Notices. All notices and other
communications provided for herein (including, without
limitation, any modifications of, or waivers or consents
hereunder) shall be given or made by telecopy, courier or U.S.
Mail or in writing and telecopied, mailed or delivered to the
intended recipient at the "Address for Notices" specified in the
other Operative Documents or, as to any party, at such other
address as shall be designated by such party in a notice to each
other party. Except as otherwise provided in this Subordinated
Promissory Note or in the other Operative Documents, all such
communications shall be deemed to have been duly given when
transmitted by telecopier, or personally delivered or, in the
case of a mailed notice, the earlier of (i) actual receipt by the
named addressee or (ii) seven (7) days after the date deposited
in the mails, postage prepaid, in each case given or addressed as
aforesaid.
Section 6.03 Amendments, Etc. Any provision of this
Subordinated Promissory Note and the Guaranty Agreements may only
be amended, modified or waived with EEX Capital's, MIStS
Issuer's, the Placement Agent's and the Majority Holders' prior
written consent; provided that (i) no amendment, modification or
waiver which extends the maturity of the interest payment dates,
forgives the principal amount of any Indebtedness outstanding
under this Subordinated Promissory Note or the Guaranty
Agreements, releases or materially diminishes the liabilities
under any Guaranty Agreement, reduces the interest payable to
MIStS Issuer generally, affects this Section 6.03 or modifies the
definition of "Majority Holders" or any provision which by its
terms requires the consent or approval of all of the Holders
shall be effective without consent of all Holders; (ii) no
amendment, modification or waiver which modifies the rights,
duties or obligations of the Placement Agent shall be effective
without the consent of the Placement Agent, and (iii) no
amendment, modification or waiver which extends the maturity of
this Subordinated Promissory Note shall be effective without the
consent of all of the Holders.
Section 6.04 Successors and Assigns. This
Subordinated Promissory Note shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns.
Section 6.05 Invalidity. In the event that any one or
more of the provisions contained in this Subordinated Promissory
Note shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Subordinated Promissory Note.
Section 6.06 Survival. The obligations of the parties
under Section 2.05, shall survive the repayment of this
Subordinated Promissory Note. To the extent that any payments on
the Indebtedness evidenced by this Subordinated Promissory Note
or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, debtor in possession, receiver or
other Person under any bankruptcy law, common law or equitable
cause, then to such extent, the Indebtedness evidenced by this
Subordinated Promissory Note so satisfied shall be revived and
continue as if such payment or proceeds had not been received and
the Liens, security interests, rights, powers and remedies under
this Subordinated Promissory Note shall continue in full force
and effect. In such event, this Subordinated Promissory Note
shall be automatically reinstated and EEX Capital shall take such
action as may be reasonably requested by MIStS Issuer or the
Placement Agent to effect such reinstatement.
Section 6.07 Governing Law; Submission to Jurisdiction.
(a) This Subordinated Promissory Note shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflict of laws rules thereof.
(b) Any legal action or proceeding with respect to this
Subordinated Promissory Note may be brought in the courts of the state of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Subordinated Promissory Note, EEX Capital
hereby accepts for itself and (to the extent permitted by law) in respect of its
Property, generally and unconditionally, the jurisdiction of the aforesaid
courts. EEX Capital hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions. This submission to
jurisdiction is non-exclusive and does not preclude MIStS Issuer or the
Placement Agent, as MIStS Issuer's attorney-in-fact, from obtaining jurisdiction
over EEX Capital in any court otherwise having jurisdiction.
(c) Nothing herein shall affect the right of MIStS Issuer or the
Placement Agent, as MIStS Issuer's attorney-in-fact, to serve process in any
manner permitted by law or to commence legal proceedings or otherwise proceed
against EEX Capital in any other jurisdiction.
(d) EEX Capital hereby (i) irrevocably and unconditionally
waives, to the fullest extent permitted by law, trial by jury in any legal
action or proceeding relating to this Subordinated Promissory Note and for any
counterclaim therein; (ii) irrevocably waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages; (iii) certifies that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers, and
(iv) acknowledges that it has been induced to enter into this Subordinated
Promissory Note, among other things, the mutual waivers and certifications
contained in this Section 6.07.
Section 6.08 Placement Agent's Rights. The Placement
Agent, as MIStS Issuer's attorney-in-fact, has the right in
certain circumstances set forth in the Subscription Agreement, to
make demand on or exercise remedies under this Subordinated
Promissory Note.
<Signature Page Next>
<PAGE>
<PAGE>
Executed as of the date first written above.
EEX CAPITAL INC.
By: /s/ J. T. Leary
--------------------------
J.T. Leary
Vice President, Finance
and Treasurer
<PAGE>
<PAGE>
Schedule 1
List of Operative Documents
1. Subordinated Promissory Note dated September 29, 1997 issued
by EEX Capital in favor of MIStS Issuer in the face principal
amount of $75,000,000.
2. Subordinated Promissory Note dated September 29, 1997 issued
by EEX in favor of EEX Capital in the face principal amount of
$150,000,000.
3. Each of the Transaction Documents (under and as defined in
the Subscription Agreement).
<PAGE>
EXHIBIT 4.7
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT is entered
into by ENSERCH EXPLORATION, INC., a Texas corporation ("EEX"),
and MIStS Issuer L.L.C., a limited liability company formed under
the laws of the State of Delaware ("MIStS Issuer"), as of
September 29, 1997.
Recitals
A. EEX executed a Guaranty Agreement dated August 4,
1995 in favor of MIStS Issuer, which was amended by (i) that
certain First Omnibus Amendment to Demand Note and Guaranty
Agreement dated as of October 31, 1996 by and among EEX Capital
L.L.C. ("EEX LLC"), EEX and MIStS Issuer (the "First Amendment")
and (ii) that certain Second Omnibus Amendment to Demand Note and
Guaranty Agreement dated as of June 27, 1997, by and among EEX
LLC, EEX and MIStS Issuer (the "Second Amendment" and, the
Guaranty Agreement as amended by the First Amendment and the
Second Amendment, the "Existing Guaranty"), with respect to a
demand loan made by MIStS Issuer to EEX LLC in the original
principal amount of $150,000,000 (the "Loan").
