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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[ ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
EEX Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY PROXY MATERIALS
EEX CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 1998
To the Shareholders of
EEX Corporation:
Notice is hereby given that a special meeting of shareholders of EEX
Corporation, a Texas corporation (the "Company"), will be held at the Company's
offices at 2500 CityWest Blvd., Houston, Texas 77042 on December 8, 1998 at
11:30 a.m., Central Standard Time, for the following purposes:
1. To approve an amendment to the Company's Restated Articles of
Incorporation to effect a 1 for 3 reverse stock split of the
Company's outstanding Common Stock and decrease the number of
authorized shares of the Company's Common Stock from 400,000,000
shares to 150,000,000 shares; and
2. To transact such other business as may properly come before the
meeting.
Only shareholders of record as of the close of business on October 19,
1998 will be entitled to vote at the special meeting. A list of such
shareholders will be available at the time and place of meeting and, during the
ten days prior to the meeting, at the Company's offices located at 2500
CityWest Blvd., Suite 1400, Houston, Texas 77042.
PLEASE MARK, SIGN, DATE AND MAIL THE ACCOMPANYING PROXY IN THE
ENCLOSED SELF-ADDRESSED, POSTAGE PAID ENVELOPE, WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING IN PERSON. You may revoke your proxy at the meeting should
you be present and desire to vote your shares in person, and you may revoke
your proxy for any reason at any time prior to the voting thereof, either by
written revocation prior to the meeting or by appearing at the meeting and
voting in person. Your cooperation is respectfully solicited.
By Order of the Board of Directors,
-----------------------------------
T. M Hamilton
Chairman, President and Chief Executive Officer
Houston, Texas
October ___, 1998
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EEX CORPORATION
2500 CITYWEST BOULEVARD
SUITE 1400
HOUSTON, TEXAS 77042
(713) 243-3100
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 1998
INTRODUCTION
The enclosed proxy is solicited on behalf of the Board of Directors of
EEX Corporation (the "Company") in connection with its special meeting of
shareholders to be held on December 8, 1998 at 11:30 a.m., Central Standard
Time, and any adjournment thereof (the "Special Meeting"), at the Company's
offices at 2500 CityWest Blvd., Houston, Texas 77042.
When properly executed and returned, the enclosed form of proxy will
be voted according to a shareholder's instructions. If no instructions are
given, then the proxy will be voted FOR approval of the amendment (the
"Amendment") to the Company's Restated Articles of Incorporation to effect a
one-for-three reverse stock split of the Company's common stock, par value
$0.01 per share (the "Common Stock") and to decrease the number of authorized
shares of Common Stock from 400,000,000 to 150,000,000, and in the discretion
of the proxies named on the proxy card with respect to any other matters
properly brought before the Special Meeting. Any proxy given by a shareholder
may be revoked by the shareholder at any time before it is voted by written
notice to the Secretary of the Company, by a duly executed proxy bearing a
later date, or by voting in person at the meeting. No rights to dissent exist
for any action proposed to be taken at the Special Meeting.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. The
solicitation of proxies may be made by directors, officers and regular
employees of the Company personally or by mail, telephone, facsimile
communication or telegraph. No additional compensation will be paid for such
solicitation. In addition, arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to forward proxy soliciting material
to the beneficial owners of stock held of record by such persons, and the
Company will reimburse them for reasonable out-of-pocket expenses incurred by
them in so doing. The Company has retained W. F. Doring & Co., an outside
soliciting firm, in connection with the solicitation of security holders at a
fee of approximately $3,000, plus expenses. Such costs will be borne by the
Company.
The Company is mailing this Proxy Statement and the accompanying form
of proxy to shareholders on or about October 23, 1998.
<PAGE> 5
RECORD DATE; VOTING SECURITIES OUTSTANDING
The Board of Directors has fixed the close of business on October 19,
1998 as the record date (the "Record Date") for determining shareholders
entitled to notice of and to vote at the Special Meeting. As of October 9,
1998, the Company had outstanding voting securities consisting of 127,150,427
shares of Common Stock. Holders of record of outstanding Common Stock at the
close of business on October 19, 1998 will be entitled to vote at the Special
Meeting and will be entitled to one vote for each share they hold. The presence
in person or by proxy of a majority of the votes entitled to be cast will
constitute a quorum for purposes of conducting business at the Special Meeting.
