EXHIBIT 4.5
SUBORDINATED NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS.
No.1 $150,000,000
Original Issuance Date: September 29, 1997
Issuance Date: October 27, 1997
ENSERCH EXPLORATION, INC.
Subordinated Increasing Rate Note
ENSERCH EXPLORATION, INC., a Texas corporation
(together with its successors, the "Issuer"), for value received,
hereby promises to pay to:
EEX CAPITAL INC.
and registered assigns (the "Holder")
the principal sum of
ONE HUNDRED FIFTY MILLION DOLLARS
on demand, or if no demand has been made, on August 4, 2005,
together with interest thereon from and after the date hereof
until maturity on the dates and at the rates hereinafter
provided.
This Subordinated Note is subject to the terms of that
certain Subordination Agreement effective as of September 29,
1997 executed by ▇▇▇▇▇▇ 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 shall replace that certain
demand note dated June 5, 1997 in the original face principal
amount of $150,000,000 made by EEX in favor of Payee (the
"Existing Note") and to re-evidence the debt evidenced by the
Existing Note, which debt remains outstanding as of the date
hereof. Notwithstanding the execution of the replacement of the
Existing Note with this Subordinated Note, any accrued and unpaid
interest under the Existing Note as of the date hereof shall
remain outstanding and shall be payable in full on the next
Interest Payment Date hereunder.
Issuer shall keep at its principal office a register
(the "Register") in which shall be entered the names and
addresses of the registered Holders of this Subordinated Note and
of all transfers of hereof. The ownership of this Subordinated
Note (or any Subordinated Note issued in replacement herefor)
shall be proven by the Register.
Section 1. Definitions. As used herein:
(a) capitalized terms used and not otherwise defined herein
shall have the meanings attributed thereto in the Subscription
Agreement, and
(b) the following terms shall have the following meanings:
"Dividend Period" have the meaning assigned in the
Certificate of Designations.
"Dividends" have the meaning assigned in the
Certificate of Designations.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Interest Payment Date" shall mean a "Dividend Payment
Date" under and as described in the Certificate of Designations.
"Interest Periods" shall mean the periods (i) in the
case of the first Interest Period, from September 29, 1997, 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 Note.
"Prohibited Indebtedness" shall mean any Indebtedness
of or guaranteed by EEX Capital other than (a) the Indebtedness
evidenced by this Subordinated Note (and subordinated Notes
issued in replacement hereof), and (b) additional Indebtedness of
EEX Capital to EEX or another Affiliate not to exceed $10,000,000
in aggregate principal amount.
"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.
"Subscription Agreement" shall mean the Amended and
Restated Preferred Stock Subscription Agreement effective as of
September 29, 1997 by and among EEX, EEX Capital and UBS
Securities LLC, individually and as Placement Agent for the
holders of the Preferred Stock, as the same may be amended,
supplemented, restated or replaced from time to time.
Section 2. 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 Note for each Interest Period at the rate of
interest equal to the lesser of (i) the sum of the Dividends and
Additional Costs owing for the continuous Dividend Period for the
Preferred Stock whether or not such Dividends or Additional Costs
are described or paid and (ii) the Maximum Rate (defined below);
(b) The outstanding principal balance of this Subordinated 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 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 Note shall be due and payable; and
(c) Issuer may redeem this Subordinated Note upon ten (10)
Business Days' prior notice to Holder and the Placement Agent
which notice shall specify the redemption date (which shall be an
Interest Payment Date) and the amount of the redemption (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 Note) and shall be irrevocable
and effective only upon receipt by Holder and the Placement
Agent, provided that interest on the principal prepaid, accrued
to the redemption date, shall be paid on the redemption date.
Section 3. General Provisions.
All principal, interest and other sums payable under
this Subordinated 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
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 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 Issuer shall fail to pay when due any principal of or
interest on this Subordinated Note and such failure shall
continue unremedied for a period of thirty (30) days; or
(b) If Issuer or Holder shall admit in writing its inability to,
or be generally unable to, pay its debts as such debts become
due; or
(c) If Issuer or Holder 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 Issuer or Holder 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 Issuer or Holder
of all or any substantial part of its Property, or (iii) similar
relief in respect of Issuer or Holder 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 Issuer or Holder shall be entered in
an involuntary case under the Federal Bankruptcy Code; or
(e) If an "Event of Default" under and as defined in (i) the EEX
Credit Agreement, (ii) the Subscription Agreement or (iii) the
Certificate of Designations shall occur; or
(f) If EEX or any of its Subsidiaries shall default in the
performance of any of its obligations under any other Transaction
Document or EEX Capital shall default in the performance of any
of its obligations under any other Section of this Subordinated
Note not covered by the foregoing clauses (a) through (e) 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
the Placement Agent, as EEX Capital's attorney-in-fact, or (ii) a
Responsible Officer of EEX otherwise becoming aware of such
default; or
(g) If any Change of Control shall occur.
Upon the occurrence of a Maturing Event under
subparagraph (a), (e), (f) or (g) above, subject to the terms of
the Subordination Agreement, Holder shall have the right to
declare the unpaid principal balance and accrued but unpaid
interest on this Subordinated 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 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
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 Issuer.
Subject to the terms of the Subordination Agreement,
this Subordinated Note is a demand obligation 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 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 Note at any time without reason. Issuer 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 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 ▇▇▇▇▇▇ from time to time of any
payment under this Subordinated 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 Holder.
It is the intent of ▇▇▇▇▇▇ and Issuer in the execution
of this Subordinated Note to contract in strict compliance with
applicable usury law. In furtherance thereof, Holder and Issuer
stipulate and agree that none of the terms and provisions
contained in this Subordinated 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 Issuer nor any guarantors, endorsers or other parties now
or hereafter becoming liable for payment of this Subordinated
Note shall ever be obligated or required to pay interest on this
Subordinated 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 Note and any other
instruments now or hereafter executed in connection herewith
which may be in apparent conflict herewith. The holder of this
Subordinated 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 Note is accelerated. If demand
shall be made, or if the maturity of this Subordinated Note shall
be accelerated for any reason or if the principal of this
Subordinated Note is paid prior to maturity of this Subordinated
Note, and as a result thereof the interest received for the
actual period of existence of the loan evidenced by this
Subordinated Note exceeds the Maximum Rate, the holder of this
Subordinated Note shall, at its option, either refund to Issuer
the payment of such excess or credit the amount of such excess
against the principal balance of this Subordinated 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 Holder or any other
holder of this Subordinated 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 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 Note, be either
immediately returned to Issuer or credited against the principal
balance of this Subordinated 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 Note, so that the aggregate of all
interest does not exceed the maximum nonusurious amount permitted
by applicable law.
Issuer 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 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 Subordinated 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 Note by or on behalf of
Issuer shall bind its successors and assigns.
THIS SUBORDINATED NOTE, AND ITS VALIDITY, ENFORCEMENT
AND INTERPRETATION, SHALL BE GOVERNED BY TEXAS LAW.
Time shall be of the essence in this Subordinated Note
with respect to all of Issuer's obligations hereunder.
THIS NOTICE REPRESENTS THE FINAL AGREEMENT BETWEEN
ISSUER AND ▇▇▇▇▇▇ AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF ISSUER
AND ▇▇▇▇▇▇. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
ISSUER AND HOLDER.
ENSERCH EXPLORATION, INC.
By:_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice PresidentFinance and Treasurer