B. The Loan is evidenced by that certain demand note
dated August 4, 1995 made by EEX LLC to the order of MIStS Issuer
in the original principal amount of $150,000,000, which was
amended by the First Amendment and the Second Amendment (as so
amended, the "Existing Demand Note").
C. On September 26, 1997, EEX LLC merged (the
"Merger") with and into Enserch Preferred Capital Inc., a
Delaware corporation which, as survivor of the Merger, changed
its name to EEX Capital Inc. ("EEX Capital").
D. On the date hereof, EEX Capital issued to UBS
Securities LLC ("UBS") 75,000 Shares of its Class A Cumulative
Perpetual Increasing Dividend Preferred Stock (the "Preferred
Stock") for $75,000,000 in cash, and used such cash proceeds to
make a $75,000,000 principal payment on the Existing Demand Note
(the "Principal Payment"). Also on the date hereof, MIStS Issuer
issued to UBS 75,000 shares of its Class A Cumulative Perpetual
Increasing Dividend Preferred Securities (the "Preferred
Interests" and, together with the Preferred Stock, the "Preferred
Securities") for $75,000,000 in cash. MIStS Issuer used the
proceeds of the Preferred Interests, together with the Principal
Payment and certain other cash available to it to fully redeem
its outstanding Minority Interest Structured Securities (the
"Redemption").
E. As a result of the Merger, the Principal Payment
and the Redemption, (i) the Existing Demand Note has been
replaced on the date hereof with a Subordinated Promissory Note
made by EEX Capital, in its capacity as survivor by Merger to EEX
LLC, in the face principal amount of $75,000,000 (the Existing
Demand Note as so amended and as hereafter amended, extended,
replaced, restated or otherwise modified from time to time, the
"Subordinated Promissory Note") to re-evidence the Loan as
reduced by the Principal Payment, (ii) MIStS Issuer has executed
a Subordination Agreement dated as of September 29, 1997 in favor
of The Chase Manhattan Bank, as administrative agent for the
lenders from time to time party to the EEX Credit Agreement
referenced in the Subordinated Promissory Note (the
"Subordination Agreement"), pursuant to which MIStS Issuer has
subordinated its claims and rights under and in respect of the
Subordinated Promissory Note and this Guaranty Agreement to the
payment of the "Superior Indebtedness" as defined therein, and
(iii) EEX and MIStS Issuer wish to amend and restate the Existing
Guaranty as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
hereby agree to amend and restate the Existing Guaranty in its
entirety as follows:
ARTICLE 1
General Terms
Section 1.1 Terms Defined Above. As used in this
Guaranty Agreement, the terms defined above, shall have the
meanings indicated above.
Section 1.2 Certain Definitions. As used in this
Guaranty Agreement, the following terms shall have the following
meanings, unless the context otherwise requires:
"Guaranty Agreement" shall mean this Amended and
Restated Guaranty Agreement, including Schedule 1, Schedule 2.14
and Exhibit 1 attached hereto, as the same may from time to time
be amended or supplemented.
"Liabilities" shall mean (a) any and all indebtedness,
obligations and liabilities of EEX Capital pursuant to the
Subordinated Promissory Note, including without limitation, the
unpaid principal of and interest on the Subordinated Promissory
Note, including without limitation, interest accruing subsequent
to the filing of a petition (whether or not an allowable claim)
or other action concerning bankruptcy or other similar
proceeding; and (b) all renewals, rearrangements, increases,
extensions for any period, amendments or supplements in whole or
in part of the Subordinated Promissory Note executed by EEX
Capital or any documents evidencing the above.
Section 1.3 Schedule 1. Unless otherwise defined
herein, all terms beginning with a capital letter which are
defined in the attached Schedule 1 shall have the same meanings
herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed. EEX hereby
irrevocably and unconditionally guarantees the prompt payment of
the Liabilities when due, whether at maturity or otherwise. EEX
recognizes that the Subordinated Promissory Note may, subject to
the terms of the Subordination Agreement, be demanded at any
time, with or without cause, and agrees that the Liabilities will
be due at the time of such demand. MIStS Issuer shall execute
and deliver the Subordination Agreement and acknowledges that its
rights to make demand on the Subordinated Promissory Note and
this Guaranty Agreement are limited as set forth in such
Subordination Agreement.
Section 2.2 Nature of Guaranty. This Guaranty
Agreement is an absolute, irrevocable, completed and continuing
guaranty of payment and not a guaranty of collection, and no
notice of the Liabilities or any extension of credit already or
hereafter contracted by or extended to EEX Capital need be given
to EEX. This Guaranty Agreement may not be revoked by EEX and
shall continue to be effective with respect to debt under the
Liabilities arising or created after any attempted revocation by
EEX and shall remain in full force and effect until the
Liabilities are indefeasibly paid in full, notwithstanding that
from time to time prior thereto no Liabilities may be
outstanding. EEX Capital and MIStS Issuer may modify, alter,
rearrange, extend for any period and/or renew from time to time,
the Liabilities, and MIStS Issuer may waive any Default or Events
of Default without notice to EEX and in such event EEX will
remain fully bound hereunder on the Liabilities. This Guaranty
Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of the Liabilities is
rescinded or must otherwise be returned by MIStS Issuer upon the
insolvency, bankruptcy or reorganization of EEX or otherwise, all
as though such payment had not been made. This Guaranty
Agreement may be enforced by MIStS Issuer and any subsequent
holder of any of the Liabilities and shall not be discharged by
the assignment or negotiation of all or part of the Liabilities.
EEX hereby expressly waives presentment, demand, notice of
non-payment, protest and notice of protest and dishonor, notice
of Default or Event of Default, notice of intent to accelerate
the maturity and notice of acceleration of the maturity and any
other notice in connection with the Liabilities, and also notice
of acceptance of this Guaranty Agreement, acceptance on the part
of MIStS Issuer being conclusively presumed by MIStS Issuer's
request for this Guaranty Agreement and delivery of the same to
MIStS Issuer.