Shares represented by proxies that are marked "abstain" will be counted as
shares present for purposes of determining the presence of a quorum on all
matters.
The proposal to amend the Company's Restated Articles of Incorporation
requires the approval of at least two-thirds of the shares entitled to vote at
the Special Meeting. Under applicable Texas law, in determining whether the
requisite number of affirmative votes has been cast, abstention and broker
non-votes will have the same effect as votes cast against the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information as of October 9, 1998
with respect to the beneficial ownership of Common Stock by (i) each person
known to be the beneficial owner of more than five percent of the outstanding
shares of Common Stock; (ii) each director; (iii) each executive officer;
and (iv) all executive officers and directors as a group. Except as otherwise
indicated, the Company believes that the beneficial owners of the Common Stock
listed below, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable.
<TABLE>
<CAPTION>
Number of
shares
beneficially Percent
Name of Beneficial Owner owned (1) of class
------------------------ ------------------- ------------------
<S> <C> <C>
Wellington Management Company, LLP 9,160,297 (2) 7.7
T. M Hamilton 184,188 *
F. S. Addy 32,895 *
B. A. Bridgewater, Jr. 30,000 *
F. M. Lowther 4,000 *
M. P. Mallardi 20,000 *
J. K. Hartrick 64,076 (3) *
D. R. Henderson 91,303 *
R. S. Langdon 30,929 *
All Directors and Executive Officers as a Group (8 persons) 457,391 *
</TABLE>
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*Less than 1%
(1) The number of shares owned includes shares held in the Company's
Employee Stock Purchase and Savings Plan, restricted shares awarded
under the Revised and Amended 1996 Stock Incentive Plan, and shares of
Common Stock of the Company subject to options exercisable as of
October 9, 1998, or within 60 days thereafter, where applicable.
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(2) Based on information set forth in a Schedule 13G, dated January 13,
1998, these shares were reported, as of December 31, 1997, by
Wellington Management Company, LLP, 75 State Street, Boston, MA 02109
as being owned primarily by The Vanguard/Windsor Funds, Inc. of the
Vanguard Group of Investment Companies for whom Wellington Management
serves as investment adviser. Wellington Management reported
beneficial ownership of 883,500 with shared voting power and 9,160,297
with shared dispositive power. The shares beneficially owned by the
Vanguard/Windsor Funds, Inc. include 8,176,797 shares with sole voting
power and shared dispositive power.
(3) Includes 37,500 shares of Common Stock which may be acquired pursuant
to an option exercisable as of October 9, 1998, or within 60 days
thereafter.
APPROVAL OF THE AMENDMENT
GENERAL
The Board of Directors has determined that it would be advisable to
amend the Company's Restated Articles of Incorporation to effect a
one-for-three reverse stock split (the "Reverse Stock Split") of the Common
Stock and decrease the number of authorized shares of Common Stock from
400,000,000 to 150,000,000. A copy of the proposed Amendment is attached hereto
as Exhibit A. If the Amendment is approved by the shareholders, each three
shares of Common Stock outstanding on the Effective Date (as defined below)
will be converted automatically into one share of Common Stock and the number
of shares of Common Stock authorized by the Company's Restated Articles of
Incorporation will be reduced to 150,000,000. To avoid the existence of
fractional shares of Common Stock, shareholders who would otherwise be entitled
to receive fractional shares of Common Stock shall receive a cash distribution
in lieu thereof. See "Exchange of Stock Certificates." The "Effective Date"
will be the date on which the Amendment is filed with the Secretary of State of
Texas, which is anticipated to be as soon as practicable following the date of
the Special Meeting.
REASONS FOR THE AMENDMENT
On September 21, 1998, the Board of Directors adopted resolutions
approving the Amendment and directing that the Amendment be placed on the
agenda for the consideration of the shareholders at the Special Meeting.