Section 2.3 EEX's Waivers. EEX waives any right to
require MIStS Issuer to (a) proceed against EEX Capital or any
other Person liable on the Liabilities, (b) enforce any of its
rights against any other guarantor of the Liabilities,
(c) proceed or enforce any of its rights against or exhaust any
security given to secure the Liabilities, (d) have EEX Capital
joined with EEX in any suit arising out of this Guaranty
Agreement and/or the Liabilities, or (e) pursue any other remedy
in MIStS Issuer's powers whatsoever. MIStS Issuer shall not be
required to mitigate damages or take any action to reduce,
collect or enforce the Liabilities. EEX waives any defense aris-
ing by reason of any lack of authority or power, or other defense
of EEX Capital or any other guarantor of the Liabilities, and
shall remain liable hereon regardless of whether any other
guarantor be found not liable thereon for any reason. Whether
and when to exercise any of the remedies of MIStS Issuer under
any of the Operative Documents shall be in the sole and absolute
discretion of MIStS Issuer, and no delay by MIStS Issuer in
enforcing any remedy, including delay in conducting a foreclosure
sale, shall be a defense to EEX's liability under this Guaranty
Agreement.
Section 2.4 Maturity of Liabilities; Payment. EEX
agrees that if the maturity of any of the Liabilities is demanded
or accelerated by bankruptcy or otherwise, such maturity shall
also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to EEX. EEX will, forthwith
upon notice from MIStS Issuer, pay to MIStS Issuer the amount due
and unpaid by EEX Capital and guaranteed hereby. The failure of
the Placement Agent, as attorney-in-fact for MIStS Issuer, to
give any such notice shall not in any way release EEX hereunder.
Section 2.5 Issuer's Expenses. If EEX fails to pay
the Liabilities after notice from MIStS Issuer, and if MIStS
Issuer obtains the services of an attorney for collection of
amounts owing by EEX hereunder, or obtaining advice of counsel in
respect of any of its rights under this Guaranty Agreement, or if
suit is filed to enforce this Guaranty Agreement, or if
proceedings are had in any bankruptcy, probate, receivership or
other judicial proceedings for the establishment or collection of
any amount owing by EEX hereunder, or if any amount owing by EEX
hereunder is collected through such proceedings, EEX agrees to
pay to MIStS Issuer MIStS Issuer's reasonable attorneys' fees.
Section 2.6 Liability. It is expressly agreed that
the liability of EEX for the payment of the Liabilities
guaranteed hereby shall be primary and not secondary.
Section 2.7 Events and Circumstances Not Reducing or
Discharging EEX's Obligations. EEX hereby consents and agrees to
each of the following to the fullest extent permitted by law, and
agrees that EEX's obligations under this Guaranty Agreement shall
not be released, diminished, impaired, reduced or adversely
affected by any of the following, and waives any rights
(including without limitation rights to notice) which EEX might
otherwise have as a result of or in connection with any of the
following:
(a) Modifications, etc. Any renewal, extension,
modification, increase, decrease, alteration or rearrangement of
all or any part of the Liabilities, or of the Subordinated
Promissory Note or any instrument executed in connection
therewith, or any contract or understanding between EEX Capital
and MIStS Issuer or any other Person pertaining to the
Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence,
forbearance or compromise that might be granted or given by MIStS
Issuer to EEX Capital or EEX or any other Person liable on the
Liabilities;
(c) Condition of EEX Capital or EEX. The insolvency,
bankruptcy arrangement, adjustment, composition, liquidation,
dissolution or lack of power of EEX Capital or EEX or any other
Person at any time liable for the payment of all or part of the
Liabilities; or any dissolution of EEX Capital or EEX, or any
sale, lease or transfer of any or all of the assets of EEX
Capital or EEX, or any changes in the shareholders, partners or
members of EEX Capital or EEX; or any reorganization of EEX
Capital or EEX;
(d) Invalidity of Liabilities. The invalidity,
illegality or unenforceability of all or any part of the
Liabilities, or any document or agreement executed in connection
with the Liabilities, for any reason whatsoever, including
without limitation the fact that the Liabilities, or any part
thereof, exceed the amount permitted by law, the act of creating
the Liabilities or any part thereof is ultra vires, the officers
or representatives executing the documents or otherwise creating
the Liabilities acted in excess of their authority, the
Liabilities violate applicable usury laws, EEX Capital has valid
defenses, claims or offsets (whether at law, in equity or by
agreement) which render the Liabilities wholly or partially
uncollectible from EEX Capital, the creation, performance or
repayment of the Liabilities (or the execution, delivery and
performance of any document or instrument representing part of
the Liabilities or executed in connection with the Liabilities,
or given to secure the repayment of the Liabilities) is illegal,
uncollectible, legally impossible or unenforceable, or the
Subordinated Promissory Note or other documents or instruments
pertaining to the Liabilities have been forged or otherwise are
irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release
of the liability of EEX Capital on the Liabilities or any part
thereof, of any co-guarantors, or any other Person now or
hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee
or assure the payment of the Liabilities or any part thereof, it
being recognized, acknowledged and agreed by EEX that EEX may be
required to pay the Liabilities in full without assistance or
support of any other Person, and EEX has not been induced to
enter into this Guaranty Agreement on the basis of a
contemplation, belief, understanding or agreement that other
parties other than EEX Capital will be liable to perform the
Liabilities, or MIStS Issuer will look to other parties to
perform the Liabilities. Notwithstanding the foregoing, EEX does
not hereby waive or release (expressly or impliedly) any rights
of subrogation, reimbursement or contribution which it may have,
after payment in full of the Liabilities, against others liable
on the Liabilities; EEX's rights of subrogation and reimbursement
are however, subordinate to the rights and claims of MIStS
Issuer;
(f) Other Security. The taking or accepting of any
other security, collateral or guaranty, or other assurance of
payment, for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release,
surrender, exchange, subordination, deterioration, waste, loss or
impairment (including without limitation negligent, willful,
unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the
Liabilities;
(h) Care and Diligence. The failure of MIStS Issuer
or any other Person to exercise diligence or reasonable care in
the preservation, protection, enforcement, sale or other handling
or treatment of all or any part of such collateral, property or
security;
(i) Status of Liens. The fact that any collateral,
security, security interest or lien contemplated or intended to
be given, created or granted as security for the repayment of the
Liabilities shall not be properly perfected or created, or shall
prove to be unenforceable or subordinate to any other security
interest or lien, it being recognized and agreed by EEX that EEX
is not entering into this Guaranty Agreement in reliance on, or
in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral
for the Liabilities. Notwithstanding the foregoing, EEX does not
hereby waive or release (expressly or impliedly) any right to be
subrogated to the rights of MIStS Issuer in any collateral or
security for the Liabilities, after payment in full of the
Liabilities; EEX's rights of subrogation are, however,
subordinate to the rights, claims, liens and security interests
of MIStS Issuer;
(j) Payments Rescinded. Any payment by EEX Capital to
MIStS Issuer is held to constitute a preference under the
bankruptcy laws, or for any reason MIStS Issuer is required to
refund such payment or pay such amount to EEX Capital or someone
else; or
(k) Other Actions Taken or Omitted. Any other action
taken or omitted to be taken with respect to the Liabilities or
the security and collateral therefor, whether or not such action
or omission prejudices EEX or increases the likelihood that EEX
will be required to pay the Liabilities pursuant to the terms
hereof; it being the unambiguous and unequivocal intention of EEX
that EEX shall be obligated to pay the Liabilities when due,
notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether or not contemplated, and whether or
not otherwise or particularly described herein, except for the
full and final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations and Warranties
In order to induce MIStS Issuer to accept this Guaranty
Agreement, EEX represents and warrants to MIStS Issuer (which
representation and warranty will survive the creation of the
Liabilities and any extension of credit thereunder) that:
Section 3.1 By EEX. EEX's guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit,
directly or indirectly, EEX.
Section 3.2 No Representation by Issuer. Neither
MIStS Issuer nor any other Person has made any representation,
warranty or statement to EEX in order to induce EEX to execute
this Guaranty Agreement.
Section 3.3 Schedule 1. The representations and
warranties of EEX contained in Schedule 1 are true and correct
and are incorporated herein by reference.
ARTICLE 4
Covenants
EEX covenants and agrees that until payment in full of
all Liabilities, all interest thereon and all other amounts
payable by EEX under this Guaranty Agreement, EEX will perform
the affirmative covenants and the negative covenants set forth in
Articles III and IV of Schedule 1 of this Guaranty Agreement and
such covenants are incorporated herein by reference.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty
Agreement is and shall be, in every particular, available to the
successors and assigns of MIStS Issuer and is and shall always be
fully binding upon the legal representatives, heirs, successors
and assigns of EEX, notwithstanding that some or all of the
monies, the repayment of which this Guaranty Agreement applies,
may be actually advanced after any bankruptcy, receivership,
reorganization or other event affecting EEX. Following the
occurrence and during the continuation of an Event of Default
under the Subordinated Promissory Note, or the occurrence of any
event specified in Section 8.1(b) of the Second Amended and
Restated Limited Liability Company Agreement of MIStS Issuer
dated as of September 29, 1997 or of Section 5(b) of the
Certificate of Designations, the Placement Agent, acting on
behalf of the Holders, shall be entitled, at its option, to
direct the exercise of, or to exercise, all the rights, remedies,
power and privileges conferred upon MIStS Issuer under this
Guaranty Agreement (including, without limitation, the
institution of any bankruptcy proceeding), to give or withhold
all consents required to be obtained from MIStS Issuer hereunder,
to give all notices on behalf of MIStS Issuer including demands
for payment of the Liabilities and to receive all payments to be
made to MIStS Issuer hereunder.
Section 5.2 Notices. Any notice or demand to EEX
under or in connection with this Guaranty Agreement may be given
and shall conclusively be deemed and considered to have been
given and received as set forth in the Subscription Agreement.
Section 5.3 Amendments, Etc. Any provision of this
Guaranty Agreement may be amended, modified or waived with EEX's
and the Majority Holders' prior written consent; provided that
(i) no amendment, modification or waiver which extends the
maturity of the Liabilities, forgives the principal amount of any
Liabilities, affects this Section 5.3 or modifies the definition
of "Majority Holders" or any provision which by its terms
requires the consent or approval of all of the Holders shall be
effective without consent of all Holders; and (ii) no amendment,
modification or waiver which modifies the rights, duties or
obligations of the Placement Agent, shall be effective without
the consent of the Placement Agent.
Section 5.4 Construction. This Guaranty Agreement is
a contract made under and shall be construed in accordance with
and governed by the laws of the State of New York, other than the
conflict of laws rules thereof.
Section 5.5 Entire Agreement. This written Guaranty
Agreement embodies the entire agreement and understanding between
MIStS Issuer and EEX and supersedes all other agreements and
understandings between such parties relating to the subject
matter hereof.
Section 5.6 Submission to Jurisdiction. Any legal action or
proceeding with respect to this Guaranty Agreement may be brought in the courts
of the State of New York or of the United States of America for the Southern
District of New York, and, by execution and delivery of this Guaranty Agreement,
EEX hereby accepts for itself and (to the extent permitted by law) in respect of
its Property, generally and unconditionally, the jurisdiction of the aforesaid
courts. EEX hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions. This submission
to jurisdiction is non-exclusive and does not preclude MIStS Issuer or the
Placement Agent from obtaining jurisdiction over EEX in any court otherwise
having jurisdiction. Nothing herein shall affect the right of MIStS Issuer or
the Placement Agent to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against EEX in any other
jurisdiction. Each of EEX and MIStS Issuer hereby (i) irrevocably and
unconditionally waives, to the fullest extent permitted by law, trial by jury in
any legal action or proceeding relating to this Guaranty Agreement and for any
counterclaim therein; (ii) irrevocably waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages; (iii) certifies that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers, and acknowledges
that it has been induced to enter into this Guaranty Agreement and the
transactions contemplated hereby and thereby by, among other things, the
mutual waivers and certifications contained in this Section.
Section 5.7 Invalidity. In the event that any one or
more of the provisions contained in this Guaranty Agreement
shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Guaranty Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
WITNESS THE EXECUTION HEREOF, as of the date first above
written.
ENSERCH EXPLORATION, INC.
By: /s/ J. T. Leary
----------------------------
J. T. Leary
Vice President, Finance
and Treasurer
Accepted and Agreed to as of the
date first above written:
MIStS ISSUER, L.L.C.
By: EEX Capital Inc.