The Board of Directors believes that the Reverse Stock Split will
cause the stock price of the Common Stock, currently below $5.00, and
the number of shares of Common Stock outstanding to be more appropriately
aligned with the Company's peers in the independent exploration and production
sector. The Reverse Stock Split should cause the Common Stock to be more
attractive to the financial community and lower trading costs for the investing
public. Further, the Reverse Stock Split will reduce administrative costs for
the Company.
Many institutional and other investors look upon stock trading at low
prices as unduly speculative in nature and, as a matter of policy, avoid
investment in such stocks. Accordingly, the Board of Directors believes that
the current per share price of the Common Stock may reduce the effective
marketability of the shares because of the reluctance of many leading brokerage
firms to recommend low priced stock to their clients. Further, various
brokerage house policies
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and practices tend to discourage individual brokers from dealing in low priced
stocks. Some of those policies and practices pertain to the payment of brokers'
commissions and to time-consuming procedures which function to make the
handling of low priced stocks unattractive to brokers from an economic
standpoint. Additionally, the structure of trading commissions also tends to
have an adverse impact upon holders of low priced stock because the brokerage
commission on a sale of low priced stock generally represents a higher
percentage of the sales price than the commission on higher priced issues.
The Board believes that the shares of Common Stock will, as a result
of the Reverse Stock Split, trade at higher prices than those which have
prevailed recently. There can be no assurance, however, that such increase in
the market value will occur or, if such an increase occurs, that it will equal
or exceed the direct arithmetical result of the Reverse Stock Split since there
are numerous factors and contingencies which would effect such value, including
the status of the market for the shares of Common Stock at the time, the
Company's reported results of operations in future fiscal periods and general
stock market conditions. THEREFORE, THERE CAN BE NO ASSURANCE THAT THE SHARES OF
COMMON STOCK WILL NOT, DESPITE THE REVERSE STOCK SPLIT, TRADE AT PRICES WHICH
ARE LESS THAN THE ARITHMETICAL EQUIVALENT SHARE PRICE RESULTING FROM THE REVERSE
STOCK SPLIT.
The Board of Directors believes that a decrease in the number of
authorized shares of Common Stock is appropriate. The decrease will retain a
reasonable relationship between the number of shares of Common Stock authorized
and the number of shares of Common Stock issued following the Reverse Stock
Split and will reduce the number of shares of Common Stock that the Company may
issue without shareholder approval.
Shareholders have no rights of dissent under Texas law or under the
Company's Restated Articles of Incorporation and Bylaws in connection with the
Amendment.
EFFECTS OF THE AMENDMENT
If the Amendment is approved by the shareholders, the principal
effect, due to the Reverse Stock Split, will be to decrease the number of
outstanding shares of Common Stock from 127,150,427 shares to approximately
42,383,476 shares, based on share information as of October 9, 1998. The
Amendment would not affect any shareholder's proportionate equity interest in
the Company or the relative rights, preferences or priorities of any
shareholder. The Amendment will not affect the registration of the Common Stock
under the Securities Exchange Act of 1934 or the listing of the Common Stock on
the New York Stock Exchange.
The number of shares subject to stock options granted to officers and
employees of the Company under stock option plans and the strike price for such
options will be proportionately adjusted for the Reverse Stock Split. The
number of shares of Common Stock authorized for the stock option plans will
also be proportionately adjusted.
The Reverse Stock Split may leave certain shareholders with one or
more "odd lots" of Common Stock, for example stock in amounts of less than 100
shares. Such odd lots may be more difficult to sell or may require greater
transaction costs per share to sell than shares in even
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multiples of 100. The Company has recently concluded, and will consider
implementing in the future, an odd-lot repurchase program to allow shareholders
owning less than 100 shares of Common Stock to purchase additional shares to
round up their holdings to 100 shares or to sell their odd-lot holdings.
EXCHANGE OF STOCK CERTIFICATES
The exchange of shares of Common Stock will occur on the filing date
of the Amendment (the "Filing Date") without any action on the part of the
Company's shareholders and without regard to the date or dates certificates
formerly representing shares of Common Stock are physically surrendered for
certificates representing the number of shares of Common Stock such
shareholders are entitled to receive as a result of the Reverse Stock Split.