By: /s/ J. T. Leary
-------------------------
Name: J. T. Leary
Title:
<PAGE>
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedule 1 - Definitions; Representations; Covenants
Schedule 2.14 - Subsidiaries and Special Entities as of the
Closing Date; Locations of their Respective
Chief Executive Offices
Exhibit 1 - Form of Compliance Certificate
<PAGE>
<PAGE>
SCHEDULE 1
To the Guaranty Agreement
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Certain Defined Terms. As used herein,
the following terms shall have the following meanings (all terms
defined in this Article I or in other provisions of this Guaranty
Agreement in the singular to have the same meanings when used in
the plural and vice versa):
"Affiliate" shall mean with respect to any Person, any
other Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person. For purposes of the foregoing
definition, "control" means the direct or indirect ownership of
more than 50% of the outstanding capital stock or other equity
interests having ordinary voting power.
"Benefit Plan" shall mean 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.
"Business Day" shall mean any day other than a day on
which commercial banks are authorized or required to close in New
York, New York or Dallas, Texas.
"Capital Lease Obligations" shall mean, as to EEX or
any Subsidiary, the obligations of such Person to pay rent or
other amounts under a lease of (or other agreement conveying the
right to use) real and/or personal property which obligations are
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 Guaranty Agreement, the
amount of such obligations shall be the capitalized amount
thereof.
"Closing Date" shall mean September 29, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
"Consolidated Subsidiaries" shall mean 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.
"Debt" shall mean, for EEX or any Subsidiary the sum of
the following (without duplication): (i) all obligations for
borrowed money or evidenced by bonds, debentures, mandatorily
redeemable preferred stock (including such stock of Affiliates)
with maturities before the Revolving Credit Termination Date,
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 Debt of unconsolidated Affiliates and unrelated
Persons; (vi) all obligations secured by a Lien on any asset,
whether or not such Debt is assumed, but excluding obligations
secured by Liens permitted by Sections 4.02(c), (e), (f), (h),
(i), (j), (k) and (l); (vii) all production payments in
connection with oil and gas properties; and (viii) all Debt of
Special Entities to the extent EEX or any Subsidiary is liable
for such Debt under GAAP or such Debt is reflected on the
consolidated balance sheet of EEX or any Subsidiary. "Debt"
shall not include "Permitted Subordinated Debt" as such term is
defined in the EEX Credit Agreement.
"Debt to EEX Capital Ratio" shall have the meaning
assigned such term in Section 4.01.
"Default" shall have the meaning assigned such term in
the Subordinated Promissory Note.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EEX Credit Agreement" shall have the meaning assigned
such term in the Subordinated Promissory Note.
"Environmental Laws" shall mean 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" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute.
"ERISA Affiliate" shall mean 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" shall mean (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" shall have the meaning assigned such
term in Section 5.01 of the Subordinated Promissory Note.
"Financial Statements" shall mean the financial
statement or statements of EEX and its Consolidated Subsidiaries
described or referred to in Section 2.02.
"GAAP" shall mean generally accepted accounting
principles in the United States of America in effect from time to
time.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and
any Person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Governmental Requirement" shall mean 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.
"Guarantors" shall mean EEX and the Subsidiary
Guarantors.
"Guaranty Agreements" shall mean this Guaranty
Agreement and the Subsidiary Guaranty Agreements.
"Hedging Agreement" shall mean any commodity, interest
rate or currency swap, rate cap, rate floor, rate collar, forward
agreement or other exchange or rate protection agreements or any
option with respect to any such transaction.
"Holder" means the record holder of one or more (i)
shares of Preferred Stock, as shown on the books and records of
EEX Capital, or (ii) Preferred Interests, as shown on the books
and records of MIStS Issuer.
"Indebtedness" shall mean any and all amounts owing or
to be owing by EEX in connection with this Guaranty Agreement and
all renewals, extensions and/or rearrangements of any of the
above.
"Lien" shall mean, with respect to any Person, 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 (i) 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 or (ii) production payments and
the like payable out of Properties. For the purposes of this
Guaranty Agreement, EEX or any Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject
to a conditional sale agreement, or leases under a financing
lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person in a
transaction intended to create a financing.
"Majority Holders" shall mean the Holders of a majority
of the Preferred Securities, considered as if they were a single
class.
"Material Adverse Effect" shall mean any material and
adverse change in the financial condition, business or results of
operations of EEX and its Subsidiaries taken as a whole which
makes them unable to perform their obligations under the
Operative Documents.
"Multiemployer Plan" shall mean 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 Worth" shall mean, as at any date, the sum of the
following for EEX and its Consolidated Subsidiaries determined
(without duplication) in accordance with GAAP:
(i) the amount of preferred stock (excluding
mandatorily redeemable preferred stock) and common
stock at par plus the amount of paid in capital of
EEX, plus
(ii) the amount of retained earnings (or, in the
case of a retained earnings deficit, minus the
amount of such deficit), minus
(iii) the cost of treasury shares, minus
(iv) unamortized restricted stock compensation,
plus
(v) foreign currency translation adjustment gains
(or minus losses), plus
(vi) any other additions (or minus any other
deductions) to the net worth of EEX required by
GAAP.
"Operating Lease Obligations" shall mean, as to EEX or
any Subsidiary, the obligations of such Person to pay rent or
other amounts under a lease of (or other agreement conveying the
right to use) real and/or personal property which obligations are
not required to be classified and accounted for as a liability
for a capital lease on a balance sheet of such Person and, for
purposes of this Guaranty 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.
"Operative Documents" shall have the meaning specified
in the Subordinated Promissory Note.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Permitted Subordinated Debt" shall mean Debt of EEX or
a Subsidiary owing to EEX or another Subsidiary subordinated to
the Indebtedness on terms substantially similar to the terms set
forth in Exhibit M to the EEX Credit Agreement on terms and
pursuant to documentation acceptable to the requisite parties
thereunder.
"Person" shall mean any individual, corporation,
company, limited liability company, voluntary association,
partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.
"Placement Agent" shall mean UBS Securities LLC, in its
capacity as placement agent for the Holders.
"Plan" shall mean each Benefit Plan and Multiemployer
Plan.
"Prohibited Debt" shall mean, for MIStS Issuer, the sum
of the following (without duplication): (i) all obligations of
such Person for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person
(whether contingent or otherwise) in respect of bankers'
acceptances, letters of credit, surety or other bonds and similar
instruments; (iii) all obligations of such Person to pay the
deferred purchase price of Property or services (other than for
borrowed money); (iv) all obligations under leases which shall
have been, or should have been, in accordance with GAAP, recorded
as capital leases in respect of which such Person is liable
(whether contingent or otherwise); (v) all obligations under
leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at
termination, which are substantially equal to at least eighty
percent (80%) of the purchase price of the Property subject to
such lease plus interest as an imputed rate of interest; (vi) all
Debt (as described in the other clauses of this definition) and
other obligations of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person;
(vii) all Debt (as described in the other clauses of this
definition) and other obligations of others guaranteed by such
Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all
obligations or undertakings of such Person to maintain or cause
to be maintained the financial position or covenants of others or
to purchase the Debt or Property of others; (ix) the undischarged
balance of any production payment created by such Person or for
the creation of which such Person directly or indirectly received
payment; and (x) obligations to deliver goods or services in
consideration of advance payments.
"Property" shall mean any interest in any kind of
property or asset, whether real, personal or mixed, or tangible
or intangible.
"Responsible Officer" shall mean, as to EEX or any
Subsidiary, the Chief Executive Officer, the President or any
Vice President of such Person and, with respect to financial
matters, the term "Responsible Officer" shall include the Vice
President - Finance, the Chief Financial Officer, Controller,
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" shall mean the Securities and Exchange Commission
or any successor Governmental Authority.
"Special Entity" shall mean 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.
"Subsidiary" shall have the meaning assigned to such
term in the Certificate of Designations.
"Subsidiary Guarantor" shall mean any Subsidiary or
Special Entity that has executed a Subsidiary Guaranty Agreement.
"Subsidiary Guaranty Agreement" shall mean any Guaranty
Agreement executed by a Subsidiary or a Special Entity as
required by Section 3.08 as such agreement may be amended,
supplemented or restated from time to time.
"Withdrawal Liability" shall have the meaning given
such term under Part I of Subtitle E of Title IV of ERISA.
Section 1.02 Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters
required to be furnished to the Placement Agent or the Holders
hereunder shall be prepared, in accordance with GAAP, applied on
a basis consistent with the audited financial statements of EEX
referred to in Section 2.02 (except for changes concurred with by
EEX's independent public accountants).
ARTICLE II
Representations and Warranties
EEX represents and warrants to MIStS Issuer, the Placement
Agent and the Holders that:
Section 2.01 Existence. Each of EEX, each Subsidiary
Guarantor, EEX Capital and MIStS Issuer: (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 2.02 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 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. Neither EEX, any
Subsidiary, EEX Capital nor MIStS Issuer has on the Closing 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 Closing Date, there has
been no change or event having a Material Adverse Effect. Since
the date of the Financial Statements to the Closing 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 2.03 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,
any Subsidiary, EEX Capital or MIStS Issuer which involves the
possibility of any judgment or liability against EEX, any
Subsidiary, EEX Capital or MIStS Issuer not fully covered by
insurance (except for normal deductibles), and which would have a
Material Adverse Effect.
Section 2.04 No Breach. Neither the execution and
delivery of the Operative Documents to which EEX, any Subsidiary,
EEX Capital or MIStS Issuer 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 Closing Date under, the respective charter or by-laws or
other organizational documents of EEX, any Subsidiary, EEX
Capital or MIStS Issuer 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, EEX Capital or MIStS Issuer pursuant to the terms
of any such agreement or instrument.
Section 2.05 Authority. EEX, EEX Capital, MIStS
Issuer and each Subsidiary have all necessary power and authority
to execute, deliver and perform its obligations under the
Operative Documents to which it is a party; and the execution,
delivery and performance by any of the foregoing of the Operative
Documents to which it is a party, have been duly authorized by
all necessary corporate or member action on its part; and the
Operative Documents constitute the legal, valid and binding
obligations of EEX, each Subsidiary, EEX Capital and MIStS
Issuer, 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 2.06 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, any Subsidiary, EEX Capital or MIStS
Issuer of the Operative Documents or for the validity or enforce-
ability thereof.
Section 2.07 Use of Proceeds. The proceeds of the
Preferred Interests shall be used by EEX Capital to repay
$75,000,000 of the Existing Demand Note. Such repayment, and the
proceeds of the Preferred Interests, shall be used by MIStS
Issuer to redeem all $150,000,000 of its Minority Interest
Structured Securities outstanding on the Closing Date. None of
EEX, EEX Capital nor MIStS Issuer is engaged principally, or as
one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning
of Regulation G, U or X of the Board of Governors of the Federal
Reserve System). Following application of the proceeds of the
Preferred Securities, not more than 25 percent of the value of
the assets (of EEX and its Subsidiaries on a consolidated basis),
which are subject to any arrangement with MIStS Issuer (herein or
otherwise) whereby EEX's or any Subsidiary's right or ability to
sell, pledge or otherwise dispose of assets is in any way
restricted, will be margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System).
Section 2.08 ERISA. As of the Closing Date, except as
would not have a Material Adverse Effect:
(a) EEX, the Subsidiaries and each ERISA Affiliate
have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) Neither EEX, the Subsidiaries 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.
(g) Neither EEX, the Subsidiaries 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 2.09 Taxes. Each of EEX, its Subsidiaries,
EEX Capital and MIStS Issuer 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 or EEX Capital or MIStS Issuer 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, no claim is being asserted with respect to any
such tax, fee or other charge.
Section 2.10 Titles, etc. To the best of EEX's
knowledge:
(a) Each of EEX and the Subsidiary Guarantors 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 4.02.
(b) All leases and agreements necessary for the
conduct of the business of EEX and the Subsidiary Guarantors 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 the
Subsidiary Guarantors.
(c) The rights, properties and other assets presently
owned, leased or licensed by EEX and the Subsidiary Guarantors
including, without limitation, all easements and rights of way,
include all rights, Properties and other assets necessary to
permit EEX and the Subsidiary Guarantors to conduct their
business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.
Section 2.11 No Material Misstatements. No
information, exhibit or report furnished to the Placement Agent
or any Holder by or on behalf of EEX, any Subsidiary, EEX Capital
or MIStS Issuer in connection with the negotiation and
administration of this Guaranty 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 2.12 Investment Company Act. Neither EEX, any
Subsidiary, EEX Capital nor MIStS Issuer 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 2.13 Public Utility Holding Company Act.