The Company's transfer agent, Harris Trust and Savings Bank, will effectuate
the exchange of certificates.
As soon as practicable after the Filing Date, transmittal forms will
be mailed to each holder of record of certificates representing shares of
Common Stock to be used in forwarding their certificates for surrender and
exchange for certificates representing the number of shares of Common Stock
such shareholders are entitled to receive as a result of the Reverse Stock
Split. After receipt of such transmittal form, each such holder shall surrender
the certificates formerly representing shares of Common Stock of the Company
and such holder will receive in exchange therefor certificates representing the
number of shares of Common Stock to which such holder is entitled. These
transmittal forms will be accompanied by instructions specifying other details
of the exchange. SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE A TRANSMITTAL FORM.
In order that the Company may avoid the expense and inconvenience of
issuing and transferring fractional shares of Common Stock, shareholders who
would otherwise be entitled to receive a fractional share of Common Stock shall
receive payment in cash in lieu of receiving a fractional share of Common
Stock. Payment for fractional shares will be based upon the closing price
reported for the Common Stock on the New York Stock Exchange on the Filing
Date.
FEDERAL INCOME TAX CONSEQUENCES
The following description of certain federal income tax consequences
is based on the Internal Revenue Code of 1986, as amended (the "Code"), the
applicable Treasury Regulations promulgated thereunder, judicial authority and
current administrative rulings and practices as in effect on the date of this
proxy statement. This discussion is for general information only and does not
purport to deal with all aspects of federal income taxation that may be
relevant to holders of Common Stock and is not intended to be applicable to all
categories of investors, some of which, such as dealers in securities, banks,
insurance companies, tax-exempt organizations and foreign persons, may be
subject to special rules.
GENERAL RULES. The Company has not sought and will not seek a ruling
from the Internal Revenue Service or an opinion of counsel regarding the
federal income tax consequences of the Reverse Stock Split. However, the
Company believes that the Reverse Stock Split will constitute
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a tax-free recapitalization in accordance with Section 368(a)(1)(E) of the
Code. Generally, neither the Company nor the holders of Common Stock will
recognize gain or loss for federal income tax purposes as a result of the
Reverse Stock Split except that a holder of Common Stock who receives cash for
fractional shares pursuant to the Reverse Stock Split may recognize gain or
loss as provided in "--Cash For Fractional Shares" below. Following the Reverse
Stock Split, a holder of Common Stock received in the Reverse Stock Split will
have an aggregate basis in such Common Stock (including any fractional share
deemed received) for computing gain or loss equal to the aggregate basis for
computing gain or loss of the Common Stock held by that holder immediately
prior to the Reverse Stock Split. In addition, a holder of Common Stock will
have a holding period for the Common Stock received in the Reverse Stock Split
that is the same as the holding period of the Common Stock exchanged therefor.
CASH FOR FRACTIONAL SHARES. Holders of Common Stock who receive cash
in lieu of fractional shares in the Reverse Stock Split will recognize gain or
loss equal to the difference, if any, between such holder's tax basis in the
fractional share and the amount of cash received. Such gain or loss will be a
capital gain or loss if the Common Stock is held by such holder as a capital
asset at the time of the Reverse Stock Split, unless the receipt of such cash
by such holder has the effect of a distribution of a dividend, in which case
such gain will be taxed as ordinary income to the extent of the earnings and
profits of the Company.
HOLDERS OF COMMON STOCK ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE REVERSE
STOCK SPLIT.
VOTE REQUIRED; BOARD RECOMMENDATION
Assuming a quorum is present, the affirmative vote of at least
two-thirds of the shares of Common Stock entitled to vote at the Special
Meeting is required to approve the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
AMENDMENT TO THE COMPANY'S RESTATED ARTICLES OF INCORPORATION.
OTHER MATTERS
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be included in the Company's proxy
statement and form of proxy relating to, and to be presented at, the Annual
Meeting of Shareholders of the Company to be held in 1999 must be received by
the Company on or before December 1, 1998. In order for business to be properly
brought before the 1999 Annual Meeting by a shareholder, the shareholder must
have given timely notice thereof in writing not earlier than March 4, 1999 and
not later than March 29, 1999, if such notice has not been given in accordance
with the preceding sentence. Such proposals should be addressed to the
Corporate Secretary, EEX Corporation, 2500 CityWest Blvd., Suite 1400, Houston,
Texas 77042.
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VOTING PROXIES
The enclosed proxy card confers authority to vote, in accordance with
the instructions contained in the proxy, with respect to the approval of the
Amendment. The proxy will be voted in accordance with the choice indicated
thereon. If no specification is made, proxies will be voted "FOR" the approval
of the Amendment.
OTHER BUSINESS
Management of the Company is not aware of any other matters which are
to be presented to the Special Meeting, nor has it been advised that other
persons will present any such matters. However, if other matters properly come
before the meeting, the individual named in the accompanying proxy shall vote
on such matters in accordance with his or her best judgment.
The above notice and Proxy Statement are sent by order of the Board of
Directors of the Company.
T. M Hamilton
Chairman, President and Chief Executive Officer
Houston, Texas
October ___, 1998
7
<PAGE> 11
EXHIBIT A
PROPOSED AMENDMENT TO THE
COMPANY'S RESTATED ARTICLES OF INCORPORATION
Article Four (A) of the Restated Articles of Incorporation of the
corporation will be deleted and replaced in its entirety with the following:
"(A) Authorized Capital Stock.
(i) The aggregate number of shares of all classes of stock the
Company shall have authority to issue is 160,000,000 consisting of and
divided into:
(a) one class of 150,000,000 shares of Common Stock, par
value $0.01 per share (the "Common Stock"); and
(b) one class of 10,000,000 shares of Preferred Stock, no
par value (the "Preferred Stock"), which may be divided
into and issued in one or more series, as hereinafter
provided.
(ii) Reverse Stock Split. Effective as of the close of
business on the date of filing this amendment to the Restated Articles
of Incorporation (the "Effective Time"), the filing of this amendment
shall effect a reverse stock split (the "Reverse Stock Split")
pursuant to which each three (3) shares of Common Stock of the
corporation issued and outstanding, shall be combined into one (1)
validly issued, fully paid and nonassessable share of Common Stock of
the corporation. The number of authorized shares, the number of shares
of treasury stock and the par value of the Common Stock shall not be
affected by the Reverse Stock Split. Each stock certificate that prior
to the Effective Time represented shares of Common Stock shall,
following the Effective Time, represent the number of shares into
which the shares of Common Stock represented by such certificate shall
be combined. Fractional shares that occur as a result of the foregoing
shall be purchased by the corporation based upon the closing price
reported for the Common Stock on the New York Stock Exchange on the
date of filing this amendment."
<PAGE> 12
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF
EEX CORPORATION
TO BE HELD ON DECEMBER 8, 1998
The undersigned hereby appoints T. M Hamilton and J. K. Hartrick, or
either of them, as the lawful agents and Proxies of the undersigned (with all
the powers the undersigned would possess if personally present, including full
power of substitution), and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of EEX Corporation held of
record by the undersigned on October 19, 1998, at the Special Meeting of
Shareholders of EEX Corporation to be held at 2500 CityWest Blvd., Houston,
Texas 77042 at 11:30 a.m. Central Standard Time on December 8, 1998, or any
adjournment or postponement thereof.
It is understood that when properly executed, this proxy will be voted
in the manner directed herein by the undersigned shareholder. WHERE NO CHOICE
IS SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL SET
FORTH IN 1, BELOW.
The undersigned hereby revokes all previous proxies relating to the
shares of Common Stock covered hereby and confirms all that said Proxy may do
by virtue hereof.
EEX CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY.
1. To approve the proposed amendment to the Restated Articles of
Incorporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In his discretion, the Proxy is authorized to vote upon any
matters which may properly come before the Special Meeting,
or any adjournment or postponement thereof.
Dated: , 1998
-----------------------------
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Signature of Shareholder(s)
This proxy must be signed exactly as the
name appears hereon. Executors,
administrators, trustees, etc., should
give full title as such. If the signer is
a corporation, please sign full corporate
name by duly authorized officer.