Neither EEX, any Subsidiary, EEX Capital nor MIStS Issuer is a
"holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "sub-
sidiary company" of a "holding company," or a "public utility"
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 2.14 Subsidiaries and Partnerships. On the
Closing 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 2.15 Location of Chief Executive Offices. On
the Closing Date, EEX's chief executive offices are located at
the address stated on the signature page of this Guaranty
Agreement. On the Closing Date, the chief executive office of
each Subsidiary is located at the addresses stated on Schedule
2.14.
Section 2.16 Defaults. As of the Closing Date,
neither EEX, any Subsidiary, EEX Capital nor MIStS Issuer 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 2.17 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):
(a) 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;
(b) 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;
(c) 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;
(d) 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;
(e) 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;
(f) 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 to be imposed by OPA during the term of this
Guaranty 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 Guaranty Agreement; and
(g) 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 2.18 Compliance with Laws. As of the Closing
Date, neither EEX, any Subsidiary, EEX Capital nor MIStS Issuer
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 2.19 Subordination. The Liabilities and the
obligations of EEX under this Guaranty Agreement are subordinated
to the "Superior Indebtedness" under and as defined in the
Subordination Agreement.
ARTICLE III
Affirmative Covenants
EEX covenants and agrees that, until payment in full of all
Liabilities, all interest thereon and all other amounts payable
by EEX under this Guaranty Agreement:
Section 3.01 Financial Statements. EEX shall deliver,
or shall cause to be delivered, to the Placement Agent with
sufficient copies of each for the Holders:
(a) 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
Placement Agent 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.
(b) 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).
(c) As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of
each of EEX Capital and MIStS Issuer, the unaudited statements of
income, shareholders' equity, and cash flows for such fiscal
year, and the related balance sheet of the each of EEX Capital
and MIStS Issuer 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 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 Capital or MIStS Issuer, as the
case may be, 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 as are disclosed
therein. If either EEX Capital or MIStS Issuer ever has audited
financial statements, EEX will cause such audited financial
statements to be delivered to the Placement Agent promptly upon
their becoming available.
(d) Promptly after a Responsible Officer of EEX knows
that any Default has occurred, a notice of such Default,
describing the same in reasonable detail and the action EEX
proposes to take with respect thereto.
(e) 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 will furnish to the Placement Agent, with sufficient copies
for the Holders, at the time it furnishes each set of financial
statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit 1 to this Guaranty Agreement
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), (ii)
setting forth in reasonable detail the computations necessary to
determine whether EEX is in compliance with Section 4.01 as of
the end of the respective fiscal quarter or fiscal year and (iii)
certifying that EEX is in compliance with Section 3.08 or will be
in compliance within the next 30 days and listing the
Subsidiaries and Special Entities, if any, that will be executing
Guaranty Agreements.
Section 3.02 Litigation. Contemporaneously with any
securities law disclosure of same, EEX shall give to the
Placement Agent, with sufficient copies for the Holders, notice
of all legal or arbitral proceedings, and of all proceedings
before any Governmental Authority affecting EEX, any Subsidiary,
EEX Capital or MIStS Issuer except proceedings which, if
adversely determined, would not have a Material Adverse Effect.
Section 3.03 Maintenance, Etc.
(a) EEX shall, and shall cause each Subsidiary
Guarantor to, preserve and maintain EEX's corporate existence,
the limited liability company existence and single purpose status
of EEX Capital and MIStS Issuer, and all of the respective
material rights, privileges and franchises of EEX, EEX Capital
and MIStS Issuer; 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 Placement
Agent, 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 and to the extent
requested by the Placement Agent, 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.
(b) Contemporaneously with the delivery of the
financial statements required by Section 3.01(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
in substantially the form provided at the closing of this
Guaranty Agreement and, if requested, will furnish the Placement
Agent copies of the applicable policies.
Section 3.04 Environmental Matters.
(a) 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.
(b) EEX will promptly notify the Placement Agent and
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 3.05 Further Assurances. EEX will, and will
cause each Subsidiary, EEX Capital and MIStS Issuer to, cure
promptly any defects in the creation and issuance of the
Subordinated Promissory Note, the Preferred Securities and the
execution and delivery of the other Operative Documents. EEX at
its expense will and will cause each Subsidiary, EEX Capital and
MIStS Issuer to promptly execute and deliver to the Placement
Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and
agreements of EEX, any Subsidiary, EEX Capital or MIStS Issuer,
as the case may be, in the other Operative Documents and this
Guaranty Agreement, or to correct any omissions in the Operative
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 3.06 ERISA Information and Compliance. EEX
will promptly furnish and will cause the Subsidiaries and any
ERISA Affiliate to promptly furnish to the Placement Agent (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 the President or the
principal financial 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, 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 the President
or the principal financial 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, 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 which occurrence would have a Material Adverse
Effect.
Section 3.07 Lease Payments. EEX, at its option, may
cause its obligations to Enserch Exploration Holdings, Inc. to be
subordinated to the Indebtedness on terms substantially similar
to the terms set forth on Exhibit M to the EEX Credit Agreement
or on terms and subject to documentation satisfactory to the
Administrative Agent.
Section 3.08 Subsidiary Guaranty Agreements. EEX will
cause each of its Subsidiaries and Special Entities to execute a
Subsidiary Guaranty Agreement, except for such Subsidiaries and
Special Entities that in the aggregate do not have assets at book
value in excess of 25% of the total consolidated assets at book
value of EEX. EEX shall have 30 days from the date of delivery
of each Compliance Certificate to comply with this covenant. At
the time that a Subsidiary or Special Entity executes and
delivers a Subsidiary Guaranty Agreement to the Placement Agent
it shall also deliver to the Placement Agent the following in
form and substance acceptable to the Placement Agent:
(a) A certificate of the Secretary or an Assistant
Secretary of each Subsidiary Guarantor setting forth (i)
resolutions of its board of directors or appropriate Persons with
respect to the authorization of such Subsidiary Guarantor to
execute and deliver the Operative Documents to which it is a
party and to enter into the transactions contemplated in those
documents, (ii) the officers of such Subsidiary Guarantor (y) who
are authorized to sign the Loan Documents to which such
Subsidiary Guarantor is a party and (z) who will, until replaced
by another officer or officers duly authorized for that purpose,
act as its representative for the purposes of signing documents
and giving notices and other communications in connection with
this Guaranty Agreement and the transactions contemplated hereby,
(iii) specimen signatures of the authorized officers, and (iv)
the articles or certificate of incorporation and bylaws or
appropriate document of governance of such Subsidiary Guarantor,
certified as being true and complete. MIStS Issuer, the
Placement Agent and the Holders may conclusively rely on such
certificate until they receive notice in writing from EEX to the
contrary.
(b) An opinion of counsel to the Subsidiary Guarantor,
substantially in the form of Exhibit N to the EEX Credit
Agreement.
ARTICLE IV
Negative Covenants
EEX covenants and agrees that, until payment in full of the
Liabilities and all interest thereon, without the prior written
consent of the Majority Holders:
Section 4.01 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 4.02 Liens. Except as expressly permitted in
this Section 4.02, EEX 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 Guaranty 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:
(a) 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;
(b) any extension, renewal or refunding of any Lien
permitted by Section 4.02(a), if limited to the same Property
subject to, and securing not more than the amount secured by, the
Lien extended, renewed or refunded;
(c) the pledge of current assets in the ordinary
course of business, to secure current liabilities;
(d) 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;
(e) 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;
(f) 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;
(g) 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);
(h) 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;
(i) 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;
(j) 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;
(k) 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;
(l) 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
(m) 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 4.03 Investments, Loans and Advances. Neither
EEX nor any of its Subsidiaries will make any loan or advance to
any Person except as expressly permitted by the Operative
Documents.
Section 4.04 Dividends, Distributions and Redemptions.
EEX will not declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its stock now or hereafter
outstanding, return any capital to its stockholders or make any
distribution of its assets to its stockholders after the
occurrence and during the continuance of an Event of Default.
Section 4.05 Nature of Business. EEX will not allow
any material change to be made in the character of its business
as an independent oil and gas exploration and production company.
Section 4.06 Mergers, Etc. Neither EEX nor any
Subsidiary will merge into or with or consolidate with any other
Person, or sell, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially
all of its Property or assets to any other Person ("Disposition")
unless (i) no Default exists or would result from such merger or
Disposition and (ii) for any merger of which EEX is the survivor,
or for any merger or Disposition, if the surviving Person or
acquiring Person is not EEX, such surviving Person or acquiring
Person assumes the Indebtedness and all other obligations of EEX
under the Loan Documents and the Operative Documents and is
approved by the Majority Holders; provided that MIStS Issuer may
merge with and into EEX Capital.
Section 4.07 Proceeds. EEX will not permit the
proceeds of the Preferred Securities to be used for any purpose
other than those permitted by Section 2.07. Neither EEX nor any
Person acting on behalf of EEX has taken or will take any action
which might cause any of the Operative Documents to violate
Regulation G, U or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate Section 7
of the Securities Exchange Act of 1934, as amended, or any rule
or regulation thereunder, in each case as now in effect or as the
same may hereafter be in effect.
Section 4.08 ERISA Compliance. EEX and the
Subsidiaries will not at any time:
(a) 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;
(b) 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;
(c) 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;
(d) 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;
(e) 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;
(f) 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;
(g) 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
(h) 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 4.08 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 4.09 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 4.10 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 compara-
ble arm's length transaction with a Person not an Affiliate.
Section 4.11 Restrictive Dividend Agreements. Neither
EEX nor any Subsidiary Guarantor will create, incur, assume or
suffer to exist any financing agreement (other than this Guaranty
Agreement and the other Operative Documents) which in any way
restricts any Subsidiary Guarantor from paying dividends to EEX.
Section 4.12 MIStS Issuer. EEX will not allow MIStS
Issuer to engage in any activity prohibited by Section 4.03 of
the Subordinated Promissory Note.
<PAGE>
<PAGE>
SCHEDULE 2.14
To the Guaranty Agreement
SUBSIDIARIES AND SPECIAL ENTITIES AS OF THE CLOSING DATE;
LOCATIONS OF THEIR RESPECTIVE CHIEF EXECUTIVE OFFICES
[to be provided by EEX]
<PAGE>
<PAGE>
EXHIBIT 1
To the Guaranty Agreement
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the
_________________ of ENSERCH EXPLORATION, INC., a Texas
corporation ("EEX"), and that as such, he is a Responsible
Officer authorized to execute this certificate on behalf of EEX.
With reference to the Amended and Restated Guaranty Agreement
dated as of September 29, 1997 (together with all permitted
amendments or supplements thereto being the "Guaranty Agreement")
between EEX and MIStS Issuer L.L.C., the undersigned represents
and warrants as follows (each capitalized term used herein having
the same meaning given to it in the Guaranty Agreement unless
otherwise specified):
(a) The representations and warranties of EEX
contained in Article II of the Guaranty Agreement and
in the other Operative Documents and otherwise made in
writing by or on behalf of EEX pursuant to the Guaranty
Agreement or other Operative Documents were true and
correct when made, are repeated at and as of the time
of delivery hereof and are true and correct at and as
of the time of delivery hereof, except to the extent
such representations and warranties are expressly
limited to an earlier date or the Majority Holders have
expressly consent in writing to the contrary.
(b) Each of EEX, EEX Capital and MIStS Issuer has
performed and complied with all agreements and
conditions contained in the Guaranty Agreement and in
the other Operative Documents required to be performed
or complied with by it prior to or at the time of
delivery hereof.
(c) Attached hereto are the detailed computations
necessary to determine whether EEX is in compliance
with Section 4.01 of Schedule 1 to the Guaranty
Agreement as of the end of the fiscal quarter ending
________________.
(d) EEX is in compliance with Section 3.08 of
Schedule 1 to the guaranty Agreement. [The following
is a list of the Subsidiaries and Special Entities that
must execute a Subsidiary Guarantee Agreement within
the next 30 days pursuant to Section 3.08 of Schedule 1
to the Guaranty Agreement: ___________________]
EXECUTED AND DELIVERED THIS ____ day of _______________, _______.
ENSERCH EXPLORATION, INC.
By:
Name:
Title:
