PURCHASE AGREEMENT
By and Among
EEX Corporation,
Warburg, ▇▇▇▇▇▇ Equity Partners, L.P.,
Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners I, C.V.,
Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners II, C.V.,
and
Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners III, C.V.,
Series B 8% Cumulative Perpetual Preferred Stock
Warrants for Common Stock
December 22, 1998
TABLE OF CONTENTS
ARTICLE I.DEFINITIONS 1
Section 1.1 Definitions 1
Section 1.2 References and Titles 10
ARTICLE II.PURCHASE OF THE SECURITIES 11
Section 2.1 Purchase of the Securities 11
ARTICLE III.REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
Section 3.1 Organization, Standing and Power 11
Section 3.2 Subsidiaries 12
Section 3.3 Capital Structure 12
Section 3.4 Authority; No Violations; Approvals 13
Section 3.5 SEC Documents 15
Section 3.6 Absence of Certain Changes or Events 16
Section 3.7 No Undisclosed Material Liabilities 16
Section 3.8 No Default 17
Section 3.9 Compliance with Applicable Laws 17
Section 3.10 Litigation 18
Section 3.11 Title to Oil and Gas Properties 18
Section 3.12 Title to Other Properties 19
Section 3.13 Intentionally Omitted 19
Section 3.14 Certain Agreements 19
Section 3.15 Status of Securities 20
Section 3.16 Tax Returns and Tax Payments 20
Section 3.17 Employee Benefit Plans 21
Section 3.18 Labor Matters 23
Section 3.19 Intangible Property 23
Section 3.20 Environmental Matters 24
Section 3.21 Insurance 25
Section 3.22 Prepayments 26
Section 3.23 Gas Imbalances 26
Section 3.24 Reserve Report 26
Section 3.25 Reverse Stock Split 27
Section 3.26 No Brokers or Finders 27
Section 3.27 Vote 27
Section 3.28 Amendment to Rights Agreement 27
ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF PURCHASERS 27
Section 4.1 Organization, Standing and Power 27
Section 4.2 Authority; Approvals 28
Section 4.3 Litigation 28
Section 4.4 Investment Intent 28
Section 4.5 Transfer Restrictions 28
Section 4.6 Purchaser Status 29
Section 4.7 No Brokers or Finders 30
Section 4.8 Ownership of Shares 30
Section 4.9 Financing 30
ARTICLE V.COVENANTS 30
Section 5.1 Confidentiality 30
Section 5.2 Affirmative Covenants of the Company 30
Section 5.3 Negative Covenants of the Company 31
Section 5.4 Approvals 33
Section 5.5 HSR Act Notification 33
Section 5.6 Notification of Certain Matters 33
Section 5.7 Board of Directors 34
Section 5.9 Shareholders Meeting 35
Section 5.10 Standstill 36
Section 5.11 Registration Rights Agreement 38
Section 5.12 Use of Proceeds 38
Section 5.13 Share Repurchase Program 38
Section 5.14 Change of Control 38
Section 5.15 Preemptive Rights 40
Section 5.16 Allocation to Stated Surplus 40
Section 5.17 Cooperation. 40
ARTICLE VI.CONDITIONS PRECEDENT TO CLOSING 41
Section 6.1 Conditions Precedent to Each Party's Obligation41
Section 6.2 Conditions Precedent to Obligation of Purchasers
41
Section 6.3 Conditions Precedent to Obligations of Company42
ARTICLE VII.CLOSING 43
Section 7.1 Closing 43
Section 7.2 Actions to Occur at the Closing 43
ARTICLE VIII.TERMINATION 44
Section 8.1 Termination 44
Section 8.2 Effect of Termination 44
ARTICLE IX.RECOVERY OF FEES 45
ARTICLE X.MISCELLANEOUS 45
Section 10.1 Survival of Provisions 45
Section 10.2 No Waiver; Modification in Writing 45
Section 10.3 Specific Performance 46
Section 10.4 Severability 46
Section 10.5 Fees and Expenses 46
Section 10.6 Parties in Interest 46
Section 10.7 Notices 47
Section 10.8 Counterparts 47
Section 10.9 Entire Agreement 47
Section 10.10 Governing Law 48
Section 10.11 Public Announcements 48
Section 10.12 Assignment 48
Section 10.13 Director and Officer Liability 48
Section 10.14 Headings 48
Exhibit 6.2(h) Statement of Resolution
Exhibit 7.2(b)(ii)(A) Form of Series A Warrants
Exhibit 7.2(b)(ii)(B) Form of Series B Warrants
Exhibit 7.2(b)(ii)(C) Form of Series C Warrants
Exhibit 7.2(b)(iv) Form of Registration Rights Agreement
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of December 22, 1998, by and
among EEX Corporation , a Texas corporation (together with its
successors, if any, the "Company"), and Warburg, ▇▇▇▇▇▇ Equity
Partners, L.P., a Delaware limited partnership, Warburg, ▇▇▇▇▇▇
Netherlands Equity Partners I, C.V., a Dutch limited partnership,
Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners II, C.V. a Dutch
limited partnership and Warburg, ▇▇▇▇▇▇ Netherlands Equity
Partners III, C.V., a Dutch limited partnership (collectively,
the "Purchasers").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following
terms have the meanings indicated:
"Affiliate" means, with respect to any Person, any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with such Person. For purposes of this definition and
this Agreement, the term "control" (and correlative terms
"controlling," "controlled by" and "under common control with")
means possession of the power, whether by contract, equity
ownership or otherwise, to direct the policies or management of a
Person.
"Agreement" means this Purchase Agreement, as the same may
be amended, supplemented or modified from time to time in
accordance with the terms hereof.
"Approval" means any approval, authorization, grant of
authority, consent, order, qualification, permit, license,
variance, exemption, franchise, concession, certificate, filing
or registration or any waiver of the foregoing, or any notice,
statement or other communication required to be filed with,
delivered to or obtained from any Governmental Entity or any
other Person.
"Articles of Incorporation" means the Company's Restated
Articles of Incorporation, as amended from time to time.
"Authorized Preferred Stock" has the meaning set forth in
Section 3.3(a).
"Beneficially Own" or "Beneficial Ownership" is defined in
Rules 13d-3 and 13d-5 of the Exchange Act, but without taking
into account any contractual restrictions or limitations on
voting or other rights.
"Benefit Plans" has the meaning set forth in Section 3.17.
"Board" means the Board of Directors of the Company.
"Business Combination" means (i) any consolidation, merger,
share exchange or similar business combination transaction
involving the Company with any Person or (ii) the sale,
assignment, conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in Houston, Texas or New York City, New York
generally are authorized or required by law or other government
actions to close.
"Bylaws" mean the Company's bylaws, as amended from time to
time.
"Capital Stock" means (i) with respect to any Person that is
a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of
capital or capital stock of such Person and (ii) with respect to
any Person that is not a corporation or company, any and all
partnership or other equity interests of such Person.
"Change of Control" shall mean any event constituting (a)
the consummation of any Business Combination except where (i) the
shareholders of the Company immediately prior to such Business
Combination own (in substantially the same proportion relative to
each other as such shareholders owned the Common Stock
immediately prior to such consummation) (x) forty percent (40%)
or more of the Voting Stock of the surviving entity on both a
Modified Non Diluted Basis and a Modified Fully Diluted Basis
immediately after such Business Combination, and (y) forty
percent (40%) or more of the outstanding common stock of the
surviving entity on both a Modified Non Diluted Basis and a
Modified Fully Diluted Basis immediately after such Business
Combination, (ii) the members of the Board immediately prior to
the entering into the agreement relating to such Business
Combination constitute at least a majority of the Board or the
board of directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in place
immediately after such consummation that would result in the
members of the Board immediately prior to the entering into the
agreement relating to such Business Combination ceasing to
constitute at least a majority of the Board or the board of
directors of the surviving entity and (iii) no Non-Financial
Person or 13d Group of Non-Financial Persons is the Beneficial
Owner of 20% or more of the total outstanding Voting Stock or
common stock of the surviving entity and no Financial Person or
13d Group of Financial Persons is the Beneficial Owner of 35% or
more of the total outstanding Voting Stock or common stock of the
surviving entity or (b) any Non-Financial Person or 13d Group of
Non-Financial Persons acquiring Beneficial Ownership of 20% or
more of the total outstanding Voting Stock or Common Stock of the
Company or any Financial Person or 13d Group of Financial Persons
acquiring Beneficial Ownership of 35% or more of the total
outstanding Voting Stock or Common Stock of the Company.
"Change of Control Exchange Date" has the meaning set forth
in Section 5.14.
"Closing" has the meaning set forth in Section 7.1.
"Closing Date" has the meaning set forth in Section 7.1.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder as in effect on the date
hereof.
"Common Stock" means the Company's common stock, par value
$.01 per share, and any Capital Stock for or into which such
Common Stock hereafter is exchanged, converted, reclassified or
recapitalized by the Company or pursuant to an agreement or
Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with
any other Common Stock or common stock, as the case may be, or
Common Stock Equivalents) rights, warrants, options, convertible
securities, or exchangeable securities, exercisable for or
convertible or exchangeable into, directly or indirectly, Common
Stock or common stock, as the case may be, whether at the time of
issuance or upon the passage of time or the occurrence of some
future event, including the Warrants.
"Company" has the meaning set forth in the introductory
paragraph hereof.
"Company Disclosure Schedule" has the meaning set forth in
Article III.
"Company Options" has the meaning set forth in Section
3.3(d).
"Company SEC Documents" has the meaning set forth in Section
3.5.
"Confidential Information" means all information about the
Company furnished to the Purchasers or any of their
Representatives by the Company or any of its Representatives, but
shall exclude information that (i) is in the possession of the
Purchasers or their Representatives prior to receipt from the
Company, (ii) is or becomes available in the public domain, other
than as a result of an unauthorized disclosure by Purchasers or
its Representatives, or (iii) is not acquired from the Company or
any other person known by the Purchasers or its Representatives
to be subject to a confidentiality agreement with the Company.
"Contracts" means all agreements, contracts, or other
binding commitments, arrangements or plans, written or oral
(including any amendments and other modifications thereto), to
which the Company or any of its Subsidiaries is a party or is
otherwise bound.
"Credit Agreement" means, that certain Credit Agreement,
dated as of May 1, 1995 among the Company, as borrower, The Chase
Manhattan Bank, as administration agent, and the lenders
signatory thereto, as the same may from time to time be amended
or supplemented.
"Cure Period" has the meaning set forth in Section
8.1(b)(i).
"Debt" has the meaning set forth in the Credit Agreement.
"EEX Rights Agreement" has the meaning set forth in Section
3.28.
"Environmental Laws" has the meaning set forth in Section
3.20.
"ERISA" has the meaning set forth in Section 3.17.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Financial Person" means any Person that (i) is, or holds
itself out as being, engaged primarily in the business of
investing, reinvesting, owning, holding or trading in securities,
and (ii) together with its Affiliates is not engaged in (x) any
significant activities other than financial services, insurance
or investment activities or (y) directly or indirectly through
Affiliates in any industrial activities, including the oil and
gas and energy industry.
"Fully-Diluted Common Stock" means, at any time, the then
outstanding Common Stock plus (without duplication) all shares of
Common Stock issuable upon the exercise of the then outstanding
Warrants.
"GAAP" has the meaning set forth in Section 3.5(b).
"Governmental Entity" means any agency, bureau, commission,
court, authority, department, official, political subdivision,
tribunal or other instrumentality of any government, whether (i)
regulatory, administrative or otherwise, (ii) federal, state or
local, or (iii) domestic or foreign.
"Hazardous Materials" has the meaning set forth in Section
3.20.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"Hydrocarbons" means oil, condensate, gas, casinghead gas
and other liquid or gaseous hydrocarbons.
"Intangible Property" has the meaning set forth in Section
3.19.
"Knowledge" of any Person means the actual knowledge of such
Person's executive and financial officers and directors, in each
case after reasonable inquiry of such other officers of such
Person with direct responsibility for the Person's business
relating to such knowledge.
"Law" means any constitutional provision, statute or other
law, ordinance, rule, regulation or interpretation of any thereof
and any Order of any Governmental Entity (including Environmental
Laws) now in effect.
"Lien" means any mortgage, lien, pledge, encumbrance,
easement, charge or security interest of any kind (including any
agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature
thereof).
"Litigation" has the meaning set forth in Section 3.10(a).
"Market Price" means, with respect to a particular security
on any given day, the last reported sale price regular way or, in
case no such reported sale takes place on such day, the average
of the last closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the
applicable securities are listed or admitted to trading, or if
not listed or admitted to trading on any national securities
exchange, (i) the closing sale price for such day reported by the
NASDAQ Stock Market, if such security is traded over-the-counter
and quoted on the NASDAQ Stock Market, or (ii) if such security
is so traded, but not so quoted, the average of the closing
reported bid and asked prices of such security as reported by the
NASDAQ Stock Market or any comparable system, or (iii) if such
security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the
Company for that purpose. If such security is not listed and
traded in a manner that the quotations referred to above are
available for the period required hereunder, the Market Price per
share of such security shall be deemed to be the fair value per
share of such security as determined in good faith by the Board
of Directors of the Company.
"Material Adverse Effect" or "Material Adverse Change" means
any effect, change, event or occurrence that is materially
adverse to the business, operations, properties, condition
(financial or otherwise), results of operations, assets or
liabilities of the Company and its Subsidiaries taken as a whole
, but excluding any such effect, change, event or occurrence
resulting from (i) changes in general economic conditions or
(ii) effects, changes, events or occurrences in the Company's
industry generally (including without limitation any regulatory
changes or changes in prices for oil or gas), in each case which
do not have a materially disproportionate effect on the business,
operations or properties of the Company or its Subsidiaries as
compared to general economic conditions or the Company's industry
as a whole, respectively.
"Material Contracts" has the meaning given it in Section
3.14(a).
"Material Subsidiary" means any Subsidiary that, together
with all Subsidiaries of such Subsidiary, (i) for the most recent
fiscal year of the Company accounted for more than 5% of the
consolidated revenues of the Company and its Subsidiaries or
(ii) at the end of such fiscal year, was the owner (beneficial or
otherwise) of more than 5% of the consolidated assets of the
Company and its Subsidiaries all as shown on the consolidated
financial statements of the Company and its Subsidiaries;
provided, that notwithstanding the above, Enserch Far East Ltd.,
EEX Operating L.P. and EEX Operating LLC. shall be Material
Subsidiaries.
"Modified Fully-Diluted Basis" shall mean a calculation
based on the then outstanding shares of Voting Stock or common
stock, as the case may be, plus all shares of Voting Stock or
common stock acquirable pursuant to, or constituting, Common
Stock Equivalents, but excluding 50% of the Voting Stock or
common stock acquirable pursuant to then outstanding Warrants.
"Modified Non-Diluted Basis" shall mean a calculation based
on the then outstanding shares of Voting Stock or common stock,
as the case may be, and without giving effect to outstanding
Common Stock Equivalents, but including (i) 50% of the shares of
common stock then acquirable upon exercise of the then
outstanding Warrants and (ii) the number of shares of common
stock equal to (a) the aggregate Market Price as of the date of
such Business Combination of all shares of common stock
acquirable upon exercise of all outstanding employee stock
options of the relevant entity that have an exercise price of
less than the Market Price of common stock as of the date of such
Business Combination less the aggregate exercises price of all
such options divided by (b) the Market Price of common stock as
of the date of such Business Combination.
"New Securities" means any shares of Capital Stock or other
equity securities (within the meaning of Rule 16a-1(d)
promulgated under the Exchange Act), including debt that is
convertible or exchangeable for Capital Stock and any warrants or
other rights to purchase Capital Stock sold for cash, other than
securities marketed to at least 25 investors, sold in an
underwritten private offering and available for resale pursuant
to Rule 144A or Regulation S promulgated under the Securities
Act, and securities sold in an underwritten offering pursuant to
a registration statement effective under the Securities Act.
"Non-Financial Person" means any Person that is not a
Financial Person.
"Oil and Gas Properties" means leasehold and other interests
in oil, gas and other mineral properties owned or otherwise held
in the name of the Company or any of its Subsidiaries including
without limitation all direct and indirect interests in and
rights with respect to oil, gas, mineral, and related properties
and assets of any kind and nature, direct or indirect, including
working, leasehold and mineral interests and operating rights and
royalties, overriding royalties, production payments, net profit
interests and other nonworking interests and nonoperating
interests; all interests in rights with respect to Hydrocarbons
and other minerals or revenues therefrom; all Contracts Interests
and claims and rights thereto, surface interests, fee interests,
reversionary interests, reservations, production sharing
interests and concessions; all easements, rights of way,
licenses, permits, leases, and other interests associated with,
appurtenant to, or necessary for the operation of any of the
foregoing; and all interests in equipment and machinery
(including ▇▇▇▇▇, well equipment and machinery), oil and gas
production, gathering, transmission, treating, processing, and
storage facilities (including tanks, tank batteries, pipelines,
and gathering systems), pumps, water plants, electric plants,
gasoline and gas processing plants, refineries, and other
tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the
foregoing, and all material files, records and data owned by, or
in the actual or constructive possession of, the Company or its
Subsidiaries relating to the foregoing, including all material
title records, geological, geophysical and seismic records, data
and information, production records, electric logs, core data,
pressure data and other related matters of a non-interpretive
nature associated therewith.
"Order" means any decree, injunction, judgment, settlement,
order, ruling, assessment or writ of a court.
"PBGC" has the meaning given to it in Section 3.17(iii).
"Permitted Liens" means:
(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 the Company or one of its
Material Subsidiaries, 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 9.02(a) of the Credit Agreement, 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 Entity
created or approved by Law for any purposes at any time as
required by Law as a condition to the transaction of any business
or the exercise of any privilege or license, or to enable the
company 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 the Company 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 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 the Company or a Material
Subsidiary, 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 the Company or a Material
Subsidiary 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 the Company
nor any Material Subsidiary is liable for the debt of such
limited liability company; and
(m) other Liens on any Properties of the Company or any
Subsidiary with an aggregate value not exceeding 1% of the book
value of the total assets of the Company on a consolidated basis.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, limited
liability company, joint venture, joint stock company, government
(or an agency or political subdivision thereof) or other entity
of any kind.
"PS" means the Company's Series B 8% Cumulative Perpetual
Preferred Stock, no par value per share.
"Purchase Price" has the meaning set forth in Section
2.1(b).
"Purchasers" has the meaning set forth in the introductory
paragraph hereto.
"Purchaser's Expenses" means all reasonable out-of-pocket
fees, costs and expenses incurred by Purchasers in connection
with its due diligence efforts or the transactions contemplated
by this Agreement and the other Transaction Documents, including
(i) fees, costs and expenses of its accountants, counsel and
other similar advisors and (ii) fees paid to any Governmental
Entity (including fees payable in connection with filings under
the HSR Act pursuant to Section 5.5), but excluding any
commitment, underwriting fee or similar fees paid by Purchasers
to any third party lender or underwriter in connection with any
debt financing obtained by Purchasers with respect to the
transactions contemplated by this Agreement.
"Registration Rights Agreement" means the Registration
Rights Agreement in the form of Exhibit 7.2(b)(iv).
"Release" has the meaning set forth in Section 3.20.
"Remedial Action" has the meaning set forth in Section 3.20.
"Representatives" of any Person means the officers,
directors, employees, agents and other representatives of such
Person.
"Reserve Report" means the proved oil and gas reserve
reports concerning the Oil and Gas Properties as of December 31,
1997 and prepared by Netherland, ▇▇▇▇▇▇ & Associates.
"Rights Agreement" has the meaning set forth in Section
5.10(d).
"Rule 144" means Rule 144 under the Securities Act of 1933,
as amended, and any successor rule thereto.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Shares and the Warrants.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Series A Warrants" means the ten year warrants to purchase
10,500,000 shares of Common Stock, at an exercise price of $12
per share (as may be adjusted from time to time as set forth
therein), in substantially the form of Exhibit 7.2(b)(ii)(A).
"Series B Warrants" means the seven year warrants to
purchase 2,500,000 shares of Common Stock, at an exercise price
of $12 per share (as may be adjusted from time to time as set
forth therein), in substantially the form of Exhibit
7.2(b)(ii)(B).
"Series C Warrants" means the seven year warrants to
purchase 8,000,000 shares of Common Stock, at an exercise price
of $12 per share (as may be adjusted from time to time as set
forth therein), in substantially the form of
Exhibit 7.2(b)(ii)(C).
"Shares" means the 1.5 million shares of PS purchased by
Purchasers pursuant to this Agreement.
"Statement of Resolution" shall mean the Statement of
Resolution in the form attached hereto as Exhibit 6.1(h).
"Stock Plans" means the Company's stock option, stock
incentive or other similar plans.
"Subsidiary" means, (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by the
Company, by a Subsidiary of the Company or by the Company and
another Subsidiary, or (ii) any other Person (other than a
corporation) in which the Company, a Subsidiary or the Company
and a Subsidiary, directly or indirectly, at the date of
determination thereof has at least a majority ownership interest.
"Tax" or "Taxes" has the meaning set forth in Section 3.16.
"Tax Return" has the meaning set forth in Section 3.16.
"13d Group" means a group within the meaning of Section
13(d)(3) of the Exchange Act.
"Transaction Documents" means this Agreement, the Statement
of Resolution, the Warrants and the Registration Rights
Agreement.
"Transfer" has the meaning set forth in Section 4.5.
"Underlying Shares" means the shares of Common Stock
issuable upon exercise of the Warrants in accordance with the
terms thereof and any shares of Common Stock paid as dividends on
the PS.
"Unit" shall mean (i) a Series A Warrant exercisable for
seven shares of Common Stock (as such number of shares is
adjusted from time to time pursuant to the terms of the
Warrants), (ii) a Series B Warrant or a Series C Warrant in
either case exercisable for seven shares of Common Stock (as such
number of shares is adjusted from time to time pursuant to the
terms of the Warrants) or cash consideration in lieu thereof and
(iii) one share of PS and the shares (or fraction thereof) of PS
and Common Stock paid to Purchaser after Closing as dividends in
respect of one share of PS issued at Closing.
"Voting Stock" of a Person means Capital Stock of such
Person of the class or classes pursuant to which the holders
thereof have the general voting power under ordinary
circumstances to vote in the election of the board of directors,
managers or trustees of such Person; provided that if such Person
has more than one class or series of Voting Stock, any
calculation as to a percentage of such Voting Stock shall be made
with respect to the percentage of votes entitled to be cast in
respect of such Voting Stock in such circumstances.
"Warburg" has the meaning set forth in Section 5.7(a).
"Warrants" mean the Series A Warrants, Series B Warrants and
Series C Warrants.
Section 1.2 References and Titles. All references in
this Agreement to Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions refer to the corresponding
Exhibits, Schedules, Articles, Sections, subsections, and other
subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles,
Sections, subsections, or other subdivisions of this Agreement
are for convenience only, do not constitute any part of such
Articles, Sections, subsections or other subdivisions, and shall
be disregarded in construing the language contained therein. The
words "this Agreement," "herein," "hereby," "hereunder," and
"hereof," and words of similar import, refer to this Agreement as
a whole and not to any particular subdivision unless expressly so
limited. The words "this Section," "this subsection," and words
of similar import, refer only to the Sections or subsections
hereof in which such words occur. The word "including" (in its
various forms) means "including without limitation." Pronouns in
masculine, feminine, or neuter genders shall be construed to
state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be
construed to include the plural and vice versa, unless the
context otherwise expressly requires. Unless the context
otherwise requires, all defined terms contained herein shall
include the singular and plural forms of such defined terms.
ARTICLE II.
PURCHASE OF THE SECURITIES
Section 2.1 Purchase of the Securities.
(a) Subject to the terms and conditions herein set forth,
the Company will sell to Purchasers, and Purchasers will purchase
from the Company, the Securities, as allocated among the
Purchasers as set forth in Exhibit 2.1.
(b) The aggregate purchase price payable for the Securities
shall be $150 million (the "Purchase Price").
(c) Delivery of the Securities shall be made at Closing by
delivery to Purchasers, against payment of the Purchase Price
therefor as provided herein, of (i) one or more share
certificates, registered in the name and amounts requested by the
Purchasers at least two Business Days prior to Closing,
representing an aggregate of 1.5 million shares of PS and
(ii) the Warrants, all to be purchased at Closing by Purchasers
hereunder.
(d) Payment of the Purchase Price for the Securities to be
purchased hereunder shall be made by or on behalf of Purchasers
by wire transfer of immediately available funds to an account of
the Company (the number for which account shall have been
furnished to Purchasers at least two Business Days prior to the
Closing Date).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchasers as follows
(in each case as qualified by matters reflected on the disclosure
schedule dated as of the date of this Agreement by reference to
the Section of this Agreement so qualified and delivered by the
Company to Purchasers prior to the date of this Agreement (the
"Company Disclosure Schedule") and made a part hereof by
reference):
Section 3.1 Organization, Standing and Power. Each of
the Company and each of its Subsidiaries is a corporation or
other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated or organized and has the requisite corporate or
other such entity power and authority to own its properties and
carry on its business as now being conducted. Each of the Company
and each of its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified
or licensed or to be in good standing, individually or in the
aggregate, has not had and could not reasonably be expected to
have a Material Adverse Effect. The Company has delivered to
Purchasers prior to the execution of this Agreement complete and
correct copies of its Articles of Incorporation and Bylaws and,
in the case of the Company's Material Subsidiaries, made
available similar organizational documents in each case, as in
effect on the date of this Agreement.
Section 3.2 Subsidiaries. Schedule 3.2 of the Company
Disclosure Schedule sets forth a true and complete list, as of
the date hereof, of each Material Subsidiary of the Company,
together with the jurisdiction of incorporation or organization
and the percentage of each Material Subsidiary's outstanding
share capital (or other voting or equity securities or interests,
as applicable) owned by the Company or another Subsidiary of the
Company. Except as set forth in Schedule 3.2 of the Company
Disclosure Schedule, all the outstanding shares of share capital
(or other voting or equity securities or interests, as
applicable) of each Material Subsidiary of the Company have been
validly issued and are fully paid and nonassessable (with respect
to corporate Subsidiaries) and are owned directly or indirectly
by the Company, free and clear of all Liens except for Permitted
Liens. Except for the shares or capital stock of its
Subsidiaries and the partnership interests listed in Schedule 3.2
of the Company Disclosure Schedule, as of the date hereof, the
Company does not own, directly or indirectly, any share or
capital stock (or other voting or equity securities or interests,
as applicable) of any corporation, limited liability company,
partnership, joint venture or other entity which is material to
the business of the Company and its Subsidiaries taken as a
whole.
Section 3.3 Capital Structure.
(a) The authorized Capital Stock of the Company consists of
150,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, no par value, which may be divided into and
issued in one or more series upon the creation thereof by the
Board (the "Authorized Preferred Stock"), of which, as of the
date of this Agreement, (A) 42,383,476 shares of Common Stock are
issued and outstanding, (B) 2,613,662 shares of Common Stock have
been authorized and reserved for issuance under the Benefit
Plans, (C) 17,204 shares of Common Stock are held by the Company
in its treasury and (D) no shares of Common Stock are held by any
of the Company's Subsidiaries. Except as described in this
Section 3.3, the Company has no authorized, issued or outstanding
shares or Capital Stock as of the date of this Agreement.
(b) As of the date hereof, there are no bonds, debentures,
notes or other indebtedness issued or outstanding having the
right to vote on any matters on which holders of Common Stock or
Authorized Preferred Stock may vote, including without limitation
the transactions contemplated by this Agreement and the other
Transaction Documents.
(c) There are no restrictions or limitations, contractual
or otherwise, binding upon the Company or any of its Subsidiaries
or to which the Company or any of its Subsidiaries is subject
that prohibit or limit the enforceability of the terms and
provisions of the Statement of Resolution or, except as provided
for in the Warrants, will prohibit or limit the right of a holder
of Warrants to exercise Warrants for shares of Common Stock; and
the exercise of any Warrants for shares of Common Stock will not
violate or result in or constitute a default under any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or any other contract, agreement,
arrangement or understanding to which the Company or any of its
Subsidiaries is a party or by which they or any of their
properties or assets are bound;
(d) There are no outstanding warrants, share or stock
options, share or stock appreciation rights or other rights to
receive or purchase any Capital Stock of the Company or any of
its Subsidiaries granted under the Stock Plans or otherwise
except as set forth in Schedule 3.3(d) of the Company Disclosure
Schedule (such warrants, share or stock options, shares or stock
appreciation rights or other rights disclosed thereon,
collectively, the "Company Options"). Except for the Company
Options and except as provided in the Transaction Agreements,
there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of
any kind to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any Capital Stock of the Company or of
any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. Except as set forth in
Schedule 3.3(d) of the Company Disclosure Schedule, there are no
outstanding obligations of the Company or any of its
Subsidiaries (contingent or otherwise) to repurchase, redeem or
otherwise acquire any Capital Stock of the Company or any of its
Subsidiaries or any security exchangeable for or convertible into
such Capital Stock. All of the Company's Stock Plans are listed
on Schedule 3.3(d).
(e) All outstanding Capital Stock of the Company and its
Subsidiaries are, and all shares which may be issued upon
exercise of the Warrants will be, when issued and upon delivery
of the exercise price, if any, payable with respect thereto, duly
authorized, validly issued, fully paid and nonassessable and,
except as provided in Section 5.15, not subject to preemptive or
similar rights.
(f) Except as contemplated hereby or in the other
Transaction Documents or as set forth in Schedule 3.3(f) of the
Company Disclosure Schedule, there are not any registration
rights agreements, shareholder agreements, voting agreements or
trusts, proxies or other agreements or contractual obligations to
which the Company or any Subsidiary is a party or bound with
respect to the registration with any Government Entity, or the
voting or disposition of any Capital Stock of the Company or any
of its Subsidiaries and, to the Company's Knowledge there are no
other shareholder agreements, voting agreements or trusts,
proxies or other agreements or contractual obligations among the
shareholders of the Company with respect to the voting or
disposition of any Capital Stock of the Company or any of its
Subsidiaries.
Section 3.4 Authority; No Violations; Approvals.
(a) The Board has approved this Agreement, the other
Transaction Documents and the transactions contemplated hereby
and thereby, and declared this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby to
be in the best interests of the Company. The Board has approved
the acquisition of the Securities and, upon any exercise of the
Warrants or any declaration of a dividend, the issuance of the
Underlying Shares by the Purchaser hereunder, and this approval
by the Board satisfies the approval requirements of Article
13.03.A(1) of the Texas Business Corporation Act with respect to
the transactions contemplated by this Agreement (including the
actions contemplated or referenced in Sections 5.10(a) and 5.15).
The Board by a vote of not less than a majority of the
"Continuing Directors" (as defined in the Company's Articles of
Incorporation) holding office as of such date expressly approved,
in advance of the acquisition of the Securities, the Underlying
Shares and such other acquisition of the Company's securities as
are contemplated by this Agreement, this Agreement and the
transactions contemplated by this Agreement. The Company has all
requisite corporate power and authority to enter into this
Agreement and each of the other Transaction Documents and to
consummate each of the transactions and perform each of the
obligations contemplated hereby and thereby. The execution and
delivery of this Agreement and each of the other Transaction
Documents and the consummation of each of the transactions and
the performance of each of the obligations contemplated hereby
and thereby have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been, and
prior to the Closing the other Transaction Documents will be,
duly executed and delivered by the Company and the Statement of
Resolution has been duly adopted by the Board of Directors in
accordance with applicable Law. Each of the Statement of
Resolution and, assuming this Agreement and each of the other
Transaction Documents to which Purchasers are a party constitute
the valid and binding obligations of Purchasers, this Agreement
and each of the other Transaction Documents constitutes a valid
and binding obligation of the Company enforceable in accordance
with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights
and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(b) Except as set forth in Schedule 3.4(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement
and each of the other Transaction Documents does not, and the
consummation of the transactions contemplated hereby and thereby
and compliance with the provisions hereof and thereof will not,
conflict with, require the consent of any other Person to or
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any material
obligation or to the loss of any material benefit under, or give
rise to a right of purchase under, result in the creation of any
Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, or otherwise result in a material
detriment to the Company or any of its Subsidiaries under, any
provision of (A) the Articles of Incorporation or Bylaws or any
provision of the comparable organizational documents of any of
the Company's Subsidiaries, (B) any loan or credit agreement,
note, bond, mortgage, indenture, lease, instrument, permit,
concession, franchise, license or other contract or agreement
arrangement or understanding to which the Company or any of its
Subsidiaries is a party or otherwise is bound or by which any of
them or their respective properties are bound or any existing
Approval applicable to the Company or any of its Subsidiaries,
(C) any joint venture or other ownership arrangement to which the
Company or any of its Subsidiaries is a party or otherwise is
bound or by which any of them or their respective properties are
bound or (D) assuming the Approvals referred to in Section 3.4(c)
are duly and timely obtained or made, any Law or Order applicable
to the Company or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of
clause (B) (other than with respect to any material loan or
credit agreement, note, bond, mortgage or indenture or any
Material Contract), (C) or (D), any such conflicts, violations,
defaults, rights, Liens or detriments, that, individually or in
the aggregate, (x) have not had and could not reasonably be
expected to have a Material Adverse Effect, (y) have not impaired
and could not reasonably be expected to impair the ability of the
Company to perform its obligations under any of the Transaction
Documents in any material respect, and (z) have not and could not
reasonably be expected to delay in any material respect or
prevent the consummation of any of the transactions, or
performance of the obligations, contemplated by any of the
Transaction Documents.
(c) No Approval from any Governmental Entity is required by
or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or
any other Transaction Document by the Company or the consummation
by the Company of the transactions contemplated hereby or
thereby, except for: (A) if applicable, the filing of a
notification report by the Company under the HSR Act and the
expiration or termination of the applicable waiting period with
respect thereto; (B) such Approvals as may be required by any
applicable state securities or "blue sky" laws; and (C) any such
Approvals the failure of which to be made or obtained (1) has not
had and could not reasonably be expected to have a Material
Adverse Effect, (2) has not impaired and could not reasonably be
expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any
material respect and (3) have not and could not reasonably be
expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by any of
the Transaction Documents.
Section 3.5 SEC Documents.
(a) The Company has made available to Purchasers a true and
complete copy of each report, schedule, registration statement
and definitive proxy statement filed by the Company with the SEC
since December 31, 1995 (the "Company SEC Documents"), which are
all the documents (other than preliminary materials) that the
Company was required to file with the SEC since December 31,
1995. As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such
Company SEC Documents, and none of the Company SEC Documents
contained as of their respective dates any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(b) The financial statements of the Company included in the
Company SEC Documents, including the notes and schedules thereto,
complied as to form in all material respects with the rules and
regulations of the SEC with respect thereto, were prepared in
accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present the
consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash
flows of the Company and its consolidated Subsidiaries for the
periods presented therein in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which are
material) applied on a consistent basis during the periods
presented.
(c) Except as disclosed in the Company SEC Documents, there
are no agreements, arrangements or understandings between the
Company and any Person who is or was at any time prior to the
date hereof an Affiliate of the Company that are required to be
disclosed in the Company SEC Documents filed after August 5, 1997
or would be required to be disclosed in subsequent documents
filed by the Company with the SEC.
Section 3.6 Absence of Certain Changes or Events.
(a) Except as disclosed in Schedule 3.6 of the Company
Disclosure Schedule or the Company SEC Documents filed with the
SEC after December 31, 1997 and prior to the date of this
Agreement, or except as contemplated by this Agreement, since
December 31, 1997, each of the Company and its Subsidiaries have
conducted their business only in the ordinary course of business
consistent with past practice, and there has not been: (i) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to
any Capital Stock of the Company or any of its Subsidiaries;
(ii) any split, combinations, reclassification or amendment of
any term of any outstanding Capital Stock or other security of
the Company or any of its Subsidiaries or (other than issuance of
Common Stock upon the exercise of any Company Options) any
issuance or the authorization of the issuance of any securities
of the Company or any of its Subsidiaries, other than in
connection with the transactions contemplated hereby; (iii) any
repurchase, redemption or other acquisition by the Company or any
Subsidiary of the Company of any outstanding Capital Stock or
other securities of the Company or any Subsidiary of the Company,
except as contemplated by the Stock Plans; (iv) (A) any grant by
the Company or any of its Subsidiaries to any officer of the
Company or any of its Subsidiaries of any increase in
compensation, except for increases in the ordinary course of
business consistent with past practice or as required under
employment or other agreements or benefit arrangements in effect
as of December 31, 1997, or (B) any grant by the Company or any
of its Subsidiaries to any such officer of any increase in
severance or termination pay, except as was required or provided
for under any employment, severance, termination or other
agreements or benefit arrangements in effect as of December 31,
1997; (v) except as required by a change in GAAP, any material
change in accounting methods, principles or practices by the
Company or any of its Subsidiaries, (vi) any material casualties
affecting the Company and its Subsidiaries, taken as a whole, or
any material loss, damage or destruction to any of their
properties or assets, whether covered by insurance or not.
(b) Except as disclosed in Schedule 3.6 of the Company
Disclosure Schedule or the Company's consolidated financial
statements included in the Company's Quarterly Report on Form 10-
Q for the nine months ended September 30, 1998, and the notes
thereto since December 31, 1997, there has not been any event,
circumstance or fact that (x) has had or could reasonably be
expected to have a Material Adverse Effect, (y) has impaired or
could reasonably be expected to impair the ability of the Company
to perform its obligations under any of the Transaction Documents
in any material respect, or (z) could reasonably be expected to
delay in any material respect or prevent the consummation of any
of the transactions contemplated by any of the Transaction
Documents.
Section 3.7 No Undisclosed Material Liabilities. Except
as disclosed in Schedule 3.7 of the Company Disclosure Schedule
or the Company's financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997,
and the notes thereto, there are no liabilities or obligations of
the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable
or otherwise, other than: (i) liabilities adequately provided
for on the balance sheet of the Company dated as of September
30, 1998 (including the notes thereto) contained in the Company's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1998; (ii) liabilities incurred in the ordinary course of
business consistent with past practice since September 30, 1998,
which liabilities, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect;
(iii) liabilities arising under the Transaction Documents; and
(iv) liabilities not required by GAAP to be recognized or
disclosed on a consolidated balance sheet of the Company and its
consolidated Subsidiaries or in the notes thereto, which
liabilities, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
Section 3.8 No Default. Neither the Company nor any of
its Subsidiaries is in default or violation (and, to the
Knowledge of the Company, no event has occurred which, with
notice or the lapse of time or both, would constitute a default
or violation) of any term, condition or provision of (i) the
Articles of Incorporation or Bylaws of the Company or the
comparable organizational documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, instrument, permit, concession, franchise,
license or any other contract, agreement, arrangement or
understanding to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries or any
of their respective properties or assets is bound, or (iii) any
Order or Law applicable to the Company or any of its
Subsidiaries, except in the case of clause (ii) and (iii), for
violations or defaults that, individually or in the aggregate,
(x) have not had and could not reasonably be expected to have a
Material Adverse Effect, (y) have not impaired and could not
reasonably be expected to impair the ability of the Company to
perform its obligations under any of the Transaction Documents in
any material respect, and (z) have not and could not reasonably
be expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by any of
the Transaction Documents. The Company (i) is not in breach of
or default under any financial covenant under the Credit
Agreement, and (ii) except as disclosed in Schedule 3.8 of the
Company Disclosure Schedule, does not believe that it is
reasonably likely that it will be in breach of or default under
any financial covenant under the Credit Agreement as of the next
date on which the Company is required to be in compliance with
any such financial covenants.
Section 3.9 Compliance with Applicable Laws.
(a) The Company and each of its Subsidiaries has in effect
all Approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses, and there has
occurred no default or violation (and, to the Knowledge of the
Company, no event has occurred which, with notice or the lapse of
time or both, would constitute a default or violation) under any
such Approval, except for failures to obtain, or for defaults or
violations under, Approvals which failures, defaults or
violations, individually or in the aggregate, (i) have not had
and could not reasonably be expected to have a Material Adverse
Effect, (ii) have not impaired and could not reasonably be
expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any
material respect, and (iii) could not reasonably be expected to
delay in any material respect or prevent the consummation of any
of the transactions contemplated by any of the Transaction
Documents.
(b) Except as otherwise disclosed in the Company SEC
Documents, the Company and its Subsidiaries are in compliance
with all applicable Laws and Orders, except for possible
noncompliance which, individually or in the aggregate, (i) have
not had and could not reasonably be expected to have a Material
Adverse Effect, (ii) have not impaired and could not reasonably
be expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any
material respect, and (iii) could not reasonably be expected to
delay in any material respect or prevent the consummation of any
of the transactions contemplated by any of the Transaction
Documents.
(c) No investigation or review by any Governmental Entity
with respect to the Company, any of its Subsidiaries, the
transactions contemplated by this Agreement and the other
Transaction Documents, or the Oil and Gas Properties is pending
or, to the Knowledge of the Company, threatened, nor has any
Governmental Entity notified the Company or any of its
Subsidiaries in writing or, to the Company's Knowledge, otherwise
of any intention to conduct the same, other than those the
outcome of which, individually or in the aggregate, (i) have not
had and could not reasonably be expected to have a Material
Adverse Effect, (ii) have not impaired and could not reasonably
be expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any
material respect, or (iii) could not reasonably be expected to
delay in any material respect or prevent the consummation of any
of the transactions contemplated by any of the Transaction
Documents.
Section 3.10 Litigation.
(a) Except as disclosed in the Company SEC Documents or
Schedule 3.10 of the Company Disclosure Schedule, there is no
suit, action, proceeding or indemnification claim, at law or in
equity, pending before any Governmental Entity or arbitrator, or,
to the Knowledge of the Company, threatened, against or affecting
the Company, any Subsidiary of the Company or any of its Material
Contracts ("Litigation"), and neither the Company nor any
Subsidiary is a party to any Litigation, that (i) has had or
could reasonably be expected to have a Material Adverse Effect,
(ii) has impaired or reasonably could be expected to impair the
ability of the Company to perform its obligations under any of
the Transaction Documents in any material respect, or
(iii) reasonably could be expected to delay in any material
respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents, nor is there
any Order of any Governmental Entity or arbitrator outstanding
against or binding upon the Company or any Subsidiary of the
Company or any of its Material Contracts which (i) has had or
could reasonably be expected to have a Material Adverse Effect,
(ii) has impaired or reasonably could be expected to impair the
ability of the Company to perform its obligations under any of
the Transaction Documents in any material respect, or
(iii) reasonably could be expected to delay in any material
respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
(b) Schedule 3.10 of the Company Disclosure Schedule
contains an accurate and complete list of all Orders restricting
or limiting in any material respect the business or operations of
the Company or any of its Subsidiaries, in each case that is not
disclosed in the Company SEC Documents, to which the Company or
any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective assets or
properties are bound.
Section 3.11 Title to Oil and Gas Properties. Except as
set forth in Schedule 3.11 of the Company Disclosure Schedule,
the Company or its Subsidiaries has title (of a type and nature
customarily acceptable to the reasonably prudent oil and gas
operator of oil and gas interests) to all of the Oil and Gas
Properties classified as proved developed producing, proved
developed nonproducing and proved undeveloped in the Company
Reserve Report, other than properties sold since December 31,
1997 (each, a "Company Classified Property").
Section 3.12 Title to Other Properties. Except as set
forth in Schedule 3.12 of the Company Disclosure Schedule, the
Company or its Subsidiaries owns, of record (to the extent
applicable) and beneficially, all material personal property and
real property (other than those constituting Company Classified
Properties) and has a valid and enforceable leasehold interest in
all material leases, in each case, as reflected on the
consolidated financial statements of the Company included in the
Company SEC Documents as being owned or leased by it or any of
its Subsidiaries and all such property thereafter acquired by it
or any of its Subsidiaries (except to the extent that such
properties have thereafter been disposed of in the ordinary
course of business consistent with past practice or after the
date hereof in compliance with Section 5.3), free and clear of
any Liens except Permitted Liens.
Section 3.13 Intentionally Omitted.
Section 3.14 Certain Agreements.
(a) Except as disclosed in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, the Company's
Quarterly Reports on Form 10-Q for the periods ended March 31,
1998, June 30, 1998 and September 30, 1998 and Schedule 3.14(a)
of the Company Disclosure Schedule, there are no, whether in oral
or written form, (A) employment or consulting Contracts (unless
such employment or consulting Contracts are terminable without
liability or penalty on 30 days or less notice) under or pursuant
to which the Company is obligated to make payments in excess of
$500,000 per annum, (B) other Contracts that are material to the
Company and its Subsidiaries, taken as a whole, or their
respective business, (C) Contracts relating to material leasehold
interests or (D) Contracts with Affiliates under or pursuant to
which the Company is obligated to make payments in excess of
$100,000 per annum (excluding agreements solely by and among the
Company and one or more of its Subsidiaries), in any such case,
to which the Company or any Subsidiary is a party or to which the
Company or any Subsidiary or their respective assets is bound
(such Contracts disclosed or required to be disclosed herein, in
the Company SEC Documents or in the Company Disclosure Schedule,
the "Material Contracts"). Each Material Contract is a valid and
binding obligation of the Company or one of its Subsidiaries and,
to the Company's Knowledge, of each other party thereto,
enforceable in accordance with its terms, and is in full force
and effect.
(b) The Company or the relevant Subsidiary and, to the
Company's Knowledge, each other party to the Material Contracts
has performed in all material respects the obligations required
to be performed by it under the Material Contracts and is not
(with or without lapse of time or the giving of notice, or both)
in breach or default thereunder. No party to any Material
Contract has given written or, to the Company's Knowledge, oral
notice of any action to terminate, cancel, rescind or procure a
judicial reformation thereof.
(c) A complete copy of each written Material Contract and a
written description of each oral Material Contract has been made
available to Purchasers prior to the date of this Agreement.
(d) Except as disclosed in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, or in any other
Company SEC Document filed with the SEC after December 31, 1997,
and prior to the date of this Agreement or in Schedule 3.14(d) of
the Company Disclosure Schedule, none of the Company or of its
Subsidiaries is a party to any oral or written agreement, plan or
arrangement with any employee, consultant or independent
contractor of the Company or a Subsidiary (A) the benefits of
which are contingent, or the terms of which are materially
altered, upon, or result from, the occurrence of a transaction
involving the Company or a Subsidiary of the nature of any of the
transactions contemplated by this Agreement or (B) any of the
benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or any other
Transaction Documents or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Schedule 3.14(d) of the Company
Disclosure Schedule lists each oral and written agreement, plan
or arrangement with any employee, consultant or independent
contractor of the Company or any of its Subsidiaries which
provides for aggregate benefits or other amounts payable by the
Company or any of its Subsidiaries in excess of $500,000 which
are contingent upon, or will be accelerated by, or which
otherwise will become payable upon the termination of any such
employee's employment by or any other service with the Company or
any of its Subsidiaries after, the occurrence of the transactions
contemplated by this Agreement or any of the other Transaction
Documents.
(e) The Company has made available to Purchasers (A) true
and correct copies of all material loan or credit agreements
(including the Credit Agreement), notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which
any Debt of the Company or any of its Subsidiaries is outstanding
or may be incurred and (B) accurate information regarding the
respective principal amounts currently outstanding thereunder to
the extent materially different than as set forth in the
financial statements included in the Company's quarterly report
on Form 10-Q for the nine months ended September 30, 1998.
Section 3.15 Status of Securities. The issuance and sale
of the Securities and the reservation and issuance of the
Underlying Shares and any shares of Common Stock that may be
issued in connection with Section 5.14 have been duly authorized
by all necessary corporate action on the part of the Company and
the Shares, when delivered to Purchasers at the Closing against
payment therefor as provided herein, will be validly issued,
fully paid and non-assessable and the issuance and sale of the
Securities and the issuance of the Underlying Shares are not and
will not be subject to preemptive rights of any Person.
Section 3.16 Tax Returns and Tax Payments. The Company,
each of its Subsidiaries and any affiliated, consolidated,
combined, unitary or similar group of which the Company or any of
its Subsidiaries is or was a member has timely filed all material
returns, reports or statements required to be filed with any
Governmental Entity with respect to Taxes ("Tax Returns")
required to be filed by it, and all such Tax Returns are true,
correct and complete in all material respects and all Taxes shown
thereon to be due have been paid, except where the failure to so
have timely filed, to be true, correct or complete or to have
paid such Taxes has not had and could not reasonably be expected
to have a Material Adverse Effect. The Company has established
reserves, to the extent required by GAAP, with respect to the
payment of all material Taxes not yet due and payable with
respect to the results of operations of the Company and its
Subsidiaries through the date hereof. No claim for unpaid Taxes
has been asserted in writing by a tax authority or has become a
Lien (except for Permitted Liens) against the property of the
Company or any of its Subsidiaries. No audit of any Tax Return
of the Company or any of its Subsidiaries or any affiliated,
consolidated, combined, unitary or similar group in which the
Company or any of its Subsidiaries is or has been a member is
being conducted by a tax authority, which audit reasonably could
be expected to have a Material Adverse Effect, and no extension
of the statute of limitations on the assessment of any material
Taxes has been granted by the Company or any of its Subsidiaries
and currently is in effect. Except as set forth in Schedule 3.16
the Disclosure Schedule neither the Company nor any of its
Subsidiaries is a party to, is bound by, or has any obligation
under any tax sharing or allocation agreement or similar
agreement or arrangement, other than (x) as among the Company and
its Subsidiaries, and (y) that Tax Allocation Agreement dated as
of August 5, 1997, by and among ENSERCH Corporation, a Texas
corporation, Texas Utilities Company, a Texas corporation, and
the Company. For purposes of this Agreement "Tax" means any
federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment,
payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity. To the
Company's Knowledge, none of the purchase and sale of the Shares,
the exercise of the Warrants and the consummation of the other
transactions contemplated hereby and by the other Transaction
Documents are part of a plan (or series of related transactions)
pursuant to which one or more Persons will acquire, directly or
indirectly, Capital Stock representing a fifty percent (50%) or
greater interest in the Company, within the meaning of Section
355(e) of the Code.
Section 3.17 Employee Benefit Plans. (a) Except as
otherwise disclosed in the Company SEC Documents or Schedule 3.17
of the Company Disclosure Schedule:
(i) All employee benefit plans and arrangements
covering employees of the Company and its Subsidiaries
(collectively, the "Benefit Plans") are listed in the
Company SEC Documents or Schedule 3.17 of the Company
Disclosure Schedule and complete copies of all material
Benefit Plans, including all amendments, have been made
available to Purchasers.
(ii) To the extent applicable, the Benefit Plans
comply, in all material respects, with the requirements of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, and any Benefit Plan
intended to be qualified under Section 401(a) of the Code
satisfies the requirements of such Section has been
determined by the Internal Revenue Service to be so
qualified and has not, since such determination, been
amended or, to the Knowledge of the Company, operated in a
way which would adversely affect such qualified status.
(iii) As to any Benefit Plan subject to Title IV of
ERISA, there has been no event or condition which presents
the risk of plan termination, no accumulated funding
deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been
incurred, no reportable event within the meaning of Section
4043 of ERISA (for which the disclosure requirements of
Regulation section 4043.1 et seq., promulgated by the
Pension Benefit Guaranty Corporation ("PBGC"), have not been
waived) has occurred, no notice of intent to terminate the
Benefit Plan has been given under Section 4041 of ERISA, no
proceeding has been instituted under Section 4042 of ERISA
to terminate the Benefit Plan, no liability to the PBGC has
been incurred, and the assets of the Benefit Plan equal or
exceed the actuarial present value of the benefit
liabilities, within the meaning of Section 4041 of ERISA,
under the Benefit Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established
by the PBGC, except in each case as, individually or in the
aggregate, has not had and could not reasonably be expected
to have a Material Adverse Effect.
(iv) With respect to any employee benefit plan, within
the meaning of Section 3(3) of ERISA, which is not listed in
the Company SEC Documents or Schedule 3.17 of the Company
Disclosure Schedule but which is sponsored, maintained, or
contributed to, or has been sponsored, maintained, or
contributed to within six years prior to the Closing Date,
by any corporation, trade, business, or entity under common
control with the Company, within the meaning of Section
414(b), (c) or (m) of the Code or Section 4001 of ERISA
("Commonly Controlled Entity"), (A) no withdrawal liability,
within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied,
(B) no liability to the PBGC has been incurred by any
Commonly Controlled Entity, which liability has not been
satisfied, (C) no accumulated funding deficiency, whether or
not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, and (D) all
contributions (including installments) to such plan required
by Section 302 of ERISA and Section 412 of the Code have
been timely made, except in each case as, individually or in
the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect.
(v) Neither a Benefit Plan nor the Company has
incurred any liability or penalty under Section 4975 of the
Code or Section 409 or 502(C)(i) or (L) of ERISA, except in
each case as, individually or in the aggregate, has not had
and could not reasonably be expected to have a Material
Adverse Effect.
(vi) Each Benefit Plan has been maintained and
administered in all material respects in compliance with its
terms and with ERISA and the Code to the extent applicable
thereto.
(vii) There are no pending nor, to the Knowledge of
the Company, any threatened claims against or otherwise
involving any Benefit Plan and no suit, action or other
litigation (excluding claims for benefits incurred in the
ordinary course of Benefit Plan activities) has been brought
against or with respect to any Benefit Plan, except in each
case as, individually or in the aggregate, has not had and
could not reasonably be expected to have a Material Adverse
Effect.
(viii) All contributions required to be made as of
the date hereof to the Benefit Plans have been made, except
in each case as, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material
Adverse Effect.
(ix) No employees of the Company or any of its
Subsidiaries are covered by any severance plan or similar
arrangement, other than payments pursuant to foreign law.
Except as disclosed in Schedule 3.14(d) of the Company
Disclosure Schedule, the execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby will not (A) require the Company to make
a larger contribution to, or pay greater benefits under, any
Benefit Plan than it otherwise would, (B) create or give
rise to additional vested rights or service credits under
any Benefit Plan, or (C) result in all or any part of any
payments made, or that may become payable as a result of the
transactions contemplated by the Agreement, by the Company
not to be deductible by the payor under sections 280G or
162(m) of the Code.
(x) No Benefit Plan provides retiree medical or
retiree life insurance benefits to any person and the
Company is not contractually obligated to provide any person
with medical benefits or life insurance upon retirement or
termination of employment, except as required by
sections 601 through 608 of ERISA and Section 4980B of the
Code.
(b) There exists no event or condition described in the
Company's SEC Documents and Schedule 3.17 of the Company
Disclosure Schedule with regard to the matters described in this
Section 3.17 that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect
(after taking into account the reserves set forth in the
financial statements contained in the Company SEC Documents).
Section 3.18 Labor Matters. Except as set forth in
Schedule 3.18 of the Company Disclosure Schedule or in the
Company SEC Documents:
(a) there is no unfair labor practice charge or grievance
arising out of a collective bargaining agreement or other
grievance procedure against the Company or any of its
Subsidiaries pending, or, to the Knowledge of the Company,
threatened, that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect;
(b) there is no strike, dispute, slowdown, work stoppage or
lockout pending, or, to the Knowledge of the Company, threatened,
against or involving the Company or any of its Subsidiaries that,
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect; or
(c) there is no proceeding, claim, suit, action or
governmental investigation pending or, to the Knowledge of the
Company threatened, in respect to which any current or former
director, officer, employee or agent of the Company or any of its
Subsidiaries is or may be entitled to claim indemnification from
the Company or any of its Subsidiaries pursuant to (a) the
Articles of Incorporation or Bylaws of the Company, (b) any
provision of the comparable charter or organizational documents
of any of its Subsidiaries, (c) any indemnification agreement to
which the Company or any Subsidiary of the Company is a party or
(d) applicable Law.
Section 3.19 Intangible Property. The Company and its
Subsidiaries possess or have adequate rights to use all material
trademarks, trade names, patents, service marks, brand marks,
brand names, computer programs, databases, industrial designs and
copyrights necessary for the operation of the businesses of each
of the Company and its Subsidiaries (collectively, the
"Intangible Property"), except where the failure to possess or
have adequate rights to use such properties, individually or in
the aggregate, has not had and could not reasonably be expected
to have a Material Adverse Effect. All of the Intangible
Property is owned or licensed by the Company or its Subsidiaries
free and clear of any and all Liens, except those that,
individually or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any such Subsidiary has forfeited or
otherwise relinquished any Intangible Property which forfeiture,
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect. Except as set forth
on Schedule 3.19, the use of the Intangible Property by the
Company or its Subsidiaries does not, in any material respect,
conflict with, infringe upon, violate or interfere with or
constitute an appropriation of any right, title, interest or
goodwill, including any trademark, patent, service ▇▇▇▇,
copyright or any pending application therefor of any other person
and there have been no claims made and neither the Company nor
any of its Subsidiaries has received any notice of any claim or
otherwise knows that any of the Intangible Property is invalid or
conflicts with the asserted rights of any other person or has not
been used or enforced or has failed to have been used or enforced
in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Intangible Property, except for
any such conflict, infringement, violation, interference, claim,
invalidity, abandonment, cancellation or unenforceability that,
individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect. To the
Company's Knowledge, the Company will not suffer any Material
Adverse Effect with respect to Year 2000 non-compliance.
Section 3.20 Environmental Matters.
For purposes of this Agreement:
(i) "Environmental Laws" means all federal, state and
local laws, rules, regulations, ordinances, Orders and
decrees of any Governmental Entity, as now in existence
relating to pollution or the protection of human health,
safety or the indoor or outdoor environment (including
ambient air, surface water, groundwater, land surface,
subsurface strata, natural resources or wildlife) of any
jurisdiction in which the applicable party hereto owns or
operates assets or conducts business or owned or operated
assets or conducted business (whether or not through a
predecessor entity), including laws and regulations relating
to Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
generation or handling of Hazardous Materials, and any
similar laws, rules, regulations, ordinances, Orders and
decrees of any foreign jurisdiction in which the applicable
party hereto owns or operates assets or conducts business;
(ii) "Hazardous Materials" means (x) any petroleum,
crude oil or derivatives thereof or petroleum products,
radioactive materials (including naturally occurring
radioactive materials), asbestos in any form that is or
could become friable, urea formaldehyde foam insulation,
polychlorinated biphenyls or transformers or other equipment
that contain dielectric fluid containing polychlorinated
biphenyls, (y) any chemicals, materials or substances which
are now defined as or included in the definition of "solid
wastes," "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances" or "toxic
pollutants," or words of similar import, under any
Environmental Law and (z) any other chemical, material,
substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a
jurisdiction in which the Company or any of its Subsidiaries
operates.
(iii) "Release" means any spill, effluent,
emission, leaking, pumping, pouring, emptying, escaping,
dumping, injection, deposit, disposal, discharge, release,
dispersal, leaching or migration into the indoor or outdoor
environment, or into or out of any property owned, operated
or leased by the Company or its Subsidiaries; and
(iv) "Remedial Action" means all actions, including any
capital expenditures, required by a Governmental Entity or
required under any Environmental Law, or voluntarily
undertaken to (w) clean up, remove, treat, or in any other
way ameliorate or address any Hazardous Materials in the
indoor or outdoor environment; (x) prevent the Release or
threat of Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten to
endanger the public or employee health or welfare or the
indoor or outdoor environment; (y) perform pre-remedial
studies and investigations or post-remedial monitoring and
care pertaining or relating to a Release; or (z) bring the
Company or its Subsidiaries into compliance with any
Environmental Law.
Except as disclosed on Schedule 3.20 of the Company
Disclosure Schedule:
(a) The operations of the Company and its Subsidiaries have
been at all relevant time in the past, are, and as of each
Closing Date will be, in compliance with all Environmental Laws,
except where the failure to so comply, individually or in the
aggregate, has not had and could not reasonably be expected to
have a Material Adverse Effect;
(b) Neither the Company nor any of its Subsidiaries has
caused the generation, treatment, manufacture, processing,
distribution, use, storage, discharge, Release, transport,
disposal, handling, or arrangement for transport or disposal of
any Hazardous Materials at or from any of its properties or
facilities, except as has not had and could not reasonably be
expected to have a Material Adverse Effect;
(c) Neither the Company nor any of its Subsidiaries has
received any written notice from any Governmental Entity or other
third party alleging any violation by the Company or any of its
Subsidiaries of, or responsibility or liability of the Company or
any of its Subsidiaries under, any Environmental Law or for
personal injuries, Remedial Action or property damages, which has
had or could reasonably be expected to have a Material Adverse
Effect;
(d) The Company and its Subsidiaries are not subject to any
outstanding written Orders issued by, or contracts with, any
Governmental Entity or other person respecting (A) Environmental
Laws, (B) Remedial Action, (C) any Release or threatened Release
of a Hazardous Material or (D) an assumption of responsibility
for environmental liabilities of another person, except such
Orders or contracts the compliance with which, individually or in
the aggregate, has not had and could not reasonably be expected
to have a Material Adverse Effect.
Section 3.21 Insurance. Schedule 3.21 of the Company
Disclosure Schedule sets forth a list of the Company's and each
of its Subsidiaries' material insurance policies. Each of these
policies is in full force and effect and all premiums due with
respect to such policies have been paid. The Company maintains
insurance in such amounts, with such deductibles and exclusions,
and covering such risks as are in accordance with industry
practice for companies engaged in businesses similar to those of
the Company and each of its Subsidiaries (taking into account the
cost and availability of such insurance).
Section 3.22 Prepayments. Except as disclosed in Schedule
3.22, neither the Company nor any Subsidiary is obligated, by
virtue of a prepayment arrangement, make-up right under a
production sales Contract containing a "take or pay" or similar
provision, production payment or any other arrangement, to
deliver hydrocarbons, or proceeds from the sale thereof,
attributable to any of its properties at some future time without
then or thereafter being entitled to received payment of the
contract price therefor.
Section 3.23 Gas Imbalances. Except as disclosed in the
Company SEC Documents or Schedule 3.23, neither the Company nor
any Subsidiary has (i) any obligation to deliver gas from the Oil
and Gas Properties (or cash in lieu thereof) to other owners of
interests in those properties as a result of past production by
the Company, any Subsidiary or any of their predecessors in
excess of the share to which they were entitled nor (ii) any
right to receive deliveries of gas from the Oil and Gas
Properties (or cash in lieu thereof) from other owners of
interests in those properties as a result of past production by
the Company, any Subsidiary or any of their predecessors of less
than the share to which they were entitled in either case where
any such gas imbalance could reasonably be expected to have a
Material Adverse Effect.
Section 3.24 Reserve Report. A true, correct and complete
copy of the Reserve Report has been provided to Purchasers. The
Company's and each Subsidiary's ownership of the Oil and Gas
Properties described in the Reserve Report entitles the
respective owner to receive a percentage of the oil, gas and
other hydrocarbons produced from each well or unit equal to not
less than the percentage set forth in the Reserve Report as the
"Net Revenue Interest" for such well or unit and cause the
respective owner to be obligated to bear a percentage of the cost
of operation of such well or unit not greater than the percentage
set forth in the Reserve Report as the "Working Interest" for
such well or unit, and to the extent such percentages of
production which the respective owner is entitled to receive, and
shares of expenses which the respective owner is obligate to
bear, may change after the date of such report, such changes were
properly reflected (based on reasonable assumptions) in preparing
such report. All information supplied (i) by or on behalf of the
Company and its Subsidiaries to Netherland, ▇▇▇▇▇▇ & Associates
in connection with such firm's estimates of proved oil and gas
reserves attributable to the Oil and Gas Properties and the
preparation of the Reserve Reports and (ii) by the Company and
its Subsidiaries to ▇▇▇▇▇ ▇▇▇▇▇ Company in connection with its
1998 review of the Company's proved oil and gas reserves and the
Reserve Report was (at the time supplied or, with respect to
Netherland, ▇▇▇▇▇▇ & Associates, as modified or amended prior to
the issuance of the Company Reserve Report) true and correct in
all material respects and the Company has no Knowledge of any
material errors in such information that existed at the time of
such issuance. Except for changes (including changes in
commodity prices) generally affecting the oil and gas industry
and dispositions of Oil and Gas Properties since the date
thereof, there have been no changes in respect of the matters
addressed in the Reserve Reports that, individually or in the
aggregate, (x) have had or could reasonably be expected to have a
Material Adverse Effect, (y) have impaired or could reasonably be
expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any
material respect, or (z) have or could reasonably be expected to
delay in any material respect or prevent the consummation of any
of the transactions contemplated by any of the Transaction
Documents. Set forth in Schedule 3.24 of the Company Disclosure
Schedules is a list of all material Oil and Gas Properties that
were included in the Reserve Reports that have been disposed of
prior to the date of this Agreement.
Section 3.25 Reverse Stock Split. On December 8, 1998,
the Company's shareholders approved the 1 for 3 reverse stock
split recommended by the Board and the appropriate amendments to
the Company's Restated Articles of Incorporation giving effect to
such reverse stock split were filed with the Secretary of State
of the State of Texas.
Section 3.26 No Brokers or Finders. No agent, broker,
finder or investment or commercial banker, or other Person or
firm engaged by or acting on behalf of the Company or its
Subsidiaries in connection with the negotiation, execution or
performance of this Agreement is or will be entitled to any
brokerage or finder's or similar fee or other commission as a
result of this Agreement, the other Transaction Documents or the
transactions contemplated hereby or thereby, other than any such
fees or commissions that have been disclosed to Purchasers and as
to which the Company shall have full responsibility.
Section 3.27 Vote. Except for the shareholder approval
necessary to permit the Warrants to be exercisable for Common
Stock instead of cash, there are no approvals required of the
holders of any class or series of shares or stock of the Company
necessary to approve this Agreement or any other Transaction
Documents and the transactions contemplated hereby or thereby.
Section 3.28 Amendment to Rights Agreement. The Board has
taken all necessary action to amend the Rights Agreement, dated
as of September 10, 1996, as amended (the "EEX Rights
Agreement"), between the Company and ▇▇▇▇▇▇ Trust Company of New
York, as Rights Agent, so that the Purchasers are not "acquiring
persons" thereunder and that none of the execution and delivery
of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby (including
the exercise of the Warrants) will cause (i) the rights issued
pursuant to the Rights Agreement to become exercisable under the
Rights Agreement or (ii) the distribution of Rights Certificates
(as defined in the Rights Agreement).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser represents and warrants to the Company as
follows:
Section 4.1 Organization, Standing and Power. It is a
limited partnership duly organized, validly existing, and in good
standing under the laws of Delaware (in the case of Warburg) or
the Netherlands (in the case of the Purchasers other than
Warburg) and has all requisite partnership power and authority to
own, lease, and operate its properties and to carry on its
business as now being conducted and to execute and deliver this
Agreement and the other Transaction Documents to which such
Purchaser is a party and consummate the transactions contemplated
hereby and thereby.
Section 4.2 Authority; Approvals.
(a) (i) The execution and delivery of this Agreement and
the other Transaction Documents to which it is a party and the
purchase of the Securities to be purchased by it have been duly
and properly authorized, (ii) this Agreement and the other
Transaction Documents to which it is a party have been duly
executed and delivered by it or on its behalf and, assuming the
accuracy of the representations and warranties of the Company in
Section 3.4 hereof, constitute the valid and legally binding
obligations of such Purchaser, enforceable against it in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights
and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law); (iii) the purchase of the Securities to be purchased by it
does not conflict with or violate (1) its organizational
documents or (2) assuming the approvals referred to in
Section 4.2(b) are duly and timely made or obtained, any Law
applicable to it in a manner that could reasonable be expected to
materially hinder or impair the completion of any of the
transactions contemplated hereby; and (iv) the purchase of
Securities to be purchased by it does not impose any penalty or
other onerous condition on such Purchaser that could reasonably
be expected to materially hinder or impact the completion of any
of the transactions contemplated hereby.
(b) No Approval from any Governmental Entity is required by
or with respect to such Purchaser in connection with the
execution and delivery by such Purchaser of this Agreement or any
other Transaction Document to which it is a party or the
consummation by such Purchaser of the transactions contemplated
hereby or thereby, except for: (A) if applicable, the filing of
a notification report by such Purchaser under the HSR Act, and
the expiration or termination of the applicable waiting period
with respect thereto; (B) such Approvals as may be required by
any foreign securities, corporate or other Laws; and (C) any such
Approval the failure of which to be made or obtained (1) has not
impaired and could not reasonably be expected to impair the
ability of such Purchaser to perform its obligations under any of
the Transaction Documents in any material respect and (2) could
not reasonably be expected to delay in any material respect or
prevent the consummation of any of the transactions contemplated
by any of the Transaction Documents.
Section 4.3 Litigation. As of the time of execution of
this Agreement, there is no claim, action, suit, inquiry,
judicial or administrative proceeding pending or, to the
Knowledge of such Purchaser, threatened against it relating to
any of the transactions contemplated by this Agreement or any
other Transaction Document.
Section 4.4 Investment Intent. The Securities to be
acquired by it hereunder and any Underlying Shares to be acquired
upon the exercise, conversion or exchange of such Securities are
being acquired for its own account for investment and with no
intention of distributing or reselling such Securities or
Underlying Shares or any part thereof or interest therein in any
transaction which would be in violation of the securities Laws of
the United States of America or any applicable state or any
foreign country or jurisdiction.
Section 4.5 Transfer Restrictions. If such Purchaser
should decide to dispose of any of the Securities to be purchased
by it or any Underlying Shares to be issued to it upon the
exercise or exchange of such Securities, such Purchaser
understands and agrees that it may do so only pursuant to an
effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities
Act. In connection with any offer, resale, pledge or other
transfer (individually and collectively, a "Transfer") of any
Securities or Underlying Shares other than pursuant to an
effective registration statement, the Company may require that
the transferor of such Securities or Underlying Shares provide to
the Company an opinion of counsel which opinion shall be
reasonably satisfactory in form and substance to the Company, to
the effect that such Transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any
applicable state or foreign securities Laws. Such Purchaser
agrees to the imprinting, so long as appropriate, of
substantially the following legend on certificates representing
the Securities and any Underlying Shares:
THE SECURITIES (THE "SECURITIES") EVIDENCED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT
IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SECURITIES
EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR
(B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT. IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE
TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN
SECURITIES LAW.
The legends set forth above may be removed if and when the
Securities or Underlying Shares, as the case may be, represented
by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or the opinion of
counsel referred to above has been provided to the Company. The
Share certificates and Warrants shall also bear any additional
legends required by applicable federal, state or foreign
securities Laws, which legends may be removed when, in the
opinion of counsel to the Company, the same are no longer
required under the applicable requirements of such securities
Laws. Such Purchaser agrees that, in connection with any
Transfer of Securities by it pursuant to an effective
registration statement under the Securities Act, it will comply
with all prospectus delivery requirements of the Securities Act.
The Company makes no representation, warranty or agreement as to
the availability of any exemption from registration under the
Securities Act with respect to any resale of Securities or
Underlying Shares.
Section 4.6 Purchaser Status. Such Purchaser represents
and warrants to, and covenants and agrees with the Company that
(i) at the time it was offered the Securities, it was, (ii) at
the date hereof, it is, and (iii) at the Closing Date, it will
be, an accredited investor as defined in Rule 501(a) under the
Securities Act, and has such knowledge, sophistication and
experience in business and financial matters so as to be capable
of evaluating the Company and an investment in the Securities,
and is able to bear the economic risk of such investment.
Section 4.7 No Brokers or Finders. No agent, broker,
finder or investment or commercial banker, or other Person or
firm engaged by or acting on behalf of such Purchaser in
connection with the negotiation, execution or performance of this
Agreement is or will be entitled to any brokerage or finder's or
similar fee or other commission as a result of this Agreement,
other than any such fees or commissions that have been disclosed
to the Company and as to which such Purchaser shall have full
responsibility.
Section 4.8 Ownership of Shares. Except as set forth in
Schedule 4.8 of the Company Disclosure Schedule, neither such
Purchaser nor any of its Affiliates is the beneficial owner of
any Capital Stock in the Company.
Section 4.9 Financing. Upon the terms and subject to the
conditions of this Agreement, the Purchasers have available to
them and at the Closing will have all funds necessary to satisfy
its obligations to purchase the Securities hereunder.
ARTICLE V.
COVENANTS
Section 5.1 Confidentiality. For a period of three years
from the date of this Agreement, the Purchasers will refrain, and
will cause their respective Representatives to refrain from
disclosing to any other Person any Confidential Information.
Disclosure of Confidential Information will not be deemed to be a
breach of this Section 5.1 if such disclosure is made with the
consent of the Company or pursuant to a subpoena or order issued
by a court of competent jurisdiction or by a judicial or
administrative or legislative body or committee; provided that,
upon receipt by the Purchasers of any subpoena or order covering
Confidential Information of the Company, the Purchasers will
promptly notify the Company of such subpoena or order. If this
Agreement is terminated, the Purchasers further agree that they
will, upon the request of the Company, promptly deliver to the
Company all Confidential Information, including all copies,
reproductions and extracts thereof in their possession or in the
possession of any of their Representatives, and, upon the request
of the Company, the Purchasers and their Representatives will
destroy all other documents or records prepared by the Purchasers
or their Representatives that are based on, derived from or
otherwise reflect the Confidential Information. Each of the
Company and the Purchasers hereby agree that the Letter Agreement
dated June 16, 1998 between the Company and Warburg relating to
confidentiality and certain other matters is hereby terminated.
Section 5.2 Affirmative Covenants of the Company. The
Company hereby covenants and agrees that, until the earlier of
the Closing or the termination of this Agreement, unless
otherwise expressly contemplated by this Agreement or consented
to in writing by Purchasers (such consent not to be unreasonably
withheld), the Company will and will cause each of its
Subsidiaries to:
(a) operate its business in the usual and ordinary course
consistent with past practices except as contemplated by this
Agreement or as provided in or contemplated by Schedule 5.2(a) of
the Company Disclosure Schedule;
(b) use commercially reasonable efforts to maintain and
keep its properties and assets in as good a repair and condition
as at present, ordinary wear and tear excepted; and
(c) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of
coverage to that currently maintained.
Section 5.3 Negative Covenants of the Company.
(a) Except as expressly contemplated by this Agreement or
otherwise consented to in writing by Purchasers, from the date of
this Agreement until earlier of the Closing or the termination of
this Agreement, the Company shall not do, and shall not permit
any of its Subsidiaries to do, any of the following:
(i) except as set forth in Schedule 5.3(a)(i) of the
Company Disclosure Schedule, acquire or agree to acquire
(whether pursuant to a definitive agreement, a non-binding
letter of intent or otherwise), by merging or consolidating
with, by purchasing an equity interest in or a portion of
the assets of (including by a "farm-in" of any properties or
interests), or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other Person (other than
from a Subsidiary of the Company or the purchase of assets
from suppliers or vendors in the ordinary course of business
and other than assets which, individually or in the
aggregate, are not material to the business or operations of
the Company or any of its Subsidiaries);
(ii) except as set forth in Schedule 5.3(a)(ii) of the
Company Disclosure Schedule sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, or agree to sell,
lease, exchange, mortgage, pledge, transfer or otherwise
dispose of (including by a "farm-out" of any properties or
interests), any of its assets or any assets of any of its
Subsidiaries, except for pledges or dispositions of assets
in the ordinary course of business and except for assets
which, individually or in the aggregate, are not material to
the business or operations of the Company or any of its
Subsidiaries;
(iii) except as set forth in Schedule 5.3(a)(iii)
of the Company Disclosure Schedule, adopt or propose to
adopt any amendments to the Company's Articles of
Incorporation of Bylaws; other than transactions between the
Company and one or more of its Subsidiaries or among one or
more of its Subsidiaries, adopt resolutions authorizing a
liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization of
the Company or any Subsidiary; or make any other material
changes in the Company's capital structure;
(iv) (i) except as set forth in Schedule 5.3(a)(iv) of
the Company Disclosure Schedule change any of its material
accounting methods, principles, practices or policies or
(ii) make or rescind any express or deemed election relating
to Taxes, settle or compromise any claim, action, suit,
Litigation, audit or controversy relating to Taxes, or
change any of its methods of reporting income or deductions
for federal or other income Tax purposes from those employed
in the preparation of the federal or other income Tax
Returns or other Tax Returns for the taxable year ending
December 31, 1997, except, in the case of either clause (i)
or clause (ii), as may be required by Law or GAAP;
(v) other than borrowings in the ordinary course under
or permitted by the Credit Agreement, incur any obligation
for borrowed money or purchase money indebtedness, whether
or not evidenced by a note, bond, debenture or similar
instrument or under any financing lease, whether pursuant to
a sale-and-leaseback transaction or otherwise;
(vi) except as set forth in Schedule 5.3(a)(vi) of the
Company Disclosure Schedule, make any loans or advances to
any Person, other than (i) advances to employees in the
ordinary and usual course of business and (ii) transactions
among or between the Company and its Subsidiaries in the
ordinary and usual course of the Company's business;
(vii) declare or pay any dividend or make any other
distribution (whether in cash, stock or property) with
respect to its Capital Stock (or other voting or equity
securities or interests, as applicable), other than
dividends paid by any Subsidiary to the Company or another
Subsidiary in the ordinary and usual course of the Company's
business;
(viii) except as set forth in Schedule 5.3(a)(viii)
of the Company Disclosure Schedule, enter into, adopt, or
(except as may be required by law) amend or terminate any
Benefit Plans; approve, implement or amend any employment
severance arrangements (other than payments made under the
Company's severance plans in effect as of the date hereof)
or discharge or, except to replace any officer or executive
management personnel who have departed on substantially the
same or lesser terms as the departed Person, hire any
officers or executive management personnel; authorize or
enter into any employment, severance, consulting services or
other agreement with any officers or executive management
personnel; authorize or make any payment to any director,
officer, shareholder or employee, or any Affiliate of the
foregoing (whether as a loan or otherwise) except for
regular compensation and other payments consistent with past
practice; or except at set forth in Section 5.3(a) (viii) of
the Company Disclosure Schedule, change the compensation or
benefits provided to any director, officer or employee as of
the date hereof;
(ix) materially amend, terminate or fail to use all
commercially reasonable efforts to maintain in full force
and effect and, if applicable, renew any Material Contract
(provided that the Company and its Subsidiaries shall not be
required to renew any Material Contract on terms that are
less favorable to the Company or its Subsidiaries), or fail
to use all commercially reasonable efforts to prevent a
default in any material respect (or take or omit to take any
action that, with or without the giving of notice or passage
of time, would constitute a material default) under any
Material Contract;
(x) split, combine, reclassify or amend any term of
any of its shares or capital stock (or other voting or
equity securities or interests, as applicable);
(xi) except as set forth in Schedule 5.3(a)(xi) of the
Company Disclosure Schedule, (i) issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase, or
otherwise) any of its shares or Capital Stock or other
securities other than (A) as contemplated herein or
(B) pursuant to awards issued and outstanding as of the date
hereof under the Stock Plans or as required under the terms
of any other security of the Company outstanding as in
effect as of the date of this Agreement, or (ii) purchase or
otherwise acquire any of its shares or capital stock,
employee or director stock options, warrants or other equity
securities or debt securities other than pursuant to the
terms thereof as in effect as of the date of this Agreement;
or
(xii) agree in writing or otherwise to do any of
the foregoing.
Section 5.4 Approvals. The Company and Purchasers each
agree to cooperate and use all commercially reasonable efforts to
obtain (and will promptly prepare all registrations, filings and
applications, requests and notices preliminary to) all Approvals
that may be necessary or which may be reasonably requested by the
Company or Purchasers to consummate the transactions contemplated
by this Agreement and the other Transaction Documents.
Section 5.5 HSR Act Notification. To the extent the HSR
Act will be applicable to the acquisition of the Securities or
the Underlying Shares by Purchasers, each of the parties hereto
shall (b) file or cause to be filed, as promptly as practicable
after the execution and delivery of this Agreement and in no
event later than five Business Days after the date of this
Agreement, with the Federal Trade Commission and the United
States Department of Justice, all reports and other documents
required to be filed by such party under the HSR Act concerning
the transactions contemplated hereby and (c) promptly comply with
or cause to be complied with any requests by the Federal Trade
Commission or the United States Department of Justice for
additional information concerning the Transaction, in each case
so that the waiting period applicable to this Agreement and the
Transaction contemplated hereby under the HSR Act shall expire as
soon as practicable after the execution and delivery of this
Agreement. Each party hereto agrees to request, and to cooperate
with the other party or parties in requesting, early termination
of any applicable waiting period under the HSR Act. If after the
Closing and until the earlier to occur of the date on which the
Warrants are fully exercised and the date on which all
outstanding Warrants are no longer exercisable, further filings
are required under the HSR Act so that Purchasers may acquire the
Underlying Shares or otherwise acquire securities pursuant to the
Transaction Documents, including pursuant to Sections 5.14 and
5.15 hereof, the Company will upon the written request of a
Purchaser, and the Purchasers will upon the written request of
the Company, (i) file or cause to be filed, as promptly as
practicable after the receipt of such notice and in no event
later than fifteen Business Days after the receipt of such notice
with the Federal Trade Commission and the United States
Department of Justice, all reports and other documents required
to be filed by such party under the HSR Act concerning the
transactions contemplated in such notice, (ii) promptly comply
with or cause to be complied with any requests by the Federal
Trade Commission or the United States Department of Justice for
additional information so that the waiting period applicable
thereto under the HSR Act shall expire as soon as practicable,
and (iii) cooperate with the other Parties in requesting, early
termination of any applicable waiting period under the HSR Act.
The Company will reimburse the Purchasers for any filing fees in
connection with the first such filings by the Purchasers.
Section 5.6 Notification of Certain Matters. The Company
shall give prompt notice to Purchasers, and Purchasers shall give
prompt notice to the Company, of (a) the occurrence, or failure
to occur, of any event that causes any representation or warranty
contained in any Transaction Document to be untrue or inaccurate
in any material respect at any time from the date of this
Agreement to the Closing Date and (b) any failure of the Company
or Purchasers to comply with or satisfy, in any material respect,
any covenant, condition or agreement to be complied with or
satisfied by it under any Transaction Document. The provisions
of this Section 5.6 shall survive for so long as any
representation, warranty, covenant, or agreement shall survive
hereunder.
Section 5.7 Board of Directors.
(a) The Company shall take, or cause to be taken, such
action as may be necessary or advisable to ensure that
simultaneously with the Closing the Board shall consist of six
directorships, one of which shall be vacant pending designation
by Warburg, ▇▇▇▇▇▇ Equity Partners, L.P. ("Warburg") of one
individual to serve as a member of the Board of Directors as a
part of the class of directors standing for election at the
Company's 1999 annual meeting.
(b) At any meeting of the shareholders of the Company held
for the purpose of electing directors of the Company, Warburg
shall be entitled to nominate for election to the Board, and the
Company shall use its reasonable best efforts to cause to be
nominated for election and to be elected to the Board, the
following number of individuals:
(i) For so long as either (i) the Purchasers own 50%
or more of the Shares or (ii) the shares of Common Stock
Beneficially Owned by the Purchasers (calculated after
giving effect to the full exercise of all outstanding
Securities then owned by the Purchasers at the exercise
price then in effect) is equal to or greater than fifteen
percent (15%) of the Company's issued and outstanding Common
Stock (also calculated after giving effect to the full
exercise of all outstanding Securities then owned by the
Purchasers at the exercise price then in effect), Warburg
shall be entitled to nominate for election to the Board that
number of individuals such that the aggregate number of
directors on the Board that represent Warburg after giving
effect to the election of such nominees shall equal the
greater of (i) one director and (ii) that number of
directors constituting fifteen percent (15%) of the total
Board seats of the Company after giving effect to the
election of such nominees of Warburg on the Board rounded
down to the nearest whole number of Board seats; provided,
however, that such number of directors shall be reduced by
the number of directors that have been elected by the
holders of the PS pursuant to Section 5(D) of the Statement
of Resolutions, if any of the PS is owned by any of the
Purchasers.
(ii) For so long as the shares of Common Stock owned by
the Purchasers (calculated on the basis set forth in
subparagraph (i) above) is less than fifteen percent (15%)
but more than five percent (5%) of the Company's issued and
outstanding Common Stock (calculated on the basis set forth
in subparagraph (i) above) and Warburg is not entitled to
elect directors pursuant to subparagraph (i) above, Warburg
shall be entitled to nominate one person for election to the
Board, unless at the time of such election the Board
includes a representative of Warburg and such director is
not up for re-election; and
(iii) For so long as the shares of Common Stock
owned by the Purchasers (calculated on the basis set forth
in subparagraph (i) above) is more than five percent (5%) of
the Company's issued and outstanding Common Stock
(calculated on the basis set forth in subparagraph (i)
above), the Company shall (x) permit an authorized
representative of Warburg to attend all meetings of the
Board as an observer, (y) upon the written request of
Warburg, provide Warburg with such notice of and other
information with respect to such meetings as are delivered
to the directors of the Company and (z) upon the written
request of Warburg, notify Warburg, within 10 days
thereafter, of the taking of any written action by the Board
in lieu of a meeting thereof. All expenses of Warburg's
observer shall be paid by Warburg.
(iv) In the event that one of Warburg's representatives
on the Board shall resign, be removed or otherwise become
unable to serve as director, then Warburg may promptly
designate a replacement for such representative, and the
Company shall take, or cause to be taken, such action as may
be necessary or advisable to ensure that such designated
replacement shall serve on the Board in the place of such
representative until the next scheduled meeting of
shareholders held for the purpose of electing directors. In
the event that one of Warburg's representatives on the Board
is unable to attend a meeting of the Board, Warburg shall be
entitled to designate an alternate to attend and observe
such meeting of the Board. All expenses of Warburg's
alternate will be paid by Warburg.
(v) Each of Warburg's representatives on the Board
(not including any alternates or observers) shall be
entitled to such compensation as is customarily paid by the
Company to the Company's outside directors.
(vi) The provisions of clauses (iv) and (v) of this
Section 5.7(b) shall survive for so long as any of the
provisions of clauses (i), (ii), or (iii) of this
Section 5.7(b) shall apply.
Section 5.8 Rights Agreements. The Company will not
further amend the EEX Rights Agreement in a manner, or adopt any
other Rights Agreement, that conflicts with the provisions
hereof, including the provisions of Sections 3.28 and 5.10 or is
more restrictive than the provisions hereof with respect to the
percentage of ownership of Capital Stock permitted to be owned by
Purchasers.
Section 5.9 Shareholders Meeting. The Company shall duly
call, give notice of, convene and hold a meeting of its
shareholders to be held within six months after the Closing, for
the purpose of obtaining shareholder approval and adoption under
the rules of the New York Stock Exchange to permit the Warrants
to be exercisable for Common Stock instead of cash (other than
the Series C Warrants which shall remain exercisable only for
cash unless the Company elects otherwise in the manner
contemplated by the Series C Warrants). The Company shall use
its reasonable best efforts to obtain such approval of the
shareholders of the Company and will comply with the requirements
of the Exchange Act and the New York Stock Exchange with respect
to the preparation of a proxy statement and the solicitation of
proxies, if any, in connection with such vote of the
shareholders; provided that no shareholder approval obtained
after the six month anniversary of the Closing shall be effective
for purposes of the Warrants. Prior to the meeting of the
Company's shareholders pursuant to this Section 5.9, the Company
shall file an additional listing application with the NYSE with
respect to the Underlying Shares (except with respect to the
Series C Warrants) and shall use its reasonable best efforts to
obtain the approval of the NYSE to the listing of such shares of
Common Stock.
Section 5.10 Standstill.
(a) The Purchasers, together with any 13d Group of which it
is a part, but excluding any investment company or affiliated
money management advisor registered under the Investment Company
Act of 1940, as amended, or the Investment Advisers Act of 1940,
as amended, agree that they shall not Beneficially Own any Voting
Stock or Common Stock of the Company other than (i) the Shares,
(ii) the Underlying Shares, (iii) all Common Stock and PS issued
as a dividend on PS (the "Dividend Shares"), (iv) Capital Stock
of the Company acquired pursuant to Section 5.14 or Section 5.15
and (v) shares of Common Stock, in addition to those described in
clauses (i), (ii), (iii) or (iv) above, not exceeding five
percent (5%) of the issued and outstanding Common Stock
(calculated at the date of determination), provided that in no
event shall the Purchasers Beneficially Own shares of Capital
Stock of the Company that would be entitled to cast thirty five
percent (35%) or more of the aggregate votes entitled to be cast
under ordinary circumstances with respect to the election of
directors of the Company, except as such ownership is a result of
(v) any repurchase of Capital Stock by the Company, (w) the
receipt, exercise or conversion of rights or other securities,
including the Dividend Shares, issued in respect of the PS, the
Warrants or the Underlying Shares, (x) a Business Combination
between the Company and another Person approved by the Board and
in which any Purchaser owns, directly or indirectly, any Capital
Stock of such other Person prior to the approval by the Board of
such Business Combination, (y) Capital Stock of the Company
acquired pursuant to Section 5.14 or (z) Capital Stock of the
Company acquired as a result of the election by the Company under
the Series C Warrants to have such Warrants exercisable for
shares of Common Stock.
(b) The Purchasers shall not knowingly, after due inquiry,
sell any shares of Common Stock or the Warrants to any Person or
13d Group which would, immediately following such sale,
Beneficially Own in excess of ten percent (10%) of the issued and
outstanding Voting Stock or Common Stock of the Company; provided
that, if such Person or 13d Group is known to the Purchasers to
be a competitor of the Company in the oil and gas exploration and
production industry, the foregoing restriction shall apply if
such Person or 13d Group would, immediately following such sale,
Beneficially Own in excess of five percent (5%) of the issued and
outstanding Voting Stock or Common Stock of the Company.
(c) If the Purchasers are not in violation of this Section
5.10, the restrictions set forth in Section 5.10(b) shall not
apply to any transfer of Warrants or Common Stock (i) to any
partner or wholly-owned subsidiary of any Purchaser that agrees
to be bound by the provisions this Section 5.10 as if it were a
Purchaser for purposes of this Section, (ii) upon consummation of
a business combination or similar transaction involving the
Company, or an agreement relating thereto being approved by the
Board, (iii) pursuant to a tender or exchange offer approved by,
or recommended by, the Board or pursuant to which the Board has
formally expressed no opinion and remains neutral toward such
tender or exchange offer subject to the provisions of Rule 14d-9
promulgated under the Exchange Act, (iv) pursuant to a
distribution by a Purchaser, substantially pro-rata, to equity
owners of such Purchaser, or (v) pursuant to a bona fide
underwritten public offering in which the Purchasers use
reasonable efforts to obtain an agreement by the underwriters to
make a good faith effort to prevent the sale to any one Person of
more than five percent (5%) of the issued and outstanding Voting
Stock or Common Stock of the Company.
(d) The restrictions set forth in Section 5.10(b) shall
terminate upon the first to occur of (i) a Change of Control,
(ii) the redemption by the Board of rights granted under the EEX
Rights Agreement or any similar agreement subsequent entered into
or adopted by the Company (each, a "Rights Agreement"), and
(iii) the Board's permitting, by amendment or waiver of any
Rights Agreement or otherwise, of any Non-financial Person to
Beneficially Own twenty percent (20%) or more, or any Financial
Person to Beneficially Own more than thirty-five percent (35%),
of the Voting Stock of the Company.
(e) In connection with any matter in which the Purchasers
both (i) have voting rights which are counted together with the
voting rights of the Voting Stock or Common Stock of the Company
and (ii) do not have voting rights as a holder of the Shares
counted separately as a class, the number of votes which the
Purchasers shall be entitled to cast at their sole discretion
shall not exceed one vote fewer than twenty percent (20%) of the
aggregate number of votes entitled to be cast thereon by the
Common Stock and all other classes of Capital Stock of the
Company entitled to vote on such matter, less the votes entitled
to be cast by any non-Purchaser constituting a member of any 13d
Group of which Purchaser is a member. If Purchaser would
otherwise be entitled to cast votes in excess of the number
calculated pursuant to the previous sentence, then the balance of
such votes shall be cast for, against or abstain in respect of
such matter in the same proportion as the votes cast for, against
or abstain by all other shareholders of the Company.
(f) The Purchasers shall not participate in or be a member
of any 13d Group (other than a 13d Group composed solely of
themselves and their affiliates) with respect to the Voting Stock
or Common Stock of the Company.
(g) The Purchasers shall be prohibited from seeking,
proposing or making any public statement regarding a tender offer
or Business Combination involving the Company. The Purchasers
shall use all reasonable efforts to promptly notify the Company
if any of the Purchasers' Board representative, observer or
alternate is approached with respect to or made aware of a
proposal regarding any of the foregoing.
(h) The Purchasers shall not be a participant in a proxy
solicitation with respect to the Capital Stock of the Company or
subject its shares of Capital Stock of the Company to voting
trusts or similar voting agreements.
(i) All of the provisions of this Section 5.10 shall
terminate and be of no further force or effect upon the earliest
to occur of (i) any date on or after the tenth anniversary of the
Closing on which the Market Price per share of the Common Stock
is at or below twelve dollars ($12.00) (provided that such price
shall be adjusted in same manner as the Exercise Price as defined
in the Warrants), (ii) any date on which the Purchasers and any
13d Group of which they are a member shall Beneficially Own less
than ten percent (10%) of the issued and outstanding Common Stock
of the Company, (iii) a Change of Control of the type described
in clause (a) of the definition thereof, (iv) a redemption by the
Board of any rights granted under any Rights Agreement, and
(v) the Board permitting by amendment or waiver of any Rights
Agreement or otherwise, any Non-financial Person to Beneficially
Own twenty percent (20%) or more, or any Financial Person to
Beneficially Own more than thirty-five percent (35%), of the
Voting Stock of the Company.
(j) The Board shall be entitled to waive in writing the
Purchasers' compliance with any or all of the provisions of this
Section 5.10.
Section 5.11 Registration Rights Agreement. The Company
agrees to enter into a Registration Rights Agreement in
substantially the form attached hereto as Exhibit 7.2(b)(iv).
Section 5.12 Use of Proceeds. The Company shall use the
proceeds from the sale of the Securities for the purposes of
funding exploration and production appraisal and development
activities, for working capital and for general corporate
purposes, and not for the purpose of purchasing or otherwise
acquiring securities.
Section 5.13 Share Repurchase Program. Until the earlier
to occur of the tenth anniversary of the Closing and the date on
which the Warrants are no longer outstanding, the Company will
not, at any time when the market price of the Company's Common
Stock is less than $12 per share (as such price is adjusted from
time to time in the same manner as the Exercise Price pursuant to
the Warrants), conduct any share repurchase or redemption program
or other acquisition of Common Stock involving, in the aggregate
from the date hereof, an amount greater than $25 million plus the
amount set forth on Schedule 5.13 available as of the date hereof
under the Company's existing publicly announced share repurchase
program.
Section 5.14 Change of Control. If a Change of Control
occurs at any time prior to the sixth anniversary of the Closing
Date, the Company shall, on or prior to the date of such Change
of Control, give written notice of the Change of Control and
state in such notice the consideration the Purchasers may receive
per Unit in accordance with the provisions of this Section 5.14
(a "Notice of Change of Control") to the Purchasers and the
Purchasers shall have the right to exchange all or, to the extent
provided for herein, a part of the Securities held by the
Purchasers on the Change of Control Exchange Date for shares of
Common Stock (or such other consideration as is provided for
herein) on the terms and conditions set forth below:
(i) Upon receipt of a Notice of Change of Control, one
or more Purchasers may on or prior to the later of (x) the
30th day following such Purchasers' receipt of a Notice of
Change of Control or (y) the 10th day following the
consummation of such Change of Control, give notice (a
"Purchaser Election Notice") to the Company (including any
successor resulting from such Change of Control) that such
Purchasers have elected to exchange the number of Units
indicated in the Purchaser Election Notice for the
consideration provided for therein on the date specified in
the Purchaser Election Notice (the "Change of Control
Exchange Date"), which Change of Control Exchange Date shall
be no less than five Business Days nor more than twenty
Business Days following the Company's receipt of the
Purchaser Election Notice; provided, however, that the
Change of Control Exchange Date shall be delayed to the
extent necessary to satisfy the requirements of the HSR Act
or applicable securities laws.
(ii) On the Change of Control Exchange Date, the
Purchasers shall tender to the Company the Units specified
in the Purchaser Election Notice and shall receive from the
Company 18.6047 duly authorized, validly issued, fully paid
and non assessable shares of Common Stock per Unit tendered
(such number of shares of Common Stock to be issued per Unit
shall be adjusted from time to time after Closing in the
same proportion as the number of shares of Common Stock
acquirable upon exercise of the Warrants is adjusted
pursuant to the terms of the Warrants).
(iii) In lieu of receiving shares of Common Stock
pursuant to subsection (ii) of this Section 10.14, the
Purchasers shall be entitled to receive the number of shares
of stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such Change
of Control) upon exchange of the Units in accordance with
subsection (ii) above would have been entitled to receive
upon such Change of Control. In determining the kind and
amount of stock, securities or other property receivable
upon consummation of such Change of Control, if the holders
of Common Stock have the right to elect the kind or amount
of consideration receivable upon consummation of such Change
of Control, then the Purchasers shall have the right to make
a similar election as of the Change of Control Exchange Date
with respect to the number of shares of stock or other
securities or property into which the Units shall be
exchangeable.
(iv) The Company shall be prohibited from approving or
consummating any transaction that would result in a Change
of Control unless the Company's compliance with its
obligations upon the exercise of Purchasers' rights under
this Section 5.14 will not violate any applicable law and
will not breach any material agreement to which the Company
or any of its Subsidiaries is a party, and if the Company is
to merge with or into another entity in connection with a
Change of Control, then the Company shall obtain prior to
the consummation of such merger the written agreement of
such other entity that it will comply with the applicable
obligations hereunder, including this Section 5.14 and the
Company shall deliver such agreement to Purchasers.
(v) Notwithstanding subsection (ii) of this Section
10.14, if prior to the Change of Control Exchange Date, the
PS shares have been redeemed by the Company, then Purchasers
may elect (by so indicating) in the Purchaser Election
Notice to either (A) in lieu of tendering the number of
shares of PS referred to in clause (iii) of the definition
of Unit, tender the amount of cash that Purchasers received
from the Company in respect of such number of shares of PS
upon such redemption or (B) in lieu of tendering the number
of shares of PS referred to in clause (iii) of the
definition of Unit, elect that the Company reduce the number
of shares of Common Stock (or if subsection (iii) of this
Section 10.14 is applicable then such other consideration)
deliverable to the Purchasers by the number of shares of
Common Stock (or such other consideration) having an
aggregate Market Price as of the date of the consummation of
the Change of Control equal to the aggregate cash
consideration that Purchasers would have had to pay pursuant
to clause (A) of this subsection (v) of Section 10.14.
(vi) Notwithstanding subsection (ii) of this Section
10.14, if upon the consummation of the exchange pursuant to
subsection (ii), Purchasers' ownership of Common Stock would
result in a change of control that would cause an event of
default under the Credit Agreement (without regard to the
effects of any amendments or supplements to the Credit
Agreement made after the date hereof that reduces the level
of stock ownership required to result in a change of control
for purposes of the Credit Agreement) and if an event of
default would not otherwise occur or exist, then on the
Change of Control Exchange Date, the Company may elect to
reduce the number of shares of Common Stock issued pursuant
thereto to the extent, but only to the extent, necessary to
avoid an event of default under the Credit Agreement, and in
lieu of such shares of Common Stock shall pay to the
Purchasers in cash an amount equal to the aggregate Market
Price of such shares of Common Stock as at the date of
consummation of such Change of Control.
(vii) In connection with the exchange of Units for
Common Stock (or other consideration, if applicable) on the
Change of Control Exchange Date, the Company shall deliver
an opinion of its regular outside securities counsel, or
other counsel reasonably satisfactory to Purchasers,
covering such matters as Purchasers reasonably request and
shall provide such other incidental documentation reasonably
requested by Purchasers that is customary for such a
transaction.
Section 5.15 Preemptive Rights. Until the earlier to
occur of the tenth anniversary of the Closing and the date the
Purchasers or any 13d Group of which they are a member
Beneficially Owns less than 10% of the outstanding Common Stock
of the Company.
(a) The Company hereby grants to each of the Purchasers the
right to purchase a pro rata share of New Securities which the
Company may, from time to time, propose to issue, sell or grant.
Each Purchasers' pro rata share, for purposes of this right, is
the proportion that (i) the number of shares of Fully-Diluted
Common Stock then owned by such Purchaser immediately prior to
the issuance of such New Securities bears to (ii) the total
number of shares of Fully-Diluted Common Stock immediately prior
to the issuance of such New Securities.
(b) If the Company proposes to undertake an issuance of New
Securities, it shall give each Purchaser written notice of its
intention, describing the type of New Securities, and their price
and the general terms upon which the Company proposes to issue
the same. Each Purchaser shall have 10 days after such notice is
deemed delivered to agree to purchase up to such Purchaser's pro
rata share of such New Securities for the price and upon the
terms specified in the notice by giving written notice to the
Company and stating the quantity of New Securities to be
purchased.
(c) With respect to that portion of the New Securities that
the Purchasers fail to exercise their right to purchase within
such 10-day period, the Company shall have 90 days thereafter to
sell such New Securities at a price and upon terms no more
favorable to the purchasers thereof than specified in the
Company's notice to the Purchasers pursuant to Section 5.15(b)
above. If the Company has not sold within such 90-day period the
New Securities in accordance with the foregoing, the Company
shall not thereafter issue or sell any New Securities without
first again offering such securities to the Purchasers in the
manner provided above.
Section 5.16 Allocation to Stated Surplus. In connection
with the issuance of the Shares, the Board shall determine that
the amount allocable to stated capital in respect of such Shares
shall not exceed $0.01 per Share.
Section 5.17 Cooperation. The Company and the Purchasers
shall cooperate in good faith to establish promptly the
appropriate allocation of the Purchase Price between the Shares
and the Warrants.
ARTICLE VI.
CONDITIONS PRECEDENT TO CLOSING
Section 6.1 Conditions Precedent to Each Party's
Obligation. The respective obligations of Purchasers and the
Company to effect the transactions contemplated hereby are
subject to the satisfaction on or prior to the Closing Date of
the following conditions:
(a) Approvals. All Approvals of, or expirations of waiting
periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement
shall have been filed, occurred, or been obtained, as applicable,
including the expiration or termination of any applicable waiting
period under the HSR Act.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any
Governmental Entity that makes the consummation of the
transactions contemplated hereby illegal.
Section 6.2 Conditions Precedent to Obligation of
Purchasers. The obligation of Purchasers to effect the
transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived, in whole
or in part, by Purchasers:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall
be true and correct in all respects (provided that, for purposes
of this Section 6.2(a), any representation or warranty of the
Company contained herein that is qualified by a materiality
standard or a Material Adverse Effect qualification shall be read
without regard to any such qualifications as if such
qualifications were not contained therein) as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date except for such failures which, individually or
in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect, and Purchasers shall
have received a certificate to the foregoing effect signed on
behalf of the Company and its Subsidiaries by the chief executive
officer or by the chief financial officer of the Company.
(b) Performance of Obligations. The Company and its
subsidiaries shall have performed in all material respects all
obligations required to be performed by it or them under this
Agreement prior to the Closing Date, and Purchasers shall have
received a certificate to such effect signed on behalf of the
Company and its Subsidiaries by the chief executive officer or by
the chief financial officer of the Company.
(c) No Adverse Action or Decision. There shall be no
action, suit, investigation or proceeding, pending or threatened,
against or affecting the Company or any of its Subsidiaries or
any of their respective properties or rights, or any of their
Affiliates, officers or directors, before any court, arbitrator
or administrative or governmental body which (i) seeks to
restrain, enjoin or prevent the consummation of or otherwise
affect the transactions contemplated by this Agreement or the
other Transaction Documents or (ii) questions the validity or
legality of any such transaction or seeks to recover damages or
to obtain other relief in connection with any such transaction.
(d) Consents Under Agreements. Purchasers shall have been
furnished with evidence of all consents or approvals required to
be obtained by the Company or any of its Subsidiaries with
respect to the consummation of each of the transactions
contemplated by this Agreement the failure of which to obtain
reasonably could be expected to result in a Material Adverse
Effect, and each such consent or approval shall be unconditional.
(e) Legal Opinions. Purchasers shall have received
(i) from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, general counsel of the Company and
its Subsidiaries, an opinion dated the Closing Date, in form and
substance reasonably acceptable to the Purchasers, and (ii) from
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to the Company
and its Subsidiaries, or other counsel to the Company and its
Subsidiaries reasonably acceptable to Purchasers an opinion dated
the Closing Date, in form and substance reasonably acceptable to
the Purchasers.
(f) Appointment to the Board. The Board shall have
appointed the nominee of Warburg to the Board in accordance with
Section 5.7.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by the
Company pursuant to Section 7.2(b) shall have been delivered.
(h) Statement of Resolution. The Statement of Resolution
shall have been filed with the Texas Secretary of State.
Section 6.3 Conditions Precedent to Obligations of
Company. The obligation of the Company to effect the
transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived, in whole
or in part, by the Company:
(a) Representations and Warranties. The representations
and warranties of Purchasers set forth in this Agreement shall be
true and correct in all respects (provided that, for purposes of
this Section 6.3(a), any representation or warranty of Purchasers
contained herein that is qualified by a materiality standard or a
Material Adverse Effect qualification shall be read without
regard to any such qualifications as if such qualifications were
not contained therein) as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date
except for such failures which, individually or in the aggregate,
have not had and could not reasonably be expected to have a
Material Adverse Effect, and the Company shall have received a
certificate to the foregoing effect signed on behalf of
Purchasers by its general partner.
(b) Performance of Obligations of Purchasers. Purchasers
shall have performed in all material respects the obligations
required to be performed by it under this Agreement prior to the
Closing Date, and the Company shall have received a certificate
to such effect signed on behalf of Purchasers by its general
partner.
(c) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by
Purchasers pursuant to Section 7.2(a) shall have been delivered.
ARTICLE VII.
CLOSING
Section 7.1 Closing. Subject to the satisfaction or
waiver of the conditions set forth in Article VI, the purchase
and sale of the Securities to be purchased by Purchasers
hereunder (the "Closing") will take place at the offices of Akin,
Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, at 10:00 a.m., local
time, on the third Business Day following the satisfaction or
waiver (subject to applicable Law) of each of the conditions to
the obligations of the parties to effect the transactions to
occur at such Closing as set forth in Article VI, or on such
other date as mutually agreed to by the parties hereto. The date
on which the Closing occurs is herein referred to as the "Closing
Date". All closing transactions at the Closing shall be deemed to
have occurred simultaneously.
Section 7.2 Actions to Occur at the Closing.
(a) At the Closing, Purchasers shall deliver to the Company
the following:
(i) Purchase Price. An amount equal to the Purchase
Price for the Securities in accordance with Article II.
(ii) Certificates. The certificates described in
Sections 6.3(a) and 6.3(b).
(iii) Registration Rights Agreement. The
Registration Rights Agreement, duly executed by the
Purchasers.
(b) At the Closing, the Company shall deliver to Purchasers
(or to their respective designees as indicated otherwise) the
following:
(i) Share Certificates. Certificates representing the
Shares.
(ii) Warrants.
(A) The Series A Warrants, the form of which is
attached hereto as Exhibit 7.2(b)(ii)(A).
(B) The Series B Warrants, the form of which is
attached hereto as Exhibit 7.2(b)(ii)(B).
(C) The Series C Warrants, the form of which is
attached hereto as Exhibit 7.2(b)(ii)(C).
(iii) Registration Rights Agreement. The
Registration Rights Agreement, duly executed.
(iv) Certificates. The certificates described in
Sections 6.2(a) and 6.2(b).
(v) Consents Under Agreements. The original of each
consent or approval, if any, pursuant to Section 6.2(c).
(vi) Legal Opinions. The opinions of counsel referred
to in Section 6.2(d).
ARTICLE VIII.
TERMINATION
Section 8.1 Termination. This Agreement may be
terminated prior to the Closing:
(a) by mutual consent of Purchasers and the Company;
(b) by either Purchasers or the Company:
(i) in the event of a breach by the other party of any
representation, warranty, covenant or agreement contained in
this Agreement which (A) would give rise to the failure of a
condition set forth in Section 6.2 or 6.3, and (B) cannot be
cured or, if curable, has not been cured within 20 days (the
"Cure Period") following receipt by the breaching party of
written notice of such breach;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or
ruling or taken any other action (which order, decree, or
ruling Purchasers and the Company shall use all commercially
reasonable efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the
transactions contemplated by this Agreement, and such order,
decree, ruling, or other action shall have become final and
nonappealable; provided, however, that the right to
terminate this Agreement under this clause (ii) shall not be
available to any party whose breach of this Agreement has
been the cause of, or resulted in, such order, decree,
ruling or other action; or
(iii) if the Closing shall not have occurred by
February 15, 1999, provided, however, that the right to
terminate this Agreement under this clause (iii) shall not
be available to any party whose breach of this Agreement has
been the cause of, or resulted in, the failure of the
Closing to occur on or before such date.
The right of any party hereto to terminate this Agreement
pursuant to this Section 8.1 shall remain operative and in full
force and effect regardless of any investigation made by or on
behalf of any party hereto, any person controlling any such party
or any of their respective officers, directors, employees,
accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this
Agreement.
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement, written notice thereof shall
forthwith be given to the other party specifying the provision
hereof pursuant to which such termination is made, and this
Agreement (except for the provisions of this Section 8.2, and
Sections 5.1, 10.5, 10.6, 10.9, 10.10, 10.11, 10.12, and 10.13,
which shall survive such termination) shall forthwith become null
and void. Subject to the provisions of Section 10.5, in the
event of a termination of this Agreement by either the Company or
Purchasers as provided above, there shall be no liability on the
part of the Company or Purchasers, except for liability arising
out of a willful breach of, or misrepresentation under, this
Agreement (but in no event shall any party hereto be entitled to
recover punitive damages).
ARTICLE IX.
RECOVERY OF FEES
Any Party who shall obtain a final judgment in a court of
competent jurisdiction for the payment of damages by another
Party for a breach of this Agreement or any other Transaction
Document shall be entitled to recover reasonable attorneys' fees
and court costs incurred in connection with the obtaining of such
judgment.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Survival of Provisions.
(a) The representations and warranties of the Company and
Purchasers made herein or in any other Transaction Document and
the covenants of the Company and Purchasers to be complied with
on or prior to the Closing Date shall remain operative and in
full force and effect pursuant to their terms, regardless of
(x) any investigation made by or on behalf of Purchasers or the
Company, as the case may be, or (y) acceptance of any of the
Securities and payment by Purchasers therefor, until April 15,
2000; provided that the representations and warranties contained
in Sections 3.1, 3.3, 3.4, 3.15, 3.27 and 3.28 shall survive
until the earlier to occur of the tenth anniversary of the
Closing and the date on which none of the Warrants are
outstanding; and provided, further, that such representations and
warranties shall survive as to any claim or demand made prior to
their termination date until such claim or demand is fully paid
or otherwise resolved by the parties hereto in writing or
otherwise; and provided, further that the representations and
warranties contained in Section 3.16 shall survive until the
expiration of all applicable statutes of limitation (including
all periods of extension, whether automatic or permissive)
affecting or applicable to such representation or warranty.
(b) The covenants and agreements of the Company and
Purchasers contained in this Agreement that, by their terms, are
to be performed or complied with after the Closing Date will
survive until the later of (i) April 15, 2000 and (ii) the period
specified herein with respect to such covenant or agreement; and
provided, further, that such covenants and agreements shall
survive as to any claim or demand made prior to their termination
date until such claim or demand is fully paid or otherwise
resolved by the parties hereto in writing or otherwise.
Section 10.2 No Waiver; Modification in Writing. No
failure or delay on the part of the Company or a Purchaser in
exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. Without limiting the rights that any party may have for
fraud under common law, the remedies provided for herein are
cumulative and are the exclusive remedies available to the
Company or Purchasers at law or in equity. The provisions of
this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given without
the written consent of the Company, on the one hand, and
Purchasers or their permitted assigns, on the other hand,
provided that notice of any such waiver shall be given to each
party hereto as set forth below. Any amendment, supplement or
modification of or to any provision of this Agreement, or any
waiver of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for
which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on any party
hereto in any case shall entitle the other party to any other or
further notice or demand in similar or other circumstances.
Section 10.3 Specific Performance. The parties recognize
that in the event the Company or Purchasers should refuse to
perform under the provisions of this Agreement or any other
Transaction Document, monetary damages alone will not be
adequate. Purchasers or the Company, as the case may be, shall
therefore be entitled, in addition to any other remedies which
may be available, including money damages, to obtain specific
performance of the terms of this Agreement. In the event of any
action to enforce this Agreement or any other Transaction
Document specifically, the Company and Purchasers hereby waive
the defense that there is an adequate remedy at law.
Section 10.4 Severability. If any term or other provision
of this Agreement is invalid, illegal, or incapable of being
enforced by any rule of applicable law, or public policy, all
other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
herein are not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally
contemplated to the fullest extent possible.
Section 10.5 Fees and Expenses. Within 30 days after the
Closing, the Company shall pay to Purchasers or their designee an
amount equal to the Purchasers' Expenses through the Closing Date
(the amount of such costs and expenses shall have been furnished
to the Company at least within 25 days after the Closing Date).
Section 10.6 Parties in Interest. This Agreement shall be
binding upon and, except as provided below, inure solely to the
benefit of each party hereto and their successors and assigns,
and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 10.7 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally or mailed by registered or
certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Purchasers, to:
Warburg, ▇▇▇▇▇▇ Equity Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company, to:
EEX Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to
the Company) to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any of the above addresses may be changed at any time by
notice given as provided above; provided, however, that any such
notice of change of address shall be effective only upon receipt.
All notices, requests or instructions given in accordance
herewith shall be deemed received on the date of delivery, if
hand delivered, on the date of receipt, if telecopied, three
Business Days after the date of mailing, if mailed by registered
or certified mail, return receipt requested, and one Business Day
after the date of sending, if sent by Federal Express or other
recognized overnight courier.
Section 10.8 Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or
more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 10.9 Entire Agreement. This Agreement (which term
shall be deemed to include the Exhibits and Schedules hereto and
the other certificates, documents and instruments delivered
hereunder) and the other Transaction Documents constitute the
entire agreement of the parties hereto and supersede all prior
agreements, letters of intent and understandings, both written
and oral, among the parties with respect to the subject matter
hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this
Agreement and the other Transaction Documents.
Section 10.10 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW
PROVISIONS.
Section 10.11 Public Announcements. The Company, on the
one hand, and Purchasers, on the other, shall consult with each
other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the
transactions contemplated hereby, except for statements required
by Law or by any listing agreements with or rules of any national
securities exchange or the National Association of Securities
Dealers, Inc., or made in disclosures reasonably determined as
required to be filed pursuant to the Securities Act of 1933 or
the Securities Exchange Act of 1934.
Section 10.12 Assignment. Neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be
assigned by any of the parties hereto, whether by operation of
Law or otherwise; provided, however, that upon notice to the
Company, (a) each Purchaser may assign or delegate any or all of
its rights or obligations under this Agreement to any Affiliate
thereof and (b) nothing in this Agreement shall limit each
Purchaser's ability to make a collateral assignment of its rights
under this Agreement to any institutional lender that provides
funds to Purchasers without the consent of the Company. The
Company shall execute an acknowledgment of such collateral
assignments in such forms as Purchaser's lenders may from time to
time reasonably request; provided, however, that unless written
notice is given to the Company that any such collateral
assignment has been foreclosed upon, the Company shall be
entitled to deal exclusively with Purchasers as to any matters
arising under this Agreement or any of the other agreements
delivered pursuant hereto. In the event of such an assignment,
the provisions of this Agreement shall inure to the benefit of
and be binding on Purchaser's assigns. Any attempted assignment
in violation of this Section shall be null and void.
Section 10.13 Director and Officer Liability. The
directors, officers, partners, members and stockholders of
Purchasers, the Company and their respective Affiliates shall not
have any personal liability or obligation arising under this
Agreement (including any claims that the Company or Purchasers
may assert) other than as an assignee of this Agreement.
Section 10.14 Headings. The headings of this Agreement are
for convenience of reference only and are not part of the
substance of this Agreement.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its duly authorized officer as
of the date first written above.
EEX CORPORATION
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
Warburg, ▇▇▇▇▇▇ Equity
Partners, L.P.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Partner
Warburg, ▇▇▇▇▇▇ Netherlands Equity
Partners I, C.V.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Partner
Warburg, ▇▇▇▇▇▇ Netherlands Equity
Partners II, C.V.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Partner
Warburg, ▇▇▇▇▇▇ Netherlands Equity
Partners III, C.V.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Partner
Exhibit 6.2(h)
STATEMENT OF RESOLUTION
OF
SERIES B 8% CUMULATIVE PERPETUAL PREFERRED STOCK
OF
EEX CORPORATION
PURSUANT to the provisions of Article 2.13 of the Texas
Business Corporation Act, the undersigned corporation (the
"Company") makes the following statement:
I. The name of the Company is EEX Corporation.
II. Set forth below is a copy of the resolution of the
Board of Directors of the Company (the "Resolution") establishing
and designating, and determining the preferences, limitations and
relative rights of, the Company's Series B 8% Cumulative
Perpetual Preferred Stock, no par value per share:
"RESOLVED, that pursuant to the authority vested in the
Board of Directors of the Company by Article IV of the Restated
Articles of Incorporation, a series of Preferred Stock of the
Company be, and it hereby is, created out of the authorized but
unissued shares of the Preferred Stock of the Company, such
series to be designated "Series B 8% Cumulative Perpetual
Preferred Stock" (the "Series B Preferred Stock"), to consist of
3,000,000 shares, no par value per share, of which the
preferences and relative and other rights, and the
qualifications, limitations or restrictions thereof, shall be (in
addition to those set forth in the Restated Articles of
Incorporation) as follows:
1. Number. The number of shares constituting the Series B
Preferred Stock shall be 3,000,000; provided, however, 1,500,000
of such 3,000,000 shares may only be issued from time to time as
dividends on the Series B Preferred Stock pursuant to Section 3
of this Statement of Resolution.
2. Definitions. Unless the context otherwise requires,
when used herein the following terms shall have the meaning
indicated.
"Affiliate" means with respect to any Person, any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with such Person. For purposes of this definition, the
term "control" (and correlative terms "controlling," "controlled
by" and "under common control with") means possession of the
power, whether by contract, equity ownership or otherwise, to
direct the policies or management of a Person.
"Articles" means the Restated Articles of Incorporation of
the Company.
"Beneficially Own" or "Beneficial Ownership" is defined in
Rules 13d-3 and 13d-5 of the Exchange Act, but without taking
into account any contractual restrictions or limitations on
voting or other rights.
"Board" means the Board of Directors of the Company.
"Business Combination" means (i) any consolidation, merger,
share exchange or similar business combination transaction
involving the Company with any Person or (ii) the sale,
assignment conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in Houston, Texas or New York City, New York
generally are authorized or required by law or other governmental
actions to close.
"Capital Stock" means (i) with respect to any Person that is
a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of
capital or capital stock of such Person and (ii) with respect to
any Person that is not a corporation or company, any and all
partnership or other equity interests of such Person.
"Change of Control" shall mean any event constituting (a)
the consummation of any Business Combination except where (i) the
shareholders of the Company immediately prior to such Business
Combination own (in substantially the same proportion relative to
each other as such shareholders owned the Common Stock
immediately prior to such consummation) (x) forty percent (40%)
or more of the Voting Stock of the surviving entity on both a
Modified Non Diluted Basis and a Modified Fully Diluted Basis
immediately after such Business Combination, and (y) forty
percent (40%) or more of the outstanding common stock of the
surviving entity on both a Modified Non Diluted Basis and a
Modified Fully Diluted Basis immediately after such Business
Combination, (ii) the members of the Board immediately prior to
the entering into the agreement relating to such Business
Combination constitute at least a majority of the Board or the
board of directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in place
immediately after such consummation that would result in the
members of the Board immediately prior to the entering into the
agreement relating to such Business Combination ceasing to
constitute at least a majority of the Board or the board of
directors of the surviving entity and (iii) no Non-Financial
Person or Group of Non-Financial Persons is the Beneficial Owner
of 20% or more of the total outstanding Voting Stock or common
stock of the surviving entity and no Financial Person or Group of
Financial Persons is the Beneficial Owner of 35% or more of the
total outstanding Voting Stock or common stock of the surviving
entity or (b) any Non-Financial Person or Group of Non-Financial
Persons acquiring Beneficial Ownership of 20% or more of the
total outstanding Voting Stock or Common Stock of the Company or
any Financial Person or Group of Financial Persons acquiring
Beneficial Ownership of 35% or more of the total outstanding
Voting Stock or Common Stock of the Company.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder.
"Common Stock" means the Company's common stock, par value
$.01 per share, and any Capital Stock for or into which such
Common Stock hereafter is exchanged, converted, reclassified or
recapitalized by the Company or pursuant to an agreement or
Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with
any other Common Stock or common stock, as the case may be, or
Common Stock Equivalents) rights, warrants, options, convertible
securities or exchangeable securities, exercisable for or
convertible or exchangeable into, directly or indirectly, Common
Stock, or common stock, as the case may be, whether at the time
of issuance or upon the passage of time or the occurrence of some
future event, including the Warrants.
"Company" means EEX Corporation, a Texas corporation.
"Dividend Payment Date" is defined in Section 3(A).
"Dividend Period" is defined in Section 3(A).
"Dividend Rate" means a rate of interest equal to (i) prior
to the Dividend Reset Date, eight percent (8%) per annum and (ii)
on or after the Dividend Reset Date, the Dividend Reset Rate
determined pursuant to Section 4.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.
"Financial Person" means any Person that (i) is, or holds
itself out as being, engaged primarily in the business of
investing, reinvesting, owning, holding or trading in securities,
and (ii) together with its Affiliates is not engaged in (x) any
significant activities other than financial services, insurance
or investment activities or (y) directly or indirectly through
Affiliates, in any industrial activities, including the oil and
gas and energy industry.
"Group" means a group as contemplated by Section 13(d)(3) of
the Exchange Act.
"Holder" means a holder of record of the Series B Preferred
Stock.
"Issue Date" means with respect to any shares of Series B
Preferred Stock the original date of issuance of such shares of
Series B Preferred Stock.
"Junior Securities" means Capital Stock that, with respect
to dividends and distributions upon Liquidation, ranks junior to
the Series B Preferred Stock.
"Liquidation" means the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided,
however, that a merger or share exchange shall not be deemed a
Liquidation nor shall the sale of assets not requiring
shareholder approval be deemed to be a Liquidation.
"Liquidation Preference" is defined in Section 6.
"Majority of the Series B Preferred Stock" means more than
50% of the outstanding shares of Series B Preferred Stock.
"Market Price" means, with respect to a particular security,
on any given day, the last reported sale price regular way or, in
case no such reported sale takes place on such day, the average
of the last closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the
applicable securities is listed or admitted to trading, or if not
listed or admitted to trading on any national securities
exchange, (i) the closing sale price for such day reported by the
NASDAQ Stock Market if such security is traded over-the-counter
and quoted in the NASDAQ Stock Market, or (ii) if such security
is so traded, but not so quoted, the average of the closing
reported bid and asked prices of such security as reported by the
NASDAQ Stock Market or any comparable system, or (iii) if such
security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the
Company for that purpose. If such security is not listed and
traded in a manner that the quotations referred to above are
available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be the fair value per
share of such security as determined in good faith by the Board
of Directors of the Company.
"Modified Fully-Diluted Basis" shall mean a calculation
based on the then outstanding shares of Voting Stock or common
stock, as the case may be, plus all shares of Voting Stock or
common stock acquirable pursuant to, or constituting, Common
Stock Equivalents, but excluding 50% of the Voting Stock or
common stock acquirable pursuant to the then outstanding
Warrants.
"Modified Non-Diluted Basis" shall mean a calculation based
on the then outstanding shares of Voting Stock or common stock,
as the case may be, and without giving effect to outstanding
Common Stock Equivalents, but including (i) 50% of the shares of
Common Stock then acquirable upon exercise of the then
outstanding Warrants and (ii) the number of shares of common
stock equal to (a) the aggregate Market Price as of the date of
such Business Combination of all shares of common stock
acquirable upon exercise of all outstanding employee stock
options of the relevant entity that have an exercise price of
less than the Market Price of common stock as of the date of such
Business Combination less the aggregate exercises price of all
such options divided by (b) the Market Price of common stock as
of the date of such Business Combination.
"Non-Financial Person" means any Person that is not a
Financial Person.
"Notice of Redemption" is defined in Section 7(B)(i).
"Parity Securities" means Capital Stock that, with respect
to dividends or distributions upon Liquidation, is pari passu
with the Series B Preferred Stock.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, limited
liability company, joint venture, joint stock company, government
(or an agency or political subdivision thereof) or other entity
of any kind.
"Profits" means earnings and profits of the Company and its
Subsidiaries computed in accordance with Section 312 of the Code.
"Purchase Agreement" means the Purchase Agreement dated as
of December , 1998 among the Company and the purchasers
named therein pursuant to which 1,500,000 shares of Series B
Preferred Stock and certain other securities are to be issued by
the Company, including all schedules and exhibits thereto.
"Purchasers"means collectively, Warburg, ▇▇▇▇▇▇ Equity
Partners, L.P., Warburg, ▇▇▇▇▇▇ Equity Partners I, ▇.▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ Equity Partners II, C.V. and Warburg, ▇▇▇▇▇▇ Equity
Partners III, C.V.
"Record Date" is defined in Section 3(A).
"Redemption Date" is defined in Section 7(B)(i).
"Redemption Notice" is defined in Section 7(B)(i).
"Redemption Price" is defined in Section 7(A).
"Rights Agreement" means the Rights Agreement dated as of
September 10, 1996 between the Company and ▇▇▇▇▇▇ Trust Company
of New York, a New York trust company, as amended.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.
"Senior Securities" means Capital Stock that, with respect
to dividends or distributions upon Liquidation, ranks senior to
the Series B Preferred Stock.
"Series B Preferred Stock" means the Series B 8% Cumulative
Perpetual Preferred Stock of the Company or successor preferred
stock as contemplated by Section 5(C)(ii)(A).
"Stated Value" is an amount equal to $100.00 per share of
Series B Preferred Stock.
"Statement of Resolution" means this Statement of Resolution
of the Series B Preferred Stock.
"Subsidiary" of a Person means (i) a corporation, a majority
of whose stock with voting power, under ordinary circumstances,
to elect directors is at the time of determination, directly or
indirectly, owned by such Person or by one or more Subsidiaries
of such Person, or (ii) any other entity (other than a
corporation) in which such Person or one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination
thereof has a least a majority ownership interest.
"TBCA" means the Texas Business Corporation Act, as amended,
or any successor statute or other legislation.
"Voting Stock" of a Person means Capital Stock of such
Person of the class or classes pursuant to which the holders
thereof have the general voting power under ordinary
circumstances to vote in the election of the board of directors,
managers or trustees of such Person.
"Warrants" means the warrants to purchase up to 21,000,000
shares of Common Stock, subject to certain conditions, at an
initial exercise price of $12 per share (as may be adjusted from
time to time as set forth therein) which were issued to the
purchasers named in the Purchase Agreement pursuant to the
Purchase Agreement.
The foregoing definitions will be equally applicable to both
the singular and plural forms of the defined terms.
3. Dividends and Distributions.
(A) Subject to the prior preferences and other rights
of any Senior Securities, the holders of the Series B
Preferred Stock shall be entitled to receive out of the
assets of the Company legally available for that purpose,
dividends at the Dividend Rate, and, except as provided in
Section 3(C), no more, to be paid in accordance with the
terms of this Section 3. Such dividends shall be cumulative
from the Issue Date and shall be payable in arrears, when
and as declared by the Board, on March 31, June 30,
September 30 and December 31 of each year (each such date
being herein referred to as a "Dividend Payment Date"),
commencing on March 31, 1999. The period from the Issue
Date to the next Dividend Payment Date and quarterly period
between consecutive Dividend Payment Dates shall hereinafter
be referred to as a "Dividend Period." Each such dividend
shall be paid to the holders of record of the Series B
Preferred Stock as their names appear on the share register
of the Company on the corresponding Record Date. As used
above, the term "Record Date" means, with respect to the
dividend payable on March 31, June 30, September 30 and
December 31, respectively, of each year, the preceding March
15, June 15, September 15 and December 15, or such other
record date designated by the Board with respect to the
dividend payable on such respective Dividend Payment Date
not exceeding 30 days preceding such Dividend Payment Date.
Dividends on account of arrears for any past Dividend
Periods may be declared and paid, together with any accrued
but unpaid interest thereon to and including the date of
payment, at any time, without reference to any Dividend
Payment Date, to holders of record on a date designated by
the Board, not exceeding 30 days preceding the payment date
thereof, as may be fixed by the Board.
(B) In the event that dividends on the Series B
Preferred Stock are to be paid in cash in accordance with
Sections 3(E) or 3(F), and full cash dividends are not paid
or made available to the holders of all outstanding shares
of the Series B Preferred Stock and of any Parity
Securities, and funds available shall be insufficient to
permit payment in full in cash to all such holders of the
preferential amounts to which they are then entitled, the
entire amount available for payment of cash dividends shall
be distributed among the holders of the Series B Preferred
Stock and of any Parity Securities ratably in proportion to
the full amount to which they would otherwise be
respectively entitled, any remainder not paid in cash to the
Holders shall cumulate as provided in Section 3(C) below.
(C) If, on any Dividend Payment Date, the Company
fails to pay dividends, then until the dividends that were
scheduled to be paid on such date are paid, such dividends
shall cumulate and shall accrue additional dividends to and
including the date of payment thereof at the Dividend Rate
then in effect plus, with respect to any dividends payable
after the Dividend Reset Date, 2% per annum (but in no event
higher than the highest amount permitted under applicable
law), compounded quarterly, whether or not earned or
declared, payable only in cash (notwithstanding Section 3(E)
below) with additional dividends thereon for each succeeding
full Dividend Period during which such dividends shall
remain unpaid. Unpaid dividends for any period less than a
full Dividend Period shall cumulate on a day-to-day basis
and shall be computed on the basis of a 360-day year.
(D) So long as any shares of the Series B Preferred
Stock shall be outstanding, the Company shall not and shall
cause its Subsidiaries not to (i) declare or pay any
dividend whatsoever, whether in cash, property or otherwise,
set aside any cash or property for the payment of dividends,
or make any other distribution on any Junior Securities,
(ii) declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property
for the payment of dividends, or make any other distribution
on any Parity Securities, unless declared and paid pro rata
with the Series B Preferred Stock in proportion to the full
amount to which they would otherwise be respectively
entitled or (iii) repurchase, redeem or otherwise acquire or
set aside any cash or property for the repurchase or
redemption of any Junior Securities or Parity Securities,
unless in each such case all dividends to which the holders
of the Series B Preferred Stock shall have been entitled for
all previous Dividend Periods shall have been paid or
declared and a sum of money sufficient for the payment
thereof shall have been set apart.
(E) Subject to the election of a Holder provided for
in Section 3(F) below and subject to Section 3(C) above,
from the Issue Date through and including the Dividend Reset
Date, the Company shall pay on each Dividend Payment Date
accrued dividends, at its election, in cash, shares of
Series B Preferred Stock or shares of Common Stock. Such
election shall be made on or prior to the earlier of the
date of declaration of such dividend or the applicable
record date for such dividend, with prompt notice thereafter
being given by the Company to the holders of the Series B
Preferred Stock of such election. Notwithstanding the
foregoing, in the event that the Company shall have declared
or paid cash dividends on the Common Stock during a Dividend
Period, the Company shall pay on the Dividend Payment Date
for such Dividend Period accrued dividends solely in cash.
The number of shares of Series B Preferred Stock to be
issued in circumstances when dividends are paid with
additional shares of Series B Preferred Stock will equal the
cash amount of the dividend payable, divided by $100,
rounded to the nearest full share, up or down, after taking
into account all shares of Series B Preferred Stock owned by
the Holder provided that if the resulting fractional share
held by such Holder equals one-half of a share of Series B
Preferred Stock, such fractional share shall be rounded up
to the nearest full share. The number of shares of Common
Stock to be issued in circumstances when dividends are paid
with shares of Common Stock will equal the cash amount of
the dividend payable, divided by the lesser of (i) the
Market Price of Common Stock as of the last trading day
immediately preceding the payment date or (ii) the average
Market Price of Common Stock for the twenty (20) trading
days immediately preceding the payment date, rounded up to
the nearest full share. After the Dividend Reset Date, the
Company shall pay dividends on the Series B Preferred Stock
only in cash, and the Company shall be mandatorily required
to pay such dividends on the scheduled Dividend Payment Date
to the fullest extent permitted by law or, if not then
permitted by law, then as soon thereafter as is legally
permitted. The Company shall be required to pay all accrued
but unpaid dividends as of the Dividend Reset Date in cash
on the next succeeding Dividend Payment Date to the fullest
extent permitted by law or, if not then permitted by law,
then as soon thereafter as is legally permitted.
(F) On any Dividend Payment Date occurring on any
December 31 before the Dividend Reset Date, Holders of a
Majority of the Series B Preferred Stock may elect, by
written notice to the Company on or before five (5) business
days preceding the applicable Record Date, to have the
Company pay in cash up to the full amount of the dividend
payable on such date less any cash dividends paid with
respect to the previous three Dividend Periods, or the
portion thereof as shall not exceed the Profits of the
Company. To the extent that the Company has not determined
the Profits of the Company for the fiscal year ending on
December 31 of such year as of the applicable Record Date
and has determined in good faith that it is not reasonably
certain that it will have Profits sufficient to pay the cash
dividends requested in the aggregate by the Holders of the
Series B Preferred Stock, the Company may defer the payment
of such dividend to the earlier of the date of such
determination or March 31 of the year following the year in
which such dividend was to be paid but such deferred cash
portion of the dividend shall accrue additional dividends
thereon at the Dividend Rate. To the extent that the
aggregate cash dividends requested to be paid by all Holders
exceeds the Profits of the Company as so determined, such
aggregate cash dividends will be reduced and each Holder
requesting to be paid in cash shall be entitled to receive
his pro rata portion of the aggregate cash dividends paid
based on the dollar amount of cash dividends requested to be
paid by each Holder and the remainder shall be paid at the
election of the Company in either shares of Series B
Preferred Stock or shares of Common Stock as provided in
Section 3(E). In the event of the approval by the Board of
an agreement providing for a Business Combination, a Holder
may elect to have the Company suspend payment of dividends,
which shall continue to accrue as provided in Section 3(C)
at the Dividend Rate. If the proposed Business Combination
is consummated within 180 days of the date of approval by
the Board of the agreement providing for such Business
Combination, at the request of Holders of a Majority of the
Series B Preferred Stock, all accrued but unpaid dividends
will be paid in cash by the Company upon consummation of
such Business Combination or if the proposed Business
Combination is not consummated within 180 days of the date
of approval by the Board of the agreement providing for such
Business Combination, all accrued but unpaid dividends
(including dividends that would have been payable with
respect to unpaid dividends in Series B Preferred Stock)
will be paid by the Company promptly after expiration of
such 180 day period at the Company's election in cash,
shares of Series A Preferred Stock or shares of Common Stock
in accordance with Section 3(E).
4. Remarketing Procedures.
(A) Certain Definitions.
Capitalized terms not defined in this Section 4 shall have
the meanings specified elsewhere herein. As used herein, the
following terms shall have the following meanings, unless the
context otherwise requires:
"Existing Holder" shall mean a Person who is a record owner
of shares of Series B Preferred Stock as of the time in question.
"Maximum Applicable Rate" shall mean 18% per annum (but in
no event higher than the highest amount permitted under
applicable law).
"Minimum Applicable Rate" shall mean 4% per annum.
"Potential Holder" shall mean a prospective purchaser of
shares of Series B Preferred Stock contacted by, or who has
contacted, the Remarketing Agent or the Company in connection
with the Remarketing and who shall have executed and delivered to
the Remarketing Agent an agreement, prepared by the Remarketing
Agent, whereby such prospective purchaser shall have agreed that
it will be bound by the Remarketing Procedures and that any Bid
placed by it shall constitute an irrevocable offer by it to
purchase the shares subject to such Bid or such lesser number of
shares of Series B Preferred Stock as it shall be required to
purchase as a result of such Remarketing Procedures and
containing such other matters as the Remarketing Agent shall
specify that are not inconsistent with the Remarketing
Procedures.
"Qualifying Change of Control" shall mean a Change of
Control if the Market Price of one share of Common Stock
immediately prior to the consummation of such Change of Control
does not exceed the Threshold Amount.
"Remarketing" shall mean the operation of the procedures set
forth in this Section 4.
"Remarketing Agent" shall mean a nationally recognized
investment banking firm or commercial bank selected by the
Company (i) whose long-term unsecured debt is rated either BBB-
or better by Standard & Poor's Corporation or any successor
thereto or baa3 or better by ▇▇▇▇▇ Investors Service, Inc. or any
successor thereto, (ii) that has agreed to serve hereunder as
Remarketing Agent, and (iii) notice of which selection and
agreement has been given to the Existing Holders at least 15
Business Days prior to the Submission Deadline.
"Remarketing Procedures" shall mean the procedures set forth
in this Section 4.
"Submission Deadline" shall mean the earlier of (i) 10:00
A.M., Houston, Texas time on [seventh anniversary of the Closing
Date] or, if such date is not a Business Day, then at such time
on the next succeeding Business Day or (ii) 10:00 A.M., Houston,
Texas time on the thirtieth day following a Qualifying Change of
Control.
"Threshold Amount" shall mean $5.375 (provided, however, if
the Company after [Closing Date] shall (i) declare a dividend or
make a distribution on its Common Stock in shares of Common
Stock, (ii) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or
reclassify the outstanding Common Stock into a smaller number of
shares, then such amount shall be adjusted proportionately) and
increased by 8% per annum, compounded quarterly, from [Closing
Date] to the day immediately preceding the consummation of the
Change of Control.
(B) Orders by Existing Holders and Potential Holders.
(i) Prior to the Submission Deadline, the Remarketing
Agent shall contact Potential Holders to determine the
number of shares, if any, of Series B Preferred Stock that
each such Potential Holder offers to purchase, at a price
equal to the Stated Value per share of Series B Preferred
Stock plus accrued and unpaid dividends thereon as of the
Dividend Reset Date (the "Reset Price"), if the Dividend
Reset Rate is not less than the rate per annum specified by
such Potential Holder.
(ii) Prior to the Submission Deadline, each Existing
Holder may submit to the Remarketing Agent in writing
information as to:
(1) the number of shares, if any, of Series B
Preferred Stock held by such Existing Holder that such
Existing Holder desires to continue to hold without
regard to the Dividend Reset Rate;
(2) the number of shares, if any, of Series B
Preferred Stock held by such Existing Holder that such
Existing Holder desires to continue to hold if the
Dividend Reset Rate is not less than the rate per annum
specified by such Existing Holder; and/or
(3) the number of shares, if any, of Series B
Preferred Stock held by such Existing Holder that such
Existing Holder desires to sell at the Reset Price
without regard to the Dividend Reset Rate.
For purposes hereof, the communication to the
Remarketing Agent of the information referred to in this
Section 4(B)(ii) is hereinafter referred to as an "Order"
and each Existing Holder and each Potential Holder placing
an Order is hereinafter referred to as a "Bidder"; an Order
containing the information referred to in clause (1) of this
Section 4(B)(ii) is hereinafter referred to as a "Hold
Order"; an Order containing the information contained in
clause (2) of this Section 4(B)(ii) is hereinafter referred
to as a "Bid"; and an Order containing the information
referred to in clause (3) of this Section 4(B)(ii) is
hereinafter referred to as a "Sell Order".
(C) Deemed Submission of Orders by Existing Holders.
If an Order or Orders covering all of the shares of Series B
Preferred Stock held by an Existing Holder is not submitted
to the Remarketing Agent prior to the Submission Deadline,
the Remarketing Agent shall deem a Sell Order to have been
submitted on behalf of such Existing Holder covering the
number of shares of Series B Preferred Stock held by such
Existing Holder and not subject to any Order submitted to
the Remarketing Agent.
(D) Determination of Sufficient Clearing Bids, Winning
Bid Rate and Dividend Reset Rate.
(i) Promptly following the Submission Deadline,
the Remarketing Agent shall assemble all Orders
submitted to it (each such Order as submitted or deemed
submitted being hereinafter referred to individually
as a "Submitted Hold Order", a "Submitted Bid" or a
"Submitted Sell Order", as the case may be, or as a
"Submitted Order") and shall determine:
(1) the excess, if any, of the total number of
outstanding shares of Series B Preferred Stock over the
number of shares of Series B Preferred Stock that are
the subject of Submitted Hold Orders (such excess being
hereinafter referred to as the "Available Shares");
(2) from the Submitted Orders whether the number
of outstanding shares of Series B Preferred Stock that
are the subject of Submitted Bids by Potential Holders
and Existing Holders specifying a rate not higher than
the Maximum Applicable Rate is equal to or exceeds the
number of outstanding shares of Series B Preferred
Stock that are the subject of Submitted Sell Orders,
and if such excess or such equality exists, such
Submitted Bids are hereinafter referred to collectively
as "Sufficient Clearing Bids"); and
(3) if Sufficient Clearing Bids exist, the lowest
rate specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(a) each Submitted Bid from Existing Holders
specifying such Winning Bid Rate and all other
Submitted Bids from Existing Holders specifying
lower rates were accepted, would entitle such
Existing Holders to continue to hold the
outstanding shares of Series B Preferred Stock
that are the subject of such Submitted Bids; and
(b) each Submitted Bid from Potential
Holders specifying such Winning Bid Rate and all
other Submitted Bids from Potential Holders
specifying lower rates were accepted, would
entitle such Potential Holders to purchase the
shares of Series B Preferred Stock that are the
subject of such Submitted Bids;
would result in such Existing Holders described in
subclause (a) above continuing to hold an aggregate number
of outstanding shares of Series B Preferred Stock that, when
added to the number of shares of Series B Preferred Stock to
be purchased by such Potential Holders described in
subclause (b) above, would equal not less than the Available
Shares.
(ii) Promptly after the Remarketing Agent has made the
determinations pursuant to Section 4(D)(i), the Remarketing
Agent shall advise the Company of the Dividend Reset Rate as
follows:
(1) if Sufficient Clearing Bids exist, the
Dividend Reset Rate shall be equal to the Winning Bid
Rate so determined; provided, however, that the Winning
Bid Rate shall not exceed the Maximum Applicable Rate;
(2) if Sufficient Clearing Bids do not exist, the
Dividend Reset Rate shall be equal to the Maximum
Applicable Rate;
(3) if all of the outstanding shares of Series B
Preferred Stock are subject to Submitted Hold Orders,
the Dividend Reset Rate shall be equal to the Minimum
Applicable Rate.
(E) Acceptance and Rejection of Orders and Allocation
of Shares.
Based on the determinations made pursuant to Section
4(D)(i), Submitted Sell Orders shall be accepted or rejected, and
the Remarketing Agent shall take such other action, as set forth
below:
(i) if Sufficient Clearing Bids have been made in the
Remarketing, subject to the provisions of Section 4(E)(iii),
Submitted Bids and Submitted Sell Orders shall be accepted
or rejected in the following order of priority and all other
Submitted Bids shall be rejected:
(1) the Submitted Sell Orders of each Existing
Holder shall be accepted and the Submitted Bids of each
Existing Holder specifying any rate that is higher than
the Winning Bid Rate shall be rejected, thus requiring
each such Existing Holder to sell the outstanding
shares of Series B Preferred Stock subject to such
Submitted Sell Orders or Submitted Bids;
(2) the Submitted Bids of each Existing Holder
specifying any rate that is lower than the Winning Bid
Rate shall be accepted, thus entitling each such
Existing Holder to continue to hold the outstanding
shares of Series B Preferred Stock subject to such
Submitted Bids;
(3) the Submitted Bids of each Potential Holder
specifying any rate that is lower than the Winning Bid
Rate shall be accepted and such Potential Holder shall
purchase the number of shares of Series B Preferred
Stock subject to such Submitted Bids;
(4) the Submitted Bids of each Existing Holder
specifying a rate that is equal to the Winning Bid Rate
shall be accepted, thus entitling such Existing Holder
to continue to hold the outstanding shares of Series B
Preferred Stock subject to such Submitted Bids, unless
the number of outstanding shares of Series B Preferred
Stock subject to all such Submitted Bids placed by
Existing Holders shall be greater than the excess of
the Available Shares over the number of shares of
Series B Preferred Stock subject to Submitted Bids
described in clauses (2) and (3) of this Section
4(E)(i) (the "Remaining Shares"). In such event such
Existing Holder shall be required to sell shares of
Series B Preferred Stock subject to such Submitted
Bids, but only in an amount equal to the difference
between (1) the number of outstanding shares of Series
B Preferred Stock then held by such Existing Holder
subject to such Submitted Bids and (2) the product of
(x) the number of Remaining Shares and (y) a fraction,
the numerator of which shall be the number of
outstanding shares of Series B Preferred Stock held by
such Existing Holder subject to such Submitted Bids and
the denominator of which shall be the number of
outstanding shares of Series B Preferred Stock subject
to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid
Rate; and
(5) the Submitted Bids of each Potential Holder
specifying a rate that is equal to the Winning Bid Rate
shall be accepted, but only in an amount equal to the
product of (i) the difference between the Available
Shares and the number of outstanding shares of Series B
Preferred Stock subject to the Submitted Bids described
in clauses (2), (3) and (4) of this Section 4(E)(i) and
(ii) a fraction, the numerator of which shall be the
number of outstanding shares of Series B Preferred
Stock subject to such Submitted Bids of such Potential
Holder and the denominator of which shall be the number
of outstanding shares of Series B Preferred Stock
subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to the
Winning Bid Rate.
(ii) Subject to the provisions of Section 9(E)(iii), if
Sufficient Clearing Bids have not been made in the
Remarketing, Submitted Bids and Submitted Sell Orders shall
be accepted or rejected in the following order of priority
and all other Submitted Bids shall be rejected:
(1) the Submitted Bids of each Existing Holder
specifying any rate that is equal to or lower than the
Maximum Applicable Rate shall be accepted, thus
entitling such Existing Holder to continue to hold the
outstanding shares of Series B Preferred Stock subject
to such Submitted Bids;
(2) the Submitted Bids of each Potential Holder
specifying any rate that is equal to or lower than the
Maximum Applicable Rate shall be accepted, thus
entitling such Existing Holder to purchase the
outstanding shares of Series B Preferred Stock subject
to such Submitted Bids; and
(3) the Submitted Sell Orders of each Existing
Holder shall be accepted, and the Submitted Bids of
each Existing Holder specifying any rate that is higher
than the Maximum Applicable Rate shall be rejected,
thus requiring each such Existing Holder to sell the
outstanding shares of Series B Preferred Stock subject
to such Submitted Sell Orders and Submitted Bids, in
both cases only in an amount equal to the difference
between (A) the number of outstanding shares of Series
B Preferred Stock then held by such Existing Holder
subject to such Submitted Sell Orders or Submitted Bids
and (B) the product of (x) the difference between the
Available Shares and the aggregate number of
outstanding shares of Series B Preferred Stock subject
to Submitted Bids described in clauses (1) and (2) of
this Section 4(E)(ii) and (y) a fraction, the numerator
of which shall be the number of outstanding shares of
Series B Preferred Stock held by such Existing Holder
subject to such Submitted Sell Orders or Submitted Bids
and the denominator of which shall be the number of
outstanding shares of Series B Preferred Stock subject
to all such Submitted Sell Orders and Submitted Bids.
(iii) If, as a result of the procedures described
in this Section 4, any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled
or required to purchase, a fraction of a share of Series B
Preferred Stock, the Remarketing Agent shall, in such manner
as, in its sole discretion, it shall determine, round up or
down the number of shares of Series B Preferred Stock to be
sold or purchased by any Existing Holder or Potential Holder
of such Series B Preferred Stock so that the number of
shares of Series B Preferred Stock sold or purchased by each
Existing Holder or Potential Holder shall be whole shares of
Series B Preferred Stock.
(F) Closing of Remarketing. If any shares of Series B
Preferred Stock are to be sold pursuant to the Remarketing
Procedures, then such sale shall be consummated at the offices of
the Company at 10:00 a.m. Eastern Standard Time on the Business
Day next succeeding the Submission Deadline (the "Dividend Reset
Date"). At such closing, all Existing Holders that are to sell
shares pursuant to the Remarketing Procedures shall deliver
against payment in same day funds the appropriate stock
certificates representing the shares of Series B Preferred Stock
to be sold duly endorsed or with appropriate stock powers. If
any purchaser fails to purchase shares required to be purchased
on the Dividend Reset Date (other than as a result solely of a
breach by the applicable Existing Holder of its obligations
hereunder) and, if the Remarketing Agent does not purchase such
shares in lieu of such purchaser, then the Dividend Reset Rate
shall be the Maximum Applicable Rate notwithstanding the other
Remarketing Procedures.
(G) Certain Matters relating to the Remarketing Agent. If
there is no Person serving as Remarketing Agent as of the
Submission Deadline or if the Remarketing Agent resigns or
otherwise refuses or is unable to act as Remarketing Agent
hereunder, then the Dividend Reset Rate shall be the Maximum
Applicable Rate.
5. Voting Rights. The Holders shall have the following
voting rights with respect thereto:
(A) Each share of Series B Preferred Stock shall
entitle the holder thereof to the voting rights required by
applicable law.
(B) Until the Dividend Reset Date, Holders of shares
of the Series B Preferred Stock shall be entitled to vote
upon all matters upon which holders of Common Stock have the
right to vote, and Holders shall have that number of votes
on all such matters per share of Series B Preferred Stock as
is equal to the quotient (but in no event more than 5.334)
of (i) 8,000,000 divided by (ii) the number of outstanding
shares of Series B Preferred Stock (provided, however, if
the Company after [Closing Date] shall (i) declare a
dividend or make a distribution on its Common Stock in
shares of Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding
Common Stock into a smaller number of shares, then such
quotient shall be adjusted proportionately) as of the record
date for the determination of the shareholders entitled to
vote on such matters, or, if no such record date is
established as of the date such vote is taken or any written
consent of shareholders is solicited, such votes to be
counted together with all other shares of capital stock
having general voting powers and not separately as a class.
Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula
shall be rounded up to the nearest whole number.
(C) In addition to the voting rights accorded to the
Holders of the Series B Preferred Stock in Sections 4(A) and
4(B), the consent of the Holders of at least a Majority of
the Series B Preferred Stock, voting separately as a single
class, in person or by proxy, either in writing without a
meeting or at an annual or a special meeting of shareholders
called for the purpose, shall be necessary to (i) amend, by
way of merger or otherwise, the Articles, so as to (A)
affect adversely the rights, preferences or privileges of
Holders or (B) authorize, create or issue any shares of (1)
Parity Securities that (x) adversely affect the rights of
the Series B Preferred Stock to vote separately as a class
on any matter or (y) with other existing Parity Securities,
have an aggregate liquidation preference in excess of $150.0
million or (2) Senior Securities (or amend the provisions of
any existing class of Capital Stock to make such class of
Capital Stock a class of (1) Parity Securities that (x)
adversely affect the rights of the Series B Preferred Stock
to vote separately as a class on any matter or (y) with
other existing Parity Securities, have an aggregate
liquidation preference in excess of $150.0 million or (2)
Senior Securities) or (ii) consummate any Business
Combination (A) unless (x) the Holders of the Series B
Preferred Stock shall have the right to receive or continue
to hold in the surviving corporation in such Business
Combination the same number of shares of preferred stock
with substantially the same rights, preferences and
privileges, as correspond to the Series B Preferred Stock
held immediately prior to such Business Combination
(provided, however, that if the Company or the surviving
corporation becomes a Subsidiary of another corporation in
such Business Combination and the holders of Common Stock
became entitled to receive Capital Stock in such other
corporation, then the holders of the Series B Preferred
Stock shall be entitled to receive such shares of preferred
stock with substantially the same rights, preferences and
privileges in such other corporation) and (y) such surviving
or other corporation, as the case may be, has immediately
after the consummation of such Business Combination no
Senior Securities or Parity Securities (other than Parity
Securities having an aggregate liquidation preference not in
excess of $150.0 million and which do not adversely affect
the rights of the Series B Preferred Stock to vote
separately as a class on any matter) and (B) unless such
Business Combination would not result in a breach of any
obligations of the Company under this Statement of
Resolution. In all cases where the Holders have the right
to vote separately as a class, all such Holders shall be
entitled to one vote for each share held by them.
(D) Whenever, at any time or times, dividends payable
on any of the Series B Preferred Stock shall be in arrears
in an aggregate amount equivalent to six (6) full quarterly
dividends, there shall be vested in the Holders, voting as
one class and with one vote for each share, the right to
elect two directors of the Company. Such right of the
Holders to vote for the election of two directors may be
exercised at any annual meeting or at any special meeting
called for such purpose, or at any adjournment thereof until
all arrearages and dividends on the outstanding shares of
Series B Preferred Stock shall have been paid in full or
declared and funds sufficient for the payment thereof
deposited in trust and when so paid or provided for, then
all rights of the Holders under this Section 5(D) shall
cease. So long as such right to vote continues, the
Secretary of the Company may call, and upon written request
of the Holders of ten percent (10%) or more of the
outstanding Series B Preferred Stock addressed to him at the
principal office of the Company, shall call a special
meeting of the Holders for the election of such two
directors as provided herein. Such meeting shall be held
within fifty (50) days after delivery of such request to
such Secretary, at the place and upon the notice provided by
law and in the Bylaws of the Company for the holding of
meetings of its shareholders. If at any such meeting or any
adjournment thereof the Holders of at least a majority of
the then outstanding shares of Series B Preferred Stock then
entitled to vote in such election shall be present or
represented by proxy, then, by vote of the Holders of at
least the majority of all such shares of Series B Preferred
Stock present or represented in such meeting, the then
authorized number of directors of the Company shall be
increased by two and the Holders of such shares of Series B
Preferred Stock shall be entitled to elect such two
additional directors. Directors so elected shall serve
until the next annual meeting or until their successors
shall be elected and shall qualify; provided, however, that
whenever all arrearages and dividends on all outstanding
shares of Series B Preferred Stock shall have been paid or
declared and funds sufficient for the payment thereof
deposited in trust, the term of the office of the persons so
elected as directors shall forthwith terminate, and the
number of the whole Board shall be reduced accordingly. In
case of any vacancy occurring among the directors so elected
the remaining director who shall have been so elected may
appoint a successor to hold office for the unexpired term of
the director whose place shall be vacant. If both directors
so elected by the Holders shall cease to serve as directors
before their term shall expire, the Holders may, at a
special meeting of such Holders called as provided above,
elect successors to hold office for the unexpired terms of
the directors whose places shall be vacant. In any vote
under this Section 5(D), each share of Series B Preferred
Stock shall be entitled to vote.
6. Liquidation Preference. In the event of any
Liquidation, after payment or provision for payment by the
Company of the debts and other liabilities of the Company and the
liquidation preference of any Senior Securities, each Holder
shall be entitled to receive an amount in cash for each share of
the then outstanding Series B Preferred Stock held by such Holder
equal to the Stated Value per share plus an amount equal to all
accrued but unpaid dividends thereon, whether or not earnings are
available in respect of such dividends or such dividends have
been declared, to and including the date full payment is tendered
to the Holders with respect to such Liquidation and no more (such
amount being referred to herein as the "Liquidation Preference")
before any distribution shall be made to the holders of any
Junior Securities upon the Liquidation of the Company. In case
the assets of the Company available for payment to the Holders
are insufficient to pay the full Liquidation Preference on all
outstanding shares of the Series B Preferred Stock and all
outstanding Parity Securities in the amounts to which the holders
of such shares are entitled, then the entire assets of the
Company available for payment to the Holders will be distributed
ratably among the Holders of the Series B Preferred Stock and the
holders of the Parity Securities, based upon the aggregate amount
due on such shares upon Liquidation. Written notice of any
Liquidation of the Company, stating a payment date and the place
where the distributable amounts shall be payable, shall be given
by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to the Holders of record of the
Series B Preferred Stock, if any, at their respective addresses
as the same shall appear on the books of the Company.
7. Redemptions.
(A) The Series B Preferred Stock may be redeemed by
the Company at any time to the extent of funds legally
available therefor, in whole but not in part, in the manner
provided for in Section 7, at a redemption price per share
equal to the Stated Value plus accrued but unpaid dividends
to and including the date the redemption price is paid,
payable in same day funds, (the "Redemption Price").
(B) Notice of redemption (the "Notice of Redemption")
of the Series B Preferred Stock shall be sent by or on
behalf of the Company, by first class mail, postage prepaid,
to the Holders of record of the Series B Preferred Stock at
their respective addresses as they shall appear on the
records of the Company, not less than forty-five (45) days
nor more than ninety (90) days prior to the date fixed for
redemption (the "Redemption Date") (1) notifying such
holders of the election of the Company to redeem such
shares, of the Redemption Date and the Redemption Price, and
(2) stating the place or places at which the Series B
Preferred Stock shall, upon presentation and surrender of
the certificates evidencing such shares, be redeemed.
(C) If Notice of Redemption shall have been given as
hereinbefore provided, each Holder shall be entitled to all
preferences, relative and other rights accorded by this
resolution (including the right to receive dividends) and
the TBCA until and including the Redemption Date. If the
Company shall default in making payment on the Redemption
Date, then each Holder shall be entitled to all preferences,
relative and other rights accorded by this resolution
(including the right to receive dividends) and the TBCA
until and including the date (the "Actual Redemption Date")
when the Company actually makes payment of the Redemption
Price to the Holders. From and after the Redemption Date
or, if the Company shall default in making payment or
delivery as aforesaid, the Actual Redemption Date, the
Series B Preferred Stock shall no longer be deemed to be
outstanding, and all rights of the Holders shall cease and
terminate, except the right of the Holders, upon surrender
of certificates therefor, to receipt of amounts to be paid
hereunder.
8. Limitations on Series B Preferred Stock. No share or
shares of Series B Preferred Stock the Company acquires through
redemption, option, exchange or otherwise will be reissued, and
all such shares will be canceled, retired and eliminated from the
shares of Series B Preferred Stock which the Company will be
authorized to issue. The Company will not issue any further
shares of Series B Preferred Stock other than pursuant to Section
3.
9. Waivers. With the written consent of Holders of a
Majority of the Series B Preferred Stock, the obligations of the
Company and the rights of the Holders under this Statement of
Resolution may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a
specified period of time or indefinitely). Upon the effectuation
of each such waiver, the Company will promptly give written
notice thereof to the Holders who have not previously consented
thereto in writing.
Remainder of page intentionally left blank.
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, being the Vice President, Finance and
Treasurer of EEX Corporation, do hereby execute this Statement of
Resolution, declaring and certifying that the facts herein stated
are true, and accordingly have hereunto set my hand this _____
day of ____________ 1998.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Treasurer
Exhibit 7.2(b)(ii)(A)
[FORM OF SERIES A WARRANT]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF
IN VIOLATION OF ANY APPLICABLE SECURITIES LAWS. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
SERIES A WARRANT
No. 1 January ___, 1999
To Purchase [10,500,000] shares of Common Stock,
par value $.01 per share, of EEX Corporation
1. Definitions. Unless the context otherwise required, when
used herein the following terms shall have the meaning indicated.
"Affiliate" means with respect to any Person, any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with such Person. For purposes of this definition,
the term "control" (and correlative terms "controlling,"
"controlled by" and "under common control with") means
possession of the power, whether by contract, equity
ownership or otherwise, to direct the policies or management
of a Person.
"Beneficially Own" or "Beneficial Ownership" is defined in
Rules 13d-3 and 13d-5 of the Exchange Act, but without
taking into account any contractual restrictions or
limitations on voting or other rights.
"Board" means the Board of Directors of the Company.
"Business Combination" means (i) any consolidation, merger,
share exchange or similar business combination transaction
involving the Company with any Person or (ii) the sale,
assignment conveyance, transfer, lease or other disposition
by the Company of all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in Houston, Texas or New York City, New York
generally are authorized or required by law or other
governmental actions to close.
"Capital Stock" means (i) with respect to any Person that is
a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of
capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation or company,
any and all partnership or other equity interests of such
Person.
"Change of Control" shall mean any event constituting (a)
the consummation of any Business Combination except where
(i) the shareholders of the Company immediately prior to
such Business Combination own (in substantially the same
proportion relative to each other as such shareholders owned
the Common Stock immediately prior to such consummation) (x)
forty percent (40%) or more of the Voting Stock of the
surviving entity on both a Modified Non Diluted Basis and a
Modified Fully Diluted Basis immediately after such Business
Combination, and (y) forty percent (40%) or more of the
outstanding common stock of the surviving entity on both a
Modified Non Diluted Basis and a Modified Fully Diluted
Basis immediately after such Business Combination, (ii) the
members of the Board immediately prior to the entering into
the agreement relating to such Business Combination
constitute at least a majority of the Board or the board of
directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in
place immediately after such consummation that would result
in the members of the Board immediately prior to the
entering into the agreement relating to such Business
Combination ceasing to constitute at least a majority of the
Board or the board of directors of the surviving entity and
(iii) no Non-Financial Person or Group of Non-Financial
Persons is the Beneficial Owner of 20% or more of the total
outstanding Voting Stock or common stock of the surviving
entity and no Financial Person or Group of Financial Persons
is the Beneficial Owner of 35% or more of the total
outstanding Voting Stock or common stock of the surviving
entity or (b) any Non-Financial Person or Group of Non-
Financial persons acquiring Beneficial Ownership of 20% or
more of the total outstanding Voting Stock or Common Stock
of the Company or any Financial Person or Group of Financial
Persons acquiring Beneficial Ownership of 35% or more of the
total outstanding Voting Stock or Common Stock of the
Company.
"Common Stock" means the Company's common stock, par value
$.01 per share, and any Capital Stock for or into which such
Common Stock hereafter is exchanged, converted, reclassified
or recapitalized by the Company or pursuant to an agreement
or Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with
any other Common Stock or common stock, as the case may be,
or Common Stock Equivalents) rights, warrants, options,
convertible securities or exchangeable securities,
exercisable for or convertible or exchangeable into,
directly or indirectly, Common Stock, or common stock, as
the case may be, whether at the time of issuance or upon the
passage of time or the occurrence of some future event,
including the Warrants.
"Company" means EEX Corporation, a Texas corporation.
"Early Exercise Event" means the occurrence of any of the
following: (i) an agreement providing for a Business
Combination is approved by the Board if such Business
Combination, if consummated, would result in a Change of
Control, (ii) a Tender Offer for the Company's securities is
approved or recommended by the Board, (iii) Warburg, ▇▇▇▇▇▇
Equity Partners, L.P. and its Affiliates Beneficially Own
less than 10% of the outstanding Voting Stock of the
Company, (iv) there is a redemption, repurchase or
reacquisition by the Company of Rights issued pursuant to
the Rights Agreement or any waiver of the application of the
Rights Agreement to any Beneficial Owner or (v) any Non-
Financial Person or Group of Non-Financial Persons
Beneficially Own more than 20% of the outstanding Voting
Stock of the Company or any Financial Person or Group of
Financial Persons Beneficially Own more than 35% of the
outstanding Voting Stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and
regulations promulgated thereunder.
"Excluded Stock" means (i) shares of Common Stock issued by
the Company as a stock dividend payable in shares of Common
Stock, or upon any subdivision or split-up of the
outstanding shares of Capital Stock in each case with is
subject to Section 13(B), or upon conversion of shares of
Capital Stock (but not the issuance of such Capital Stock
which will be subject to the provisions of Section
13(A)(iii)), (ii) shares of Common Stock to be issued to
employees, consultants and advisors of the Company pursuant
to options granted prior to the date of issuance of this
Warrant and pursuant to options granted after the date of
issuance of this Warrant if the exercise price per share of
Common Stock on the date of such grant equals or exceeds the
Market Price of a share of Common Stock on the date of such
grant.
"Exercise Price" has the meaning given to it in Section 2.
"Expiration Time" has the meaning given to it in Section 3.
"Financial Person" means any Person that (i) is, or holds
itself out as being, engaged primarily in the business of
investing, reinvesting, owning, holding or trading in
securities, and (ii) together with its Affiliates is not
engaged in (x) any significant activities other than
financial services, insurance or investment activities or
(y) directly or indirectly through Affiliates, in any
industrial activities, including the oil and gas and energy
industry.
"Group" means a group as contemplated by Section 13(d)(3) of
the Exchange Act.
"Market Price" means, with respect to a particular security,
on any given day, the last reported sale price regular way
or, in case no such reported sale takes place on such day,
the average of the last closing bid and asked prices regular
way, in either case on the principal national securities
exchange on which the applicable securities is listed or
admitted to trading, or if not listed or admitted to trading
on any national securities exchange, (i) the closing sale
price for such day reported by the NASDAQ Stock Market if
such security is traded over-the-counter and quoted in the
NASDAQ Stock Market, or (ii) if such security is so traded,
but not so quoted, the average of the closing reported bid
and asked prices of such security as reported by the NASDAQ
Stock Market or any comparable system, or (iii) if such
security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked
prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time
to time by the Company for that purpose. If such security
is not listed and traded in a manner that the quotations
referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall
be deemed to be the fair value per share of such security as
determined in good faith by the Board of Directors of the
Company.
"Modified Fully-Diluted Basis" shall mean a calculation
based on the then outstanding shares of Voting Stock or
common stock, as the case may be, plus all shares of Voting
Stock or common stock acquirable pursuant to, or
constituting, Common Stock Equivalents, but excluding 50% of
the Voting Stock or common stock acquirable pursuant to the
then outstanding Warrants.
"Modified Non-Diluted Basis" shall mean a calculation based
on the then outstanding shares of Voting Stock or common
stock, as the case may be, and without giving effect to
outstanding Common Stock Equivalents, but including (i) 50%
of the shares of common stock then acquirable upon exercise
of the then outstanding Warrants and (ii) the number of
shares of common stock equal to (a) the aggregate Market
Price as of the date of such Business Combination of all
shares of common stock acquirable upon exercise of all
outstanding employee stock options of the relevant entity
that have an exercise price of less than the Market Price of
common stock as of the date of such Business Combination
less the aggregate exercises price of all such options
divided by (b) the Market Price of common stock as of the
date of such Business Combination.
"Non-Financial Person" means any Person that is not a
Financial Person.
"Ordinary Cash Dividends" means any cash dividend or
distribution which, when combined on a per share of Common
Stock basis with the per share amounts of all other cash
dividends and cash distributions paid on the Common Stock
during the 365-day period ending on the date of declaration
of such dividend or distribution (as adjusted to
appropriately reflect any of the events referred to in
Section 13 and excluding cash dividends or distributions
that resulted in an adjustment to the Exercise Price), does
not exceed 5% of the Market Price of a share of Common Stock
on the trading day immediately preceding the date of
declaration of such dividend or distribution.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, limited
liability company, joint venture, joint stock company,
government (or an agency or political subdivision thereof)
or other entity of any kind.
"Preferred Stock" means the Series B 8% Cumulative Perpetual
Preferred Stock of the Company or successor preferred stock
as contemplated by Section 5(C)(ii)(A) of the Statement of
Resolution.
"Pro Rata Repurchases" means any purchase of shares of
Common Stock by the Company or any Affiliate thereof
pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other
offer available to substantially all holders of Common
Stock, whether for cash, shares of capital stock of the
Company, other securities of the Company, evidences of
indebtedness of the Company or any other person or any other
property (including, without limitation, shares of capital
stock, other securities or evidences of indebtedness of a
subsidiary of the Company), or any combination thereof,
effected while this Warrant is outstanding; provided,
however, that "Pro Rata Repurchase" shall not include any
purchase of shares by the Company or any Affiliate thereof
made in accordance with the requirements of Rule 10b-18 as
in effect under the Exchange Act. The "Effective Date" of a
Pro Rata Repurchase shall mean the date of acceptance of
shares for purchase or exchange under any tender or exchange
offer which is a Pro Rata Repurchase or the date of purchase
with respect to any Pro Rata Repurchase that is not a tender
or exchange offer.
"Purchase Agreement" means the Purchase Agreement, dated as
of December 22, 1998, among the Company and the purchasers
named therein, including all schedules and exhibits thereto.
"Rights Agreement" means the Rights Agreement dated as of
September 10, 1996 between the Company and ▇▇▇▇▇▇ Trust
Company of New York, a New York trust company, as amended.
"Rights" is defined in Section 14.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute, and the rules and
regulations promulgated thereunder.
"Shares" is defined in Section 2.
"Stated Value" is an amount equal to $100.00 per share of
Preferred Stock.
"Statement of Resolution" means the Statement of Resolution
relating to the Preferred Stock filed with the Secretary of
State of the State of Texas on January _____, 1999.
"Subsidiary" of a Person means (i) a corporation, a majority
of whose stock with voting power, under ordinary
circumstances, to elect directors is at the time of
determination, directly or indirectly, owned by such Person
or by one or more Subsidiaries of such Person, or (ii) any
other entity (other than a corporation) in which such Person
or one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has at
least a majority ownership interest.
"Shares" has the meaning given to it in Section 2.
"TBCA" means the Texas Business Corporation Act, as amended,
or any successor statute or other legislation.
"Tender Offer" means any transaction to which Regulation 14D
of the Exchange Act applies.
"Voting Stock" of a Person means Capital Stock of such
Person of the class or classes pursuant to which the holders
thereof have the general voting power under ordinary
circumstances to vote in the election of the board of
directors, managers or trustees of such Person.
"Warrantholder" has the meaning given to it in Section 2.
"Warrants" means collectively this Warrant, the seven year
warrants to purchase an aggregate 2,500,000 shares and the
seven-year warrants to purchase an aggregate 8,000,000
shares, all of which were issued to the purchasers named in
the Purchase Agreement pursuant to the Purchase Agreement.
2. Number of Shares; Exercise Price. This certifies that, for
value received, [Name of Warburg, ▇▇▇▇▇▇ entity] or its
registered assigns (the "Warrantholder") is entitled, upon the
terms and subject to the conditions hereinafter set forth, to
acquire from the Company, in whole or in part, up to an aggregate
of [10,500,000] fully paid and nonassessable shares of Common
Stock, par value $0.01 per share, (the "Shares") of the Company,
at a purchase price of $12.00 per Share (the "Exercise Price").
The number of Shares and the Exercise Price are subject to
adjustment as provided herein, and all references to "Shares",
"Common Stock" and "Exercise Price" herein shall be deemed to
include any such adjustment or series of adjustments.
3. Exercise of Warrant; Term. The right to purchase the Shares
represented by this Warrant are exercisable, in whole or in
part by the Warrantholder, at any time or from time to time
after the earlier of August 31, 1999 and the occurrence of
an Early Exercise Event but in no event later than 11:59
p.m. Central Time, on January ___, 2009 (the "Expiration
Time"), by (a) the surrender of this Warrant and Notice of
Exercise annexed hereto, duly completed and executed on
behalf of the Warrantholder, at the office of the Company in
Houston, Texas (or such other office or agency of the
Company in the United States as it may designate by notice
in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and
(b) payment of the Exercise Price for the Shares thereby
purchased at the election of the Warrantholder in one of the
following manners:
(i) by tendering in cash, by certified or cashier's check or by
wire transfer payable to the order of the Company; or
(ii) by having the Company withhold shares of Common Stock
issuable upon exercise of the Warrant equal in value to the
aggregate Exercise Price as to which this Warrant is so exercised
based on the Market Price of the Common Stock on the trading day
prior to the date on which this Warrant and the Notice of
Exercise are delivered to the Company; or
(iii) by tendering to the Company that number of shares of
Preferred Stock rounded to the nearest whole share equal to the
aggregate Exercise Price as to which this Warrant is so exercised
divided by the sum of (1) the Stated Value of the Preferred Stock
plus (2) any accrued but unpaid dividends thereon.
If the Warrantholder does not exercise this warrant in its
entirety, the Warrantholder will be entitled to receive from
the Company within a reasonable time, not exceeding three
(3) business days, a new warrant in substantially identical
form for the purchase of that number of Shares equal to the
difference between the number of Shares subject to this
Warrant and the number of Shares as to which this Warrant is
so exercised. Notwithstanding the foregoing, if the Company
fails to obtain the approval of the Company's shareholders
of the issuance of Common Stock pursuant to this Warrant as
contemplated by Section 5.9 of the Purchase Agreement, the
Warrantholder may only exercise this Warrant in the manner
permitted by Section 3(b)(ii) and upon any such exercise
receive, in lieu of the shares of Common Stock, cash in an
amount equal to the product of (i) the number of shares of
Common Stock that would have been otherwise issuable and
(ii) the Market Price of the Common Stock on the trading day
prior to the date on which this Warrant and the Notice of
Exercise are delivered to the Company, such amount being
paid by certified or cashiers check or by wire transfer in
same day funds on the fourth business day following such
exercise.
4. Issuance of Shares; Authorization; Listing. Certificates
for Shares issued upon exercise of this Warrant will be
issued in such name or names as the Warrantholder may
designate and will be delivered to such named Person or
Persons within a reasonable time, not to exceed three (3)
business days after the date on which this Warrant has been
duly exercised in accordance with the terms of this Warrant.
The Company hereby represents and warrants that any Shares
issued upon the exercise of this Warrant in accordance with
the provisions of Section 3 will, upon such exercise, be
duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges
(other than liens or charges created by or imposed upon the
Warrantholder or taxes in respect of any transfer occurring
contemporaneously therewith). The Company agrees that the
Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are
delivered to the Company in accordance with the terms of
this Warrant, notwithstanding that the stock transfer books
of the Company may then be closed or certificates
representing such Shares may not be actually delivered on
such date. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this
Warrant, the aggregate number of shares of Common Stock
issuable upon exercise of this Warrant. The Company will (i)
procure, at its sole expense, the listing of the Shares and
other securities issuable upon exercise of this Warrant,
subject to issuance or notice of issuance on all stock
exchanges on which the Common Stock or such other securities
are then listed or traded and (ii) maintain the listing of
such Shares or such other securities after issuance. The
Company will take all action as may be necessary to ensure
that the Shares may be issued without violation of any
applicable law or regulation or of any requirement of any
securities exchange on which the Shares are listed or
traded.
5. No Fractional Shares or Scrip. No fractional Shares or
scrip representing fractional Shares shall be issued upon
any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be
entitled, the Warrantholder shall be entitled to receive a
cash payment equal to the Market Price of the Common Stock
less the Exercise Price for such fractional share.
6. No Rights as Shareholders; Transfer Books. This Warrant
does not entitle the Warrantholder to any voting rights or other
rights as a shareholder of the Company prior to the date of
exercise hereof. The Company will at no time close its transfer
books against transfer of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
7. Charges, Taxes and Expenses. Certificates for shares issued
upon exercise of this Warrant shall be issued in the name of the
Warrantholder. Issuance of certificates for shares upon the
exercise of this Warrant shall be made without charge to the
Warrantholder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificates, all of
which taxes and expenses shall be paid by the Company.
8. Transfer/Assignment. This Warrant and any rights hereunder
are not transferable by the Warrantholder, in whole or in part,
in the absence of any effective registration statement related to
this Warrant or an opinion of counsel, satisfactory in form and
substance to the Company, that such registration is not required
under the Securities Act and any applicable state securities
laws. Subject to compliance with the preceding sentence, this
Warrant and all rights hereunder are transferable, in whole or in
part, upon the books of the Company by the registered holder
hereof in person or by duly authorized attorney, and a new
warrant shall be made and delivered by the Company, of the same
tenor and date as this Warrant but registered in the name of the
transferee, upon surrender of this Warrant, duly endorsed, to the
office or agency of the Company described in Section 2. All
expenses, taxes (other than stock transfer taxes) and other
charges payable in connection with the preparation, execution and
delivery of the new warrants pursuant to this Section 8 shall be
paid by the Company. The restrictions imposed by the first
sentence of this Section 8 shall terminate as to the Warrant (i)
when such security has been effectively registered under the
Securities Act and disposed of in accordance with the
registration statement covering such security, or (ii) when, in
the opinion of counsel for the Company, such restrictions are no
longer required in order to achieve compliance with the
Securities Act.
9. Exchange and Registry of Warrant. This Warrant is
exchangeable, upon the surrender hereof by the Warrantholder
at the office or agency of the Company described in Section
2, for a new warrant or warrants of like tenor and date
representing the right to purchase in the aggregate a like
number of shares. The Company shall maintain at the office
or agency described in Section 2 a registry showing the name
and address of the Warrantholder as the registered holder of
this Warrant. This Warrant may be surrendered for exchange
or exercise, in accordance with its terms, at the office of
the Company, and the Company shall be entitled to rely in
all respects, prior to written notice to the contrary, upon
such registry.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or
destruction, of an indemnity letter (reasonably satisfactory
to the Company) by an institutional Warrantholder, or in
other cases, indemnity or security reasonably satisfactory
to it, and in the case of such mutilation, upon surrender
and cancellation of this Warrant, the Company will make and
deliver a new warrant or warrants of like tenor and date, in
lieu of this Warrant.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed
day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business
Day, then such action may be taken or such right may be
exercised on the next succeeding day that is a Business Day.
12. Rule 144 Information. The Company covenants that it will
file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations
promulgated thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any
Warrantholder, make publicly available such information), and it
will take such further action as any Warrantholder may reasonably
request, all to the extent required from time to time to enable
such holder to sell the Warrants without registration under the
Securities Act within the limitation of the exemptions provided
by (i) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission. Upon
the request of any Warrantholder, the Company will deliver to
such Warrantholder a written statement that it has complied with
such requirements.
13. Adjustments and Other Rights. The Exercise Price and the
number of Shares issuable upon exercise of this Warrant
shall be subject to adjustment from time to time as follows:
(A) Common Stock Issued at Less than Market Value. If
the Company issues or sells any Common Stock other than
Excluded Stock without consideration or for consideration
per share less than the Market Price of the Common Stock, on
the last trading day immediately preceding such issuance,
the Exercise Price in effect immediately prior to each such
issuance or sale will immediately (except as provided below)
be reduced to the price determined by multiplying the
Exercise Price, in effect immediately prior to such issuance
or sale, by a fraction, (1) the numerator of which shall be
(x) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale plus (y) the
number of shares of Common Stock which the aggregate
consideration received by the Company for the total number
of such additional shares of Common Stock so issued or sold
would purchase at the Market Price on the last trading day
immediately preceding such issuance or sale and (2) the
denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale. In
such event, the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the issuance giving rise to this
adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence. For the
purposes of any adjustment of the Exercise Price and the
number of Shares issuable upon exercise of this Warrant
pursuant to this Section 13(A), the following provisions
shall be applicable:
(i) In the case of the issuance of Common Stock
for cash, the amount of the consideration received by
the Company shall be deemed to be the amount of the
cash proceeds received by the Company for such Common
Stock before deducting therefrom any discounts or
commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with
the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of
Capital Stock or other securities of the Company) for a
consideration in whole or in part other than cash,
including securities acquired in exchange therefor
(other than securities by their terms so exchangeable),
the consideration other than cash shall be deemed to be
the fair value thereof as determined by the Board,
provided, however, that such fair value as determined
by the Board shall not exceed the aggregate Market
Price of the shares of Common Stock being issued as of
the date the Board authorizes the issuance of such
shares.
(iii) In the case of the issuance of (a)
options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time
exercisable) or (b) securities by their terms
convertible into or exchangeable for Common Stock
(whether or not at the time so convertible or
exchangeable) or options, warrants or rights to
purchase such convertible or exchangeable securities
(whether or not at the time exercisable):
(1) the aggregate maximum number of shares
of Common Stock deliverable upon
exercise of such options, warrants or
other rights to purchase or acquire
Common Stock shall be deemed to have
been issued at the time such options,
warrants or rights are issued and for a
consideration equal to the consideration
(determined in the manner provided in
Section 13(A)(i) and (ii), if any,
received by the Company upon the
issuance of such options, warrants or
rights plus the minimum purchase price
provided in such options, warrants or
rights for the Common Stock covered
thereby;
(2) the aggregate maximum number of shares
of Common Stock deliverable upon
conversion of or in exchange for any
such convertible or exchangeable
securities, or upon the exercise of
options, warrants or other rights to
purchase or acquire such convertible or
exchangeable securities and the
subsequent conversion or exchange
thereof, shall be deemed to have been
issued at the time such securities were
issued or such options, warrants or
rights were issued and for a
consideration equal to the
consideration, if any, received by the
Company for any such securities and
related options, warrants or rights
(excluding any cash received on account
of accrued interest or accrued
dividends), plus the additional
consideration (determined in the manner
provided in Section 13(A)(i) and (ii),
if any, to be received by the Company
upon the conversion or exchange of such
securities, or upon the exercise of any
related options, warrants or rights to
purchase or acquire such convertible or
exchangeable securities and the
subsequent conversion or exchange
thereof;
(3) on any change in the number of shares of
Common Stock deliverable upon exercise
of any such options, warrants or rights
or conversion or exchange of such
convertible or exchangeable securities
or any change in the consideration to be
received by the Company upon such
exercise, conversion or exchange, but
excluding changes resulting from the
anti-dilution provisions thereof (to the
extent comparable to the anti-dilution
provisions contained herein), the
Exercise Price and the number of Shares
issuable upon exercise of this Warrant
as then in effect shall forthwith be
readjusted to such Exercise Price and
number of Shares as would have been
obtained had an adjustment been made
upon the issuance of such options,
warrants or rights not exercised prior
to such change, or of such convertible
or exchangeable securities not converted
or exchanged prior to such change, upon
the basis of such change;
(4) on the expiration or cancellation of any
such options, warrants or rights
(without exercise), or the termination
of the right to convert or exchange such
convertible or exchangeable securities
(without exercise), if the Exercise
Price and the number of Shares issuable
upon exercise of this Warrant shall have
been adjusted upon the issuance thereof,
the Exercise Price and the number of
Shares issuable upon exercise of this
Warrant shall forthwith be readjusted to
such Exercise Price and number of Shares
as would have been obtained had an
adjustment been made upon the issuance
of such options, warrants, rights or
such convertible or exchangeable
securities on the basis of the issuance
of only the number of shares of Common
Stock actually issued upon the exercise
of such options, warrants or rights, or
upon the conversion or exchange of such
convertible or exchangeable securities;
and
(5) if the Exercise Price and the number of
Shares issuable upon exercise of this
Warrant shall have been adjusted upon
the issuance of any such options,
warrants, rights or convertible or
exchangeable securities, no further
adjustment of the Exercise Price and the
number of Shares issuable upon exercise
of this Warrant shall be made for the
actual issuance of Common Stock upon the
exercise, conversion or exchange
thereof; provided, however, that no
increase in the Exercise Price shall be
made pursuant to subclauses (1) or (2)
of this Section 13(A) (iii).
(B) Stock Splits, Subdivisions, Reclassifications or
Combinations. If the Company shall (1) declare a dividend or
make a distribution on its Common Stock in shares of Common
Stock, (2) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares, or (3) combine or
reclassify the outstanding Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this
Warrant at the time of the record date for such dividend or
distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that the Warrantholder after such date shall be entitled to
purchase the number of shares of Common Stock which such holder
would have owned or been entitled to receive after such date had
this Warrant been exercised immediately prior to such date.
Successive adjustments in the Exercise Price shall be made
whenever any event specified above shall occur. In such event the
Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to
the number obtained by dividing (i) the product of (a) the number
of Shares issuable upon the exercise of this Warrant before such
adjustment and (b) the Exercise Price in effect immediately prior
to the issuance giving rise to this adjustment by (ii) the new
number of shares issuable upon exercise of the Warrant determined
pursuant to the immediately preceding sentence.
(C) Other Distributions. In case the Company shall
fix a record date for the making of a distribution to all
holders of shares of its Common Stock (i) of shares of any
class other than its Common Stock or (ii) of evidence of
indebtedness of the Company or any Subsidiary or (iii) of
assets (excluding Ordinary Cash Dividends, and dividends or
distributions referred to in Section 13(B)), or (iv) of
rights or warrants (excluding those referred to in Section
13(B)), in each such case the Exercise Price in effect
immediately prior thereto shall be reduced immediately
thereafter to the price determined by dividing (x) an amount
equal to the difference resulting from (1) the number of
shares of Common Stock outstanding on such record date
multiplied by the Exercise Price per share on such record
date, less (2) the fair market value (as reasonably
determined by the Board) of said shares or evidences of
indebtedness or assets or rights or warrants to be so
distributed, by (y) the number of shares of Common Stock
outstanding on such record date; such adjustment shall be
made successively whenever such a record date is fixed. In
such event, the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the issuance giving rise to this
adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence. In the
event that such distribution is not so made, the Exercise
Price and the number of Shares issuable upon exercise of
this Warrant then in effect shall be readjusted, effective
as of the date when the Board determines not to distribute
such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the Exercise Price that
would then be in effect and the number of Shares that would
then be issuable upon exercise of this Warrant if such
record date had not been fixed.
(D) Certain Repurchases of Common Stock. In case the
Company effects a Pro Rata Repurchase of Common Stock, then
the Exercise Price shall be reduced to the price determined
by multiplying the Exercise Price in effect immediately
prior to the effective date of such Pro Rata Repurchase by a
fraction of which the numerator shall be (i) the product of
(x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the
Market Price of a share of Common Stock on the trading day
immediately preceding the first public announcement by the
Company or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase
price of the Pro Rata Repurchase, and of which the
denominator shall be the product of (i) the number of shares
of Common Stock outstanding immediately prior to such Pro
Rata Repurchase minus the number of shares of Common Stock
so repurchased and (ii) the Market Price per share of Common
Stock on the trading day immediately preceding the first
public announcement of such Pro Rata Repurchase. In such
event, the number of shares of Common Stock issuable upon
the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to
this adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence.
(E) Business Combinations. In case of any Business
Combination or reclassification of Common Stock (other than
a reclassification of Common Stock referred to in Section
13(B)), any Shares issued or issuable upon exercise of this
Warrant after the date of such Business Combination or
reclassification be exchangeable for the number of shares of
stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such
consolidation, merger, sale, lease or conveyance) upon
exercise of this Warrant immediately prior to such Business
Combination or reclassification would have been entitled
upon such Business Combination or reclassification; and in
any such case, if necessary, the provisions set forth herein
with respect to the rights and interests thereafter of the
Warrantholder shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of
stock or other securities or property thereafter deliverable
on the exercise of this Warrant. In determining the kind
and amount of stock, securities or the property receivable
upon consummation of such Business Combination, if the
holders of Common Stock have the right to elect the kind or
amount of consideration receivable upon consummation of such
Business Combination, then the Warrantholder shall have the
right to make a similar election upon exercise of this
Warrant with respect to the number of shares of stock or
other securities or property which the Warrantholder will
receive upon exercise of this Warrant.
(F) Rounding of Calculations; Minimum Adjustments.
All calculations under this Section 13 shall be made to the
nearest one-tenth (1/10th) of a cent or to the nearest one-
hundreth (1/100th) of a share, as the case may be. Any
provision of this Section 13 to the contrary
notwithstanding, no adjustment in the Exercise Price or the
number of Shares into which this Warrant is exercisable
shall be made if the amount of such adjustment would be less
than $0.01 or one-tenth (1/10th) of a share of Common Stock,
respectively, but any such amount shall be carried forward
and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or 1/10th of a share
of Common Stock, respectively, or more.
(G) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of
this Section 13 shall require that an adjustment shall
become effective immediately after a record date for an
event, the Company may defer until the occurrence of such
event (i) issuing to the Warrantholder of this Warrant
exercised after such record date and before the occurrence
of such event the additional shares of Common Stock issuable
upon such exercise by reason of the adjustment required by
such event over and above the shares of Common Stock
issuable upon such exercise before giving effect to such
adjustment and (ii) paying to such Warrantholder any amount
of cash in lieu of a fractional share of Common Stock;
provided, however, that the Company upon request shall
deliver to such Warrantholder a due ▇▇▇▇ or other
appropriate instrument evidencing such Warrantholder's right
to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
(H) Statement Regarding Adjustments. Whenever the
Exercise Price or the number of Shares into which this
Warrant is exercisable shall be adjusted as provided in
Section 13, the Company shall forthwith file, at the
principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and
the Exercise Price that shall be in effect and the number of
Shares into which this Warrant shall be exercisable after
such adjustment and the Company shall also cause a copy of
such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in
the Company's records.
(I) Notices. In the event that the Company shall
propose to take any action of the type described in this
Section 13 (but only if the action of the type described in
this Section 13 would result in an adjustment in the
Exercise Price or the number of Shares into which this
Warrant is exercisable or a change in the type of securities
or property to be delivered upon exercise of this Warrant),
the Company shall give notice to the Warrantholder, in the
manner set forth in Section 13(H), which notice shall
specify the record date, if any, with respect to any such
action and the approximate date on which such action is to
take place. Such notice shall also set forth the facts with
respect thereto as shall be reasonably necessary to indicate
the effect on the Exercise Price and the number, kind or
class of shares or other securities or property which shall
be deliverable upon exercise of this Warrant. In the case of
any action which would require the fixing of a record date,
such notice shall be given at least 10 days prior to the
date so fixed, and in case of all other action, such notice
shall be given at least 15 days prior to the taking of such
proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any
such action.
(J) No Impairment. The Company will not, by amendment
of its Articles or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to
be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in taking of all such
action as may be necessary or appropriate in order to
protect the rights of the Warrantholder.
14. Rights. Whenever the Company shall issue shares of Common
Stock upon exercise of this Warrant, the Company shall issue,
together with each such share of Common Stock, one right to
purchase Series A Junior Participating Preferred Stock of the
Company (or other securities in lieu thereof) pursuant to the
Rights Agreement, or any similar rights issued to holders of
Common Stock in addition thereto or in the replacement therefor
(such rights, together with any additional or replacement rights,
being collectively referred to as the "Rights"), whether or not
such Rights shall be exercisable at such time, but only if such
Rights are issued and outstanding and held by the other holders
of Common Stock (or evidenced by outstanding share certificates
representing Common Stock) at such time and have not expired or
been redeemed.
15. Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Texas and for all
purposes shall be construed in accordance with and governed by
the laws of Texas, without giving effect to the conflict of laws
principles.
16. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder as the
holder of this Warrant relating hereto, the prevailing party
shall be entitled to reasonable attorneys' fees and expenses
incurred in enforcing this Warrant.
17. Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written
consent of the Company and the Warrantholder.
18. Notice. All notices hereunder shall be in writing and shall
be effective (a) on the day on which delivered if delivered
personally or transmitted by telex or telegram or telecopier with
evidence of receipt, (b) one Business Day after the date on which
the same is delivered to a nationally recognized overnight
courier service with evidence of receipt, or (c) five Business
Days after the date on which the same is deposited, postage
prepaid, in the U.S. mail, sent by certified or registered mail,
return receipt requested, and addressed to the party to be
notified at the address indicated below for the Company, or at
the address for the Warrantholder set forth in the registry
maintained by the Company pursuant to Section 9, or at such other
address and/or telecopy or telex number and/or to the attention
of such other person as the Company or the Warrantholder may
designate by ten-day advance written notice.
19. Prohibited Actions. The Company agrees that it will not
take any action which would entitle the Warrantholder to an
adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after such action upon exercise of this
Warrant, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and
other rights, would exceed the total number of shares of Common
Stock then authorized by its Restated Articles of Incorporation.
20. Entire Agreement. This Warrant and the forms attached hereto
contain the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior and
contemporaneous arrangements or undertakings with respect
thereto.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Warrant to
be executed by a duly authorized officer.
Dated: January ____, 1999
EEX Corporation
▇.▇. ▇▇▇▇▇
Vice President - Finance and
Treasurer
[Form of Notice of Exercise]
Date:
TO: EEX Corporation
RE: Election to Subscribe for and Purchase Common Stock
The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to subscribe for and purchase the
number of shares of the Common Stock set forth below covered by
such Warrant. The undersigned, in accordance with Section 3 of
the Warrant, hereby agrees to pay the aggregate Exercise Price
for such shares of Common Stock in the manner set forth below. A
new warrant evidencing the remaining shares of Common Stock
covered by such Warrant, but not yet subscribed for and
purchased, should be issued in the name set forth below. If the
new warrant is being transferred, an opinion of counsel is
attached hereto with respect to the transfer of such warrant.
Number of Shares of Common Stock:
Method of Payment of Exercise Price:
Name and Address of Person to be
Issued New Warrant:
Holder:
By:
Name:
Title:
Exhibit 7.2(b)(ii)(B)
[FORM OF SERIES B WARRANT]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF
IN VIOLATION OF ANY APPLICABLE SECURITIES LAWS. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
SERIES B WARRANT
No. 1 January ___, 1999
To Purchase [2,500,000] shares of Common Stock,
par value $.01 per share, of EEX Corporation
3. Definitions. Unless the context otherwise required, when
used herein the following terms shall have the meaning indicated.
"Affiliate" means with respect to any Person, any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with such Person. For purposes of this definition,
the term "control" (and correlative terms "controlling,"
"controlled by" and "under common control with") means
possession of the power, whether by contract, equity
ownership or otherwise, to direct the policies or management
of a Person.
"Beneficially Own" or "Beneficial Ownership" is defined in
Rules 13d-3 and 13d-5 of the Exchange Act, but without
taking into account any contractual restrictions or
limitations on voting or other rights.
"Board" means the Board of Directors of the Company.
"Business Combination" means (i) any consolidation, merger,
share exchange or similar business combination transaction
involving the Company with any Person or (ii) the sale,
assignment conveyance, transfer, lease or other disposition
by the Company of all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in Houston, Texas or New York City, New York
generally are authorized or required by law or other
governmental actions to close.
"Capital Stock" means (i) with respect to any Person that is
a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of
capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation or company,
any and all partnership or other equity interests of such
Person.
"Change of Control" shall mean any event constituting (a)
the consummation of any Business Combination except where
(i) the shareholders of the Company immediately prior to
such Business Combination own (in substantially the same
proportion relative to each other as such shareholders owned
the Common Stock immediately prior to such consummation) (x)
forty percent (40%) or more of the Voting Stock of the
surviving entity on both a Modified Non Diluted Basis and a
Modified Fully Diluted Basis immediately after such Business
Combination, and (y) forty percent (40%) or more of the
outstanding common stock of the surviving entity on both a
Modified Non Diluted Basis and a Modified Fully Diluted
Basis immediately after such Business Combination, (ii) the
members of the Board immediately prior to the entering into
the agreement relating to such Business Combination
constitute at least a majority of the Board or the board of
directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in
place immediately after such consummation that would result
in the members of the Board immediately prior to the
entering into the agreement relating to such Business
Combination ceasing to constitute at least a majority of the
Board or the board of directors of the surviving entity and
(iii) no Non-Financial Person or Group of Non-Financial
Persons is the Beneficial Owner of 20% or more of the total
outstanding Voting Stock or common stock of the surviving
entity and no Financial Person or Group of Financial Persons
is the Beneficial Owner of 35% or more of the total
outstanding Voting Stock or common stock of the surviving
entity or (b) any Non-Financial Person or Group of Non-
Financial persons acquiring Beneficial Ownership of 20% or
more of the total outstanding Voting Stock or Common Stock
of the Company or any Financial Person or Group of Financial
Persons acquiring Beneficial Ownership of 35% or more of the
total outstanding Voting Stock or Common Stock of the
Company.
"Common Stock" means the Company's common stock, par value
$.01 per share, and any Capital Stock for or into which such
Common Stock hereafter is exchanged, converted, reclassified
or recapitalized by the Company or pursuant to an agreement
or Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with
any other Common Stock or common stock, as the case may be,
or Common Stock Equivalents) rights, warrants, options,
convertible securities or exchangeable securities,
exercisable for or convertible or exchangeable into,
directly or indirectly, Common Stock, or common stock, as
the case may be, whether at the time of issuance or upon the
passage of time or the occurrence of some future event,
including the Warrants.
"Company" means EEX Corporation, a Texas corporation.
"Early Exercise Event" means the occurrence of any of the
following: (i) an agreement providing for a Business
Combination is approved by the Board if such Business
Combination, if consummated, would result in a Change of
Control, (ii) a Tender Offer for the Company's securities is
approved or recommended by the Board, (iii) Warburg, ▇▇▇▇▇▇
Equity Partners, L.P. and its Affiliates Beneficially Own
less than 10% of the outstanding Voting Stock of the
Company, (iv) there is a redemption, repurchase or
reacquisition by the Company of Rights issued pursuant to
the Rights Agreement or any waiver of the application of the
Rights Agreement to any Beneficial Owner or (v) any Non-
Financial Person or Group of Non-Financial Persons
Beneficially Own more than 20% of the outstanding Voting
Stock of the Company or any Financial Person or Group of
Financial Persons Beneficially Own more than 35% of the
outstanding Voting Stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and
regulations promulgated thereunder.
"Excluded Stock" means (i) shares of Common Stock issued by
the Company as a stock dividend payable in shares of Common
Stock, or upon any subdivision or split-up of the
outstanding shares of Capital Stock in each case with is
subject to Section 13(B), or upon conversion of shares of
Capital Stock (but not the issuance of such Capital Stock
which will be subject to the provisions of Section
13(A)(iii)), (ii) shares of Common Stock to be issued to
employees, consultants and advisors of the Company pursuant
to options granted prior to the date of issuance of this
Warrant and pursuant to options granted after the date of
issuance of this Warrant if the exercise price per share of
Common Stock on the date of such grant equals or exceeds the
Market Price of a share of Common Stock on the date of such
grant.
"Exercise Price" has the meaning given to it in Section 2.
"Expiration Time" has the meaning given to it in Section 3.
"Financial Person" means any Person that (i) is, or holds
itself out as being, engaged primarily in the business of
investing, reinvesting, owning, holding or trading in
securities, and (ii) together with its Affiliates is not
engaged in (x) any significant activities other than
financial services, insurance or investment activities or
(y) directly or indirectly through Affiliates, in any
industrial activities, including the oil and gas and energy
industry.
"Group" means a group as contemplated by Section 13(d)(3) of
the Exchange Act.
"Market Price" means, with respect to a particular security,
on any given day, the last reported sale price regular way
or, in case no such reported sale takes place on such day,
the average of the last closing bid and asked prices regular
way, in either case on the principal national securities
exchange on which the applicable securities is listed or
admitted to trading, or if not listed or admitted to trading
on any national securities exchange, (i) the closing sale
price for such day reported by the NASDAQ Stock Market if
such security is traded over-the-counter and quoted in the
NASDAQ Stock Market, or (ii) if such security is so traded,
but not so quoted, the average of the closing reported bid
and asked prices of such security as reported by the NASDAQ
Stock Market or any comparable system, or (iii) if such
security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked
prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time
to time by the Company for that purpose. If such security
is not listed and traded in a manner that the quotations
referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall
be deemed to be the fair value per share of such security as
determined in good faith by the Board of Directors of the
Company.
"Modified Fully-Diluted Basis" shall mean a calculation
based on the then outstanding shares of Voting Stock or
common stock, as the case may be, plus all shares of Voting
Stock or common stock acquirable pursuant to, or
constituting, Common Stock Equivalents, but excluding 50% of
the Voting Stock or common stock acquirable pursuant to the
then outstanding Warrants.
"Modified Non-Diluted Basis" shall mean a calculation based
on the then outstanding shares of Voting Stock or common
stock, as the case may be, and without giving effect to
outstanding Common Stock Equivalents, but including (i) 50%
of the shares of common stock then acquirable upon exercise
of the then outstanding Warrants and (ii) the number of
shares of common stock equal to (a) the aggregate Market
Price as of the date of such Business Combination of all
shares of common stock acquirable upon exercise of all
outstanding employee stock options of the relevant entity
that have an exercise price of less than the Market Price of
common stock as of the date of such Business Combination
less the aggregate exercises price of all such options
divided by (b) the Market Price of common stock as of the
date of such Business Combination.
"Non-Financial Person" means any Person that is not a
Financial Person.
"Ordinary Cash Dividends" means any cash dividend or
distribution which, when combined on a per share of Common
Stock basis with the per share amounts of all other cash
dividends and cash distributions paid on the Common Stock
during the 365-day period ending on the date of declaration
of such dividend or distribution (as adjusted to
appropriately reflect any of the events referred to in
Section 13 and excluding cash dividends or distributions
that resulted in an adjustment to the Exercise Price), does
not exceed 5% of the Market Price of a share of Common Stock
on the trading day immediately preceding the date of
declaration of such dividend or distribution.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, limited
liability company, joint venture, joint stock company,
government (or an agency or political subdivision thereof)
or other entity of any kind.
"Preferred Stock" means the Series B 8% Cumulative Perpetual
Preferred Stock of the Company or successor preferred stock
as contemplated by Section 5(C)(ii)(A) of the Statement of
Resolution.
"Pro Rata Repurchases" means any purchase of shares of
Common Stock by the Company or any Affiliate thereof
pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other
offer available to substantially all holders of Common
Stock, whether for cash, shares of capital stock of the
Company, other securities of the Company, evidences of
indebtedness of the Company or any other person or any other
property (including, without limitation, shares of capital
stock, other securities or evidences of indebtedness of a
subsidiary of the Company), or any combination thereof,
effected while this Warrant is outstanding; provided,
however, that "Pro Rata Repurchase" shall not include any
purchase of shares by the Company or any Affiliate thereof
made in accordance with the requirements of Rule 10b-18 as
in effect under the Exchange Act. The "Effective Date" of a
Pro Rata Repurchase shall mean the date of acceptance of
shares for purchase or exchange under any tender or exchange
offer which is a Pro Rata Repurchase or the date of purchase
with respect to any Pro Rata Repurchase that is not a tender
or exchange offer.
"Purchase Agreement" means the Purchase Agreement, dated as
of December 22, 1998, among the Company and the purchasers
named therein, including all schedules and exhibits thereto.
"Rights Agreement" means the Rights Agreement dated as of
September 10, 1996 between the Company and ▇▇▇▇▇▇ Trust
Company of New York, a New York trust company, as amended.
"Rights" is defined in Section 14.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute, and the rules and
regulations promulgated thereunder.
"Shares" is defined in Section 2.
"Stated Value" is an amount equal to $100.00 per share of
Preferred Stock.
"Statement of Resolution" means the Statement of Resolution
relating to the Preferred Stock filed with the Secretary of
State of the State of Texas on January _____, 1999.
"Subsidiary" of a Person means (i) a corporation, a majority
of whose stock with voting power, under ordinary
circumstances, to elect directors is at the time of
determination, directly or indirectly, owned by such Person
or by one or more Subsidiaries of such Person, or (ii) any
other entity (other than a corporation) in which such Person
or one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has at
least a majority ownership interest.
"Shares" has the meaning given to it in Section 2.
"TBCA" means the Texas Business Corporation Act, as amended,
or any successor statute or other legislation.
"Tender Offer" means any transaction to which Regulation 14D
of the Exchange Act applies.
"Voting Stock" of a Person means Capital Stock of such
Person of the class or classes pursuant to which the holders
thereof have the general voting power under ordinary
circumstances to vote in the election of the board of
directors, managers or trustees of such Person.
"Warrantholder" has the meaning given to it in Section 2.
"Warrants" means collectively this Warrant, the ten year
warrants to purchase an aggregate 10,500,000 shares and the
seven-year warrants to purchase an aggregate 8,000,000
shares, all of which were issued to the purchasers named in
the Purchase Agreement pursuant to the Purchase Agreement.
4. Number of Shares; Exercise Price. This certifies that, for
value received, [Name of Warburg, ▇▇▇▇▇▇ entity] or its
registered assigns (the "Warrantholder") is entitled, upon the
terms and subject to the conditions hereinafter set forth, to
acquire from the Company, in whole or in part, up to an aggregate
of [2,500,000] fully paid and nonassessable shares of Common
Stock, par value $0.01 per share, (the "Shares") of the Company,
at a purchase price of $12.00 per Share (the "Exercise Price").
The number of Shares and the Exercise Price are subject to
adjustment as provided herein, and all references to "Shares",
"Common Stock" and "Exercise Price" herein shall be deemed to
include any such adjustment or series of adjustments.
3. Exercise of Warrant; Term. The right to purchase the Shares
represented by this Warrant are exercisable, in whole or in
part by the Warrantholder, at any time or from time to time
after the earlier of August 31, 1999 and the occurrence of
an Early Exercise Event but in no event later than 11:59
p.m. Central Time, on January ___, 2006 (the "Expiration
Time"), by (a) the surrender of this Warrant and Notice of
Exercise annexed hereto, duly completed and executed on
behalf of the Warrantholder, at the office of the Company in
Houston, Texas (or such other office or agency of the
Company in the United States as it may designate by notice
in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and
(b) payment of the Exercise Price for the Shares thereby
purchased at the election of the Warrantholder in one of the
following manners:
(iv) by tendering in cash, by certified or cashier's check or by
wire transfer payable to the order of the Company; or
(v) by having the Company withhold shares of Common Stock
issuable upon exercise of the Warrant equal in value to the
aggregate Exercise Price as to which this Warrant is so exercised
based on the Market Price of the Common Stock on the trading day
prior to the date on which this Warrant and the Notice of
Exercise are delivered to the Company; or
(vi) by tendering to the Company that number of shares of
Preferred Stock rounded to the nearest whole share equal to the
aggregate Exercise Price as to which this Warrant is so exercised
divided by the sum of (1) the Stated Value of the Preferred Stock
plus (2) any accrued but unpaid dividends thereon.
If the Warrantholder does not exercise this warrant in its
entirety, the Warrantholder will be entitled to receive from
the Company within a reasonable time, not exceeding three
(3) business days, a new warrant in substantially identical
form for the purchase of that number of Shares equal to the
difference between the number of Shares subject to this
Warrant and the number of Shares as to which this Warrant is
so exercised. Notwithstanding the foregoing, if the Company
fails to obtain the approval of the Company's shareholders
of the issuance of Common Stock pursuant to this Warrant as
contemplated by Section 5.9 of the Purchase Agreement, the
Warrantholder may only exercise this Warrant in the manner
permitted by Section 3(b)(ii) and upon any such exercise
receive, in lieu of the shares of Common Stock, cash in an
amount equal to the product of (i) the number of shares of
Common Stock that would have been otherwise issuable and
(ii) the Market Price of the Common Stock on the trading day
prior to the date on which this Warrant and the Notice of
Exercise are delivered to the Company, such amount being
paid by certified or cashiers check or by wire transfer in
same day funds on the fourth business day following such
exercise.
4. Issuance of Shares; Authorization; Listing. Certificates
for Shares issued upon exercise of this Warrant will be
issued in such name or names as the Warrantholder may
designate and will be delivered to such named Person or
Persons within a reasonable time, not to exceed three (3)
business days after the date on which this Warrant has been
duly exercised in accordance with the terms of this Warrant.
The Company hereby represents and warrants that any Shares
issued upon the exercise of this Warrant in accordance with
the provisions of Section 3 will, upon such exercise, be
duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges
(other than liens or charges created by or imposed upon the
Warrantholder or taxes in respect of any transfer occurring
contemporaneously therewith). The Company agrees that the
Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are
delivered to the Company in accordance with the terms of
this Warrant, notwithstanding that the stock transfer books
of the Company may then be closed or certificates
representing such Shares may not be actually delivered on
such date. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this
Warrant, the aggregate number of shares of Common Stock
issuable upon exercise of this Warrant. The Company will (i)
procure, at its sole expense, the listing of the Shares and
other securities issuable upon exercise of this Warrant,
subject to issuance or notice of issuance on all stock
exchanges on which the Common Stock or such other securities
are then listed or traded and (ii) maintain the listing of
such Shares or such other securities after issuance. The
Company will take all action as may be necessary to ensure
that the Shares may be issued without violation of any
applicable law or regulation or of any requirement of any
securities exchange on which the Shares are listed or
traded.
5. No Fractional Shares or Scrip. No fractional Shares or
scrip representing fractional Shares shall be issued upon
any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be
entitled, the Warrantholder shall be entitled to receive a
cash payment equal to the Market Price of the Common Stock
less the Exercise Price for such fractional share.
9. No Rights as Shareholders; Transfer Books. This Warrant
does not entitle the Warrantholder to any voting rights or other
rights as a shareholder of the Company prior to the date of
exercise hereof. The Company will at no time close its transfer
books against transfer of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
10. Charges, Taxes and Expenses. Certificates for shares issued
upon exercise of this Warrant shall be issued in the name of the
Warrantholder. Issuance of certificates for shares upon the
exercise of this Warrant shall be made without charge to the
Warrantholder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificates, all of
which taxes and expenses shall be paid by the Company.
11. Transfer/Assignment. This Warrant and any rights hereunder
are not transferable by the Warrantholder, in whole or in part,
in the absence of any effective registration statement related to
this Warrant or an opinion of counsel, satisfactory in form and
substance to the Company, that such registration is not required
under the Securities Act and any applicable state securities
laws. Subject to compliance with the preceding sentence, this
Warrant and all rights hereunder are transferable, in whole or in
part, upon the books of the Company by the registered holder
hereof in person or by duly authorized attorney, and a new
warrant shall be made and delivered by the Company, of the same
tenor and date as this Warrant but registered in the name of the
transferee, upon surrender of this Warrant, duly endorsed, to the
office or agency of the Company described in Section 2. All
expenses, taxes (other than stock transfer taxes) and other
charges payable in connection with the preparation, execution and
delivery of the new warrants pursuant to this Section 8 shall be
paid by the Company. The restrictions imposed by the first
sentence of this Section 8 shall terminate as to the Warrant (i)
when such security has been effectively registered under the
Securities Act and disposed of in accordance with the
registration statement covering such security, or (ii) when, in
the opinion of counsel for the Company, such restrictions are no
longer required in order to achieve compliance with the
Securities Act.
9. Exchange and Registry of Warrant. This Warrant is
exchangeable, upon the surrender hereof by the Warrantholder
at the office or agency of the Company described in Section
2, for a new warrant or warrants of like tenor and date
representing the right to purchase in the aggregate a like
number of shares. The Company shall maintain at the office
or agency described in Section 2 a registry showing the name
and address of the Warrantholder as the registered holder of
this Warrant. This Warrant may be surrendered for exchange
or exercise, in accordance with its terms, at the office of
the Company, and the Company shall be entitled to rely in
all respects, prior to written notice to the contrary, upon
such registry.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or
destruction, of an indemnity letter (reasonably satisfactory
to the Company) by an institutional Warrantholder, or in
other cases, indemnity or security reasonably satisfactory
to it, and in the case of such mutilation, upon surrender
and cancellation of this Warrant, the Company will make and
deliver a new warrant or warrants of like tenor and date, in
lieu of this Warrant.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed
day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business
Day, then such action may be taken or such right may be
exercised on the next succeeding day that is a Business Day.
13. Rule 144 Information. The Company covenants that it will
file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations
promulgated thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any
Warrantholder, make publicly available such information), and it
will take such further action as any Warrantholder may reasonably
request, all to the extent required from time to time to enable
such holder to sell the Warrants without registration under the
Securities Act within the limitation of the exemptions provided
by (i) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission. Upon
the request of any Warrantholder, the Company will deliver to
such Warrantholder a written statement that it has complied with
such requirements.
13. Adjustments and Other Rights. The Exercise Price and the
number of Shares issuable upon exercise of this Warrant
shall be subject to adjustment from time to time as follows:
(A) Common Stock Issued at Less than Market Value. If
the Company issues or sells any Common Stock other than
Excluded Stock without consideration or for consideration
per share less than the Market Price of the Common Stock, on
the last trading day immediately preceding such issuance,
the Exercise Price in effect immediately prior to each such
issuance or sale will immediately (except as provided below)
be reduced to the price determined by multiplying the
Exercise Price, in effect immediately prior to such issuance
or sale, by a fraction, (1) the numerator of which shall be
(x) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale plus (y) the
number of shares of Common Stock which the aggregate
consideration received by the Company for the total number
of such additional shares of Common Stock so issued or sold
would purchase at the Market Price on the last trading day
immediately preceding such issuance or sale and (2) the
denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale. In
such event, the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the issuance giving rise to this
adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence. For the
purposes of any adjustment of the Exercise Price and the
number of Shares issuable upon exercise of this Warrant
pursuant to this Section 13(A), the following provisions
shall be applicable:
(i) In the case of the issuance of Common Stock
for cash, the amount of the consideration received by
the Company shall be deemed to be the amount of the
cash proceeds received by the Company for such Common
Stock before deducting therefrom any discounts or
commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with
the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of
Capital Stock or other securities of the Company) for a
consideration in whole or in part other than cash,
including securities acquired in exchange therefor
(other than securities by their terms so exchangeable),
the consideration other than cash shall be deemed to be
the fair value thereof as determined by the Board,
provided, however, that such fair value as determined
by the Board shall not exceed the aggregate Market
Price of the shares of Common Stock being issued as of
the date the Board authorizes the issuance of such
shares.
(iii) In the case of the issuance of (a)
options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time
exercisable) or (b) securities by their terms
convertible into or exchangeable for Common Stock
(whether or not at the time so convertible or
exchangeable) or options, warrants or rights to
purchase such convertible or exchangeable securities
(whether or not at the time exercisable):
(1) the aggregate maximum number of shares
of Common Stock deliverable upon
exercise of such options, warrants or
other rights to purchase or acquire
Common Stock shall be deemed to have
been issued at the time such options,
warrants or rights are issued and for a
consideration equal to the consideration
(determined in the manner provided in
Section 13(A)(i) and (ii), if any,
received by the Company upon the
issuance of such options, warrants or
rights plus the minimum purchase price
provided in such options, warrants or
rights for the Common Stock covered
thereby;
(2) the aggregate maximum number of shares
of Common Stock deliverable upon
conversion of or in exchange for any
such convertible or exchangeable
securities, or upon the exercise of
options, warrants or other rights to
purchase or acquire such convertible or
exchangeable securities and the
subsequent conversion or exchange
thereof, shall be deemed to have been
issued at the time such securities were
issued or such options, warrants or
rights were issued and for a
consideration equal to the
consideration, if any, received by the
Company for any such securities and
related options, warrants or rights
(excluding any cash received on account
of accrued interest or accrued
dividends), plus the additional
consideration (determined in the manner
provided in Section 13(A)(i) and (ii),
if any, to be received by the Company
upon the conversion or exchange of such
securities, or upon the exercise of any
related options, warrants or rights to
purchase or acquire such convertible or
exchangeable securities and the
subsequent conversion or exchange
thereof;
(3) on any change in the number of shares of
Common Stock deliverable upon exercise
of any such options, warrants or rights
or conversion or exchange of such
convertible or exchangeable securities
or any change in the consideration to be
received by the Company upon such
exercise, conversion or exchange, but
excluding changes resulting from the
anti-dilution provisions thereof (to the
extent comparable to the anti-dilution
provisions contained herein), the
Exercise Price and the number of Shares
issuable upon exercise of this Warrant
as then in effect shall forthwith be
readjusted to such Exercise Price and
number of Shares as would have been
obtained had an adjustment been made
upon the issuance of such options,
warrants or rights not exercised prior
to such change, or of such convertible
or exchangeable securities not converted
or exchanged prior to such change, upon
the basis of such change;
(4) on the expiration or cancellation of any
such options, warrants or rights
(without exercise), or the termination
of the right to convert or exchange such
convertible or exchangeable securities
(without exercise), if the Exercise
Price and the number of Shares issuable
upon exercise of this Warrant shall have
been adjusted upon the issuance thereof,
the Exercise Price and the number of
Shares issuable upon exercise of this
Warrant shall forthwith be readjusted to
such Exercise Price and number of Shares
as would have been obtained had an
adjustment been made upon the issuance
of such options, warrants, rights or
such convertible or exchangeable
securities on the basis of the issuance
of only the number of shares of Common
Stock actually issued upon the exercise
of such options, warrants or rights, or
upon the conversion or exchange of such
convertible or exchangeable securities;
and
(5) if the Exercise Price and the number of
Shares issuable upon exercise of this
Warrant shall have been adjusted upon
the issuance of any such options,
warrants, rights or convertible or
exchangeable securities, no further
adjustment of the Exercise Price and the
number of Shares issuable upon exercise
of this Warrant shall be made for the
actual issuance of Common Stock upon the
exercise, conversion or exchange
thereof; provided, however, that no
increase in the Exercise Price shall be
made pursuant to subclauses (1) or (2)
of this Section 13(A) (iii).
(C) Stock Splits, Subdivisions, Reclassifications or
Combinations. If the Company shall (1) declare a dividend or
make a distribution on its Common Stock in shares of Common
Stock, (2) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares, or (3) combine or
reclassify the outstanding Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this
Warrant at the time of the record date for such dividend or
distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that the Warrantholder after such date shall be entitled to
purchase the number of shares of Common Stock which such holder
would have owned or been entitled to receive after such date had
this Warrant been exercised immediately prior to such date.
Successive adjustments in the Exercise Price shall be made
whenever any event specified above shall occur. In such event the
Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to
the number obtained by dividing (i) the product of (a) the number
of Shares issuable upon the exercise of this Warrant before such
adjustment and (b) the Exercise Price in effect immediately prior
to the issuance giving rise to this adjustment by (ii) the new
number of shares issuable upon exercise of the Warrant determined
pursuant to the immediately preceding sentence.
(C) Other Distributions. In case the Company shall
fix a record date for the making of a distribution to all
holders of shares of its Common Stock (i) of shares of any
class other than its Common Stock or (ii) of evidence of
indebtedness of the Company or any Subsidiary or (iii) of
assets (excluding Ordinary Cash Dividends, and dividends or
distributions referred to in Section 13(B)), or (iv) of
rights or warrants (excluding those referred to in Section
13(B)), in each such case the Exercise Price in effect
immediately prior thereto shall be reduced immediately
thereafter to the price determined by dividing (x) an amount
equal to the difference resulting from (1) the number of
shares of Common Stock outstanding on such record date
multiplied by the Exercise Price per share on such record
date, less (2) the fair market value (as reasonably
determined by the Board) of said shares or evidences of
indebtedness or assets or rights or warrants to be so
distributed, by (y) the number of shares of Common Stock
outstanding on such record date; such adjustment shall be
made successively whenever such a record date is fixed. In
such event, the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the issuance giving rise to this
adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence. In the
event that such distribution is not so made, the Exercise
Price and the number of Shares issuable upon exercise of
this Warrant then in effect shall be readjusted, effective
as of the date when the Board determines not to distribute
such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the Exercise Price that
would then be in effect and the number of Shares that would
then be issuable upon exercise of this Warrant if such
record date had not been fixed.
(D) Certain Repurchases of Common Stock. In case the
Company effects a Pro Rata Repurchase of Common Stock, then
the Exercise Price shall be reduced to the price determined
by multiplying the Exercise Price in effect immediately
prior to the effective date of such Pro Rata Repurchase by a
fraction of which the numerator shall be (i) the product of
(x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the
Market Price of a share of Common Stock on the trading day
immediately preceding the first public announcement by the
Company or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase
price of the Pro Rata Repurchase, and of which the
denominator shall be the product of (i) the number of shares
of Common Stock outstanding immediately prior to such Pro
Rata Repurchase minus the number of shares of Common Stock
so repurchased and (ii) the Market Price per share of Common
Stock on the trading day immediately preceding the first
public announcement of such Pro Rata Repurchase. In such
event, the number of shares of Common Stock issuable upon
the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to
this adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence.
(E) Business Combinations. In case of any Business
Combination or reclassification of Common Stock (other than
a reclassification of Common Stock referred to in Section
13(B)), any Shares issued or issuable upon exercise of this
Warrant shall after the date of such Business Combination or
reclassification be exchangeable for into the number of
shares of stock or other securities or property (including
cash) to which the Common Stock issuable (at the time of
such consolidation, merger, sale, lease or conveyance) upon
exercise of this Warrant immediately prior to such Business
Combination or reclassification would have been entitled
upon such Business Combination or reclassification; and in
any such case, if necessary, the provisions set forth herein
with respect to the rights and interests thereafter of the
Warrantholder shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of
stock or other securities or property thereafter deliverable
on the exercise of this Warrant. In determining the kind
and amount of stock, securities or the property receivable
upon consummation of such Business Combination, if the
holders of Common Stock have the right to elect the kind or
amount of consideration receivable upon consummation of such
Business Combination, then the Warrantholder shall have the
right to make a similar election upon exercise of this
Warrant with respect to the number of shares of stock or
other securities or property which the Warrantholder will
receive upon exercise of this Warrant.
(F) Rounding of Calculations; Minimum Adjustments.
All calculations under this Section 13 shall be made to the
nearest one-tenth (1/10th) of a cent or to the nearest one-
hundreth (1/100th) of a share, as the case may be. Any
provision of this Section 13 to the contrary
notwithstanding, no adjustment in the Exercise Price or the
number of Shares into which this Warrant is exercisable
shall be made if the amount of such adjustment would be less
than $0.01 or one-tenth (1/10th) of a share of Common Stock,
respectively, but any such amount shall be carried forward
and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or 1/10th of a share
of Common Stock, respectively, or more.
(G) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of
this Section 13 shall require that an adjustment shall
become effective immediately after a record date for an
event, the Company may defer until the occurrence of such
event (i) issuing to the Warrantholder of this Warrant
exercised after such record date and before the occurrence
of such event the additional shares of Common Stock issuable
upon such exercise by reason of the adjustment required by
such event over and above the shares of Common Stock
issuable upon such exercise before giving effect to such
adjustment and (ii) paying to such Warrantholder any amount
of cash in lieu of a fractional share of Common Stock;
provided, however, that the Company upon request shall
deliver to such Warrantholder a due ▇▇▇▇ or other
appropriate instrument evidencing such Warrantholder's right
to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
(H) Statement Regarding Adjustments. Whenever the
Exercise Price or the number of Shares into which this
Warrant is exercisable shall be adjusted as provided in
Section 13, the Company shall forthwith file, at the
principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and
the Exercise Price that shall be in effect and the number of
Shares into which this Warrant shall be exercisable after
such adjustment and the Company shall also cause a copy of
such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in
the Company's records.
(I) Notices. In the event that the Company shall
propose to take any action of the type described in this
Section 13 (but only if the action of the type described in
this Section 13 would result in an adjustment in the
Exercise Price or the number of Shares into which this
Warrant is exercisable or a change in the type of securities
or property to be delivered upon exercise of this Warrant),
the Company shall give notice to the Warrantholder, in the
manner set forth in Section 13(H), which notice shall
specify the record date, if any, with respect to any such
action and the approximate date on which such action is to
take place. Such notice shall also set forth the facts with
respect thereto as shall be reasonably necessary to indicate
the effect on the Exercise Price and the number, kind or
class of shares or other securities or property which shall
be deliverable upon exercise of this Warrant. In the case of
any action which would require the fixing of a record date,
such notice shall be given at least 10 days prior to the
date so fixed, and in case of all other action, such notice
shall be given at least 15 days prior to the taking of such
proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any
such action.
(J) No Impairment. The Company will not, by amendment
of its Articles or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to
be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in taking of all such
action as may be necessary or appropriate in order to
protect the rights of the Warrantholder.
21. Rights. Whenever the Company shall issue shares of Common
Stock upon exercise of this Warrant, the Company shall issue,
together with each such share of Common Stock, one right to
purchase Series A Junior Participating Preferred Stock of the
Company (or other securities in lieu thereof) pursuant to the
Rights Agreement, or any similar rights issued to holders of
Common Stock in addition thereto or in the replacement therefor
(such rights, together with any additional or replacement rights,
being collectively referred to as the "Rights"), whether or not
such Rights shall be exercisable at such time, but only if such
Rights are issued and outstanding and held by the other holders
of Common Stock (or evidenced by outstanding share certificates
representing Common Stock) at such time and have not expired or
been redeemed.
22. Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Texas and for all
purposes shall be construed in accordance with and governed by
the laws of Texas, without giving effect to the conflict of laws
principles.
23. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder as the
holder of this Warrant relating hereto, the prevailing party
shall be entitled to reasonable attorneys' fees and expenses
incurred in enforcing this Warrant.
24. Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written
consent of the Company and the Warrantholder.
25. Notice. All notices hereunder shall be in writing and shall
be effective (a) on the day on which delivered if delivered
personally or transmitted by telex or telegram or telecopier with
evidence of receipt, (b) one Business Day after the date on which
the same is delivered to a nationally recognized overnight
courier service with evidence of receipt, or (c) five Business
Days after the date on which the same is deposited, postage
prepaid, in the U.S. mail, sent by certified or registered mail,
return receipt requested, and addressed to the party to be
notified at the address indicated below for the Company, or at
the address for the Warrantholder set forth in the registry
maintained by the Company pursuant to Section 9, or at such other
address and/or telecopy or telex number and/or to the attention
of such other person as the Company or the Warrantholder may
designate by ten-day advance written notice.
26. Prohibited Actions. The Company agrees that it will not
take any action which would entitle the Warrantholder to an
adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after such action upon exercise of this
Warrant, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and
other rights, would exceed the total number of shares of Common
Stock then authorized by its Restated Articles of Incorporation.
27. Entire Agreement. This Warrant and the forms attached hereto
contain the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior and
contemporaneous arrangements or undertakings with respect
thereto.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Warrant to
be executed by a duly authorized officer.
Dated: January ____, 1999
EEX Corporation
▇.▇. ▇▇▇▇▇
Vice President - Finance and
Treasurer
[Form of Notice of Exercise]
Date:
TO: EEX Corporation
RE: Election to Subscribe for and Purchase Common Stock
The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to subscribe for and purchase the
number of shares of the Common Stock set forth below covered by
such Warrant. The undersigned, in accordance with Section 3 of
the Warrant, hereby agrees to pay the aggregate Exercise Price
for such shares of Common Stock in the manner set forth below. A
new warrant evidencing the remaining shares of Common Stock
covered by such Warrant, but not yet subscribed for and
purchased, should be issued in the name set forth below. If the
new warrant is being transferred, an opinion of counsel is
attached hereto with respect to the transfer of such warrant.
Number of Shares of Common Stock:
Method of Payment of Exercise Price:
Name and Address of Person to be
Issued New Warrant:
Holder:
By:
Name:
Title:
Exhibit 7.2(b)(ii)(C)
[FORM OF SERIES C WARRANT]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF
IN VIOLATION OF ANY APPLICABLE SECURITIES LAWS. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
SERIES C WARRANT
No. 1 January ___, 1999
To Purchase [8,000,000] shares of Common Stock,
par value $.01 per share, of EEX Corporation
5. Definitions. Unless the context otherwise required, when
used herein the following terms shall have the meaning indicated.
"Affiliate" means with respect to any Person, any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with such Person. For purposes of this definition,
the term "control" (and correlative terms "controlling,"
"controlled by" and "under common control with") means
possession of the power, whether by contract, equity
ownership or otherwise, to direct the policies or management
of a Person.
"Beneficially Own" or "Beneficial Ownership" is defined in
Rules 13d-3 and 13d-5 of the Exchange Act, but without
taking into account any contractual restrictions or
limitations on voting or other rights.
"Board" means the Board of Directors of the Company.
"Business Combination" means (i) any consolidation, merger,
share exchange or similar business combination transaction
involving the Company with any Person or (ii) the sale,
assignment conveyance, transfer, lease or other disposition
by the Company of all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in Houston, Texas or New York City, New York
generally are authorized or required by law or other
governmental actions to close.
"Capital Stock" means (i) with respect to any Person that is
a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of
capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation or company,
any and all partnership or other equity interests of such
Person.
"Change of Control" shall mean any event constituting (a)
the consummation of any Business Combination except where
(i) the shareholders of the Company immediately prior to
such Business Combination own (in substantially the same
proportion relative to each other as such shareholders owned
the Common Stock immediately prior to such consummation) (x)
forty percent (40%) or more of the Voting Stock of the
surviving entity on both a Modified Non Diluted Basis and a
Modified Fully Diluted Basis immediately after such Business
Combination, and (y) forty percent (40%) or more of the
outstanding common stock of the surviving entity on both a
Modified Non Diluted Basis and a Modified Fully Diluted
Basis immediately after such Business Combination, (ii) the
members of the Board immediately prior to the entering into
the agreement relating to such Business Combination
constitute at least a majority of the Board or the board of
directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in
place immediately after such consummation that would result
in the members of the Board immediately prior to the
entering into the agreement relating to such Business
Combination ceasing to constitute at least a majority of the
Board or the board of directors of the surviving entity and
(iii) no Non-Financial Person or Group of Non-Financial
Persons is the Beneficial Owner of 20% or more of the total
outstanding Voting Stock or common stock of the surviving
entity and no Financial Person or Group of Financial Persons
is the Beneficial Owner of 35% or more of the total
outstanding Voting Stock or common stock of the surviving
entity or (b) any Non-Financial Person or Group of Non-
Financial persons acquiring Beneficial Ownership of 20% or
more of the total outstanding Voting Stock or Common Stock
of the Company or any Financial Person or Group of Financial
Persons acquiring Beneficial Ownership of 35% or more of the
total outstanding Voting Stock or Common Stock of the
Company.
"Common Stock" means the Company's common stock, par value
$.01 per share, and any Capital Stock for or into which such
Common Stock hereafter is exchanged, converted, reclassified
or recapitalized by the Company or pursuant to an agreement
or Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with
any other Common Stock or common stock, as the case may be,
or Common Stock Equivalents) rights, warrants, options,
convertible securities or exchangeable securities,
exercisable for or convertible or exchangeable into,
directly or indirectly, Common Stock, or common stock, as
the case may be, whether at the time of issuance or upon the
passage of time or the occurrence of some future event,
including the Warrants.
"Company" means EEX Corporation, a Texas Corporation.
"Early Exercise Event" means the occurrence of any of the
following: (i) an agreement providing for a Business
Combination is approved by the Board if such Business
Combination, if consummated, would result in a Change of
Control, (ii) a Tender Offer for the Company's securities is
approved or recommended by the Board, (iii) Warburg, ▇▇▇▇▇▇
Equity Partners, L.P. and its Affiliates Beneficially Own
less than 10% of the outstanding Voting Stock of the
Company, (iv) there is a redemption, repurchase or
reacquisition by the Company of Rights issued pursuant to
the Rights Agreement or any waiver of the application of the
Rights Agreement to any Beneficial Owner or (v) any Non-
Financial Person or Group of Non-Financial Persons
Beneficially Own more than 20% of the outstanding Voting
Stock of the Company or any Financial Person or Group of
Financial Persons Beneficially Own more than 35% of the
outstanding Voting Stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and
regulations promulgated thereunder.
"Excluded Stock" means (i) shares of Common Stock issued by
the Company as a stock dividend payable in shares of Common
Stock, or upon any subdivision or split-up of the
outstanding shares of Capital Stock in each case with is
subject to Section 13(B), or upon conversion of shares of
Capital Stock (but not the issuance of such Capital Stock
which will be subject to the provisions of Section
13(A)(iii)), (ii) shares of Common Stock to be issued to
employees, consultants and advisors of the Company pursuant
to options granted prior to the date of issuance of this
Warrant and pursuant to options granted after the date of
issuance of this Warrant if the exercise price per share of
Common Stock on the date of such grant equals or exceeds the
Market Price of a share of Common Stock on the date of such
grant.
"Exercise Price" has the meaning given to it in Section 2.
"Expiration Time" has the meaning given to it in Section 3.
"Financial Person" means any Person that (i) is, or holds
itself out as being, engaged primarily in the business of
investing, reinvesting, owning, holding or trading in
securities, and (ii) together with its Affiliates is not
engaged in (x) any significant activities other than
financial services, insurance or investment activities or
(y) directly or indirectly through Affiliates, in any
industrial activities, including the oil and gas and energy
industry.
"Group" means a group as contemplated by Section 13(d)(3) of
the Exchange Act.
"Market Price" means, with respect to a particular security,
on any given day, the last reported sale price regular way
or, in case no such reported sale takes place on such day,
the average of the last closing bid and asked prices regular
way, in either case on the principal national securities
exchange on which the applicable securities is listed or
admitted to trading, or if not listed or admitted to trading
on any national securities exchange, (i) the closing sale
price for such day reported by the NASDAQ Stock Market if
such security is traded over-the-counter and quoted in the
NASDAQ Stock Market, or (ii) if such security is so traded,
but not so quoted, the average of the closing reported bid
and asked prices of such security as reported by the NASDAQ
Stock Market or any comparable system, or (iii) if such
security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked
prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time
to time by the Company for that purpose. If such security
is not listed and traded in a manner that the quotations
referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall
be deemed to be the fair value per share of such security as
determined in good faith by the Board of Directors of the
Company.
"Modified Fully-Diluted Basis" shall mean a calculation
based on the then outstanding shares of Voting Stock or
common stock, as the case may be, plus all shares of Voting
Stock or common stock acquirable pursuant to, or
constituting, Common Stock Equivalents, but excluding 50% of
the Voting Stock or common stock acquirable pursuant to the
then outstanding Warrants.
"Modified Non-Diluted Basis" shall mean a calculation based
on the then outstanding shares of Voting Stock or common
stock, as the case may be, and without giving effect to
outstanding Common Stock Equivalents, but including (i) 50%
of the shares of common stock then acquirable upon exercise
of the then outstanding Warrants and (ii) the number of
shares of common stock equal to (a) the aggregate Market
Price as of the date of such Business Combination of all
shares of common stock acquirable upon exercise of all
outstanding employee stock options of the relevant entity
that have an exercise price of less than the Market Price of
common stock as of the date of such Business Combination
less the aggregate exercises price of all such options
divided by (b) the Market Price of common stock as of the
date of such Business Combination.
"Non-Financial Person" means any Person that is not a
Financial Person.
"Ordinary Cash Dividends" means any cash dividend or
distribution which, when combined on a per share of Common
Stock basis with the per share amounts of all other cash
dividends and cash distributions paid on the Common Stock
during the 365-day period ending on the date of declaration
of such dividend or distribution (as adjusted to
appropriately reflect any of the events referred to in
Section 13 and excluding cash dividends or distributions
that resulted in an adjustment to the Exercise Price), does
not exceed 5% of the Market Price of a share of Common Stock
on the trading day immediately preceding the date of
declaration of such dividend or distribution.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, limited
liability company, joint venture, joint stock company,
government (or an agency or political subdivision thereof)
or other entity of any kind.
"Preferred Stock" means the Series B 8% Cumulative Perpetual
Preferred Stock of the Company or successor preferred stock
as contemplated by Section 5(C)(ii)(A) of the Statement of
Resolution.
"Pro Rata Repurchases" means any purchase of shares of
Common Stock by the Company or any Affiliate thereof
pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other
offer available to substantially all holders of Common
Stock, whether for cash, shares of capital stock of the
Company, other securities of the Company, evidences of
indebtedness of the Company or any other person or any other
property (including, without limitation, shares of capital
stock, other securities or evidences of indebtedness of a
subsidiary of the Company), or any combination thereof,
effected while this Warrant is outstanding; provided,
however, that "Pro Rata Repurchase" shall not include any
purchase of shares by the Company or any Affiliate thereof
made in accordance with the requirements of Rule 10b-18 as
in effect under the Exchange Act. The "Effective Date" of a
Pro Rata Repurchase shall mean the date of acceptance of
shares for purchase or exchange under any tender or exchange
offer which is a Pro Rata Repurchase or the date of purchase
with respect to any Pro Rata Repurchase that is not a tender
or exchange offer.
"Purchase Agreement" means the Purchase Agreement, dated as
of December 22, 1998, among the Company and the purchasers
named therein, including all schedules and exhibits thereto.
"Rights Agreement" means the Rights Agreement dated as of
September 10, 1996 between the Company and ▇▇▇▇▇▇ Trust
Company of New York, a New York trust company, as amended.
"Rights" is defined in Section 14.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute, and the rules and
regulations promulgated thereunder.
"Shares" is defined in Section 2.
"Stated Value" is an amount equal to $100.00 per share of
Preferred Stock.
"Statement of Resolution" means the Statement of Resolution
relating to the Preferred Stock filed with the Secretary of
State of the State of Texas on January _____, 1999.
"Subsidiary" of a Person means (i) a corporation, a majority
of whose stock with voting power, under ordinary
circumstances, to elect directors is at the time of
determination, directly or indirectly, owned by such Person
or by one or more Subsidiaries of such Person, or (ii) any
other entity (other than a corporation) in which such Person
or one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has at
least a majority ownership interest.
"Shares" has the meaning given to it in Section 2.
"TBCA" means the Texas Business Corporation Act, as amended,
or any successor statute or other legislation.
"Tender Offer" means any transaction to which Regulation 14D
of the Exchange Act applies.
"Voting Stock" of a Person means Capital Stock of such
Person of the class or classes pursuant to which the holders
thereof have the general voting power under ordinary
circumstances to vote in the election of the board of
directors, managers or trustees of such Person.
"Warrantholder" has the meaning given to it in Section 2.
"Warrants" means collectively this Warrant, the 10 year
warrants to purchase an aggregate 10,500,000 shares and the
seven year warrants to purchase an aggregate 2,500,000
shares, all of which were issued to the purchasers named in
the Purchase Agreement pursuant to the Purchase Agreement.
2. Number of Shares; Exercise Price. This certifies that, for
value received, [Name of Warburg, ▇▇▇▇▇▇ entity] or its
registered assigns (the "Warrantholder") is entitled, upon
the terms and subject to the conditions hereinafter set
forth, to acquire from the Company, in whole or in part, up
to an aggregate of [8,000,000] fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, (the
"Shares") of the Company, at a purchase price of $12.00 per
Share (the "Exercise Price"). The number of Shares and the
Exercise Price are subject to adjustment as provided herein,
and all references to "Shares", "Common Stock" and "Exercise
Price" herein shall be deemed to include any such adjustment
or series of adjustments.
3. Exercise of Warrant; Term. The right to purchase the Shares
represented by this Warrant are exercisable, in whole or in
part by the Warrantholder, at any time or from time to time
after the earlier of August 31, 1999 and the occurrence of
an Early Exercise Event but in no event later than 11:59
p.m. Central Time, on January ___, 2006 (the "Expiration
Time"), by (a) the surrender of this Warrant and Notice of
Exercise annexed hereto, duly completed and executed on
behalf of the Warrantholder, at the office of the Company in
Houston, Texas (or such other office or agency of the
Company in the United States as it may designate by notice
in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and
(b) payment of the Exercise Price for the Shares thereby
purchased at the election of the Warrantholder in one of the
following manners:
(vii) by tendering in cash, by certified or cashier's check
or by wire transfer payable to the order of the Company; or
(viii) by having the Company withhold shares of Common Stock
issuable upon exercise of the Warrant equal in value to the
aggregate Exercise Price as to which this Warrant is so exercised
based on the Market Price of the Common Stock on the trading day
prior to the date on which this Warrant and the Notice of
Exercise are delivered to the Company; or
(ix) by tendering to the Company that number of shares of
Preferred Stock rounded to the nearest whole share equal to the
aggregate Exercise Price as to which this Warrant is so exercised
divided by the sum of (1) the Stated Value of the Preferred Stock
plus (2) any accrued but unpaid dividends thereon.
If the Warrantholder does not exercise this warrant in its
entirety, the Warrantholder will be entitled to receive from
the Company within a reasonable time, not exceeding three
(3) business days, a new warrant in substantially identical
form for the purchase of that number of Shares equal to the
difference between the number of Shares subject to this
Warrant and the number of Shares as to which this Warrant is
so exercised. Notwithstanding the foregoing, unless prior to
July 30, 2002, the Company elects to permit the exercise of
this Warrant as otherwise contemplated by this Section 3 by
written notice to the Warrantholders, the Warrantholder may
only exercise this Warrant in the manner permitted by
Section 3(b)(ii) and upon any such exercise receive, in lieu
of the shares of Common Stock, cash in an amount equal to
the product of (i) the number of shares of Common Stock that
would have been otherwise issuable and (ii) the Market Price
on the trading day prior to the date on which this Warrant
and the Notice of Exercise are delivered to the Company,
such amount being paid by certified or cashiers check or by
wire transfer in same day funds on the fourth business day
following such exercise.
4. Issuance of Shares; Authorization; Listing. Certificates
for Shares issued upon exercise of this Warrant will be
issued in such name or names as the Warrantholder may
designate and will be delivered to such named Person or
Persons within a reasonable time, not to exceed three (3)
business days after the date on which this Warrant has been
duly exercised in accordance with the terms of this Warrant.
The Company hereby represents and warrants that any Shares
issued upon the exercise of this Warrant in accordance with
the provisions of Section 3 will, upon such exercise, be
duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges
(other than liens or charges created by or imposed upon the
Warrantholder or taxes in respect of any transfer occurring
contemporaneously therewith). The Company agrees that the
Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are
delivered to the Company in accordance with the terms of
this Warrant, notwithstanding that the stock transfer books
of the Company may then be closed or certificates
representing such Shares may not be actually delivered on
such date. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this
Warrant, the aggregate number of shares of Common Stock
issuable upon exercise of this Warrant. The Company will (i)
procure, at its sole expense, the listing of the Shares and
other securities issuable upon exercise of this Warrant,
subject to issuance or notice of issuance on all stock
exchanges on which the Common Stock or such other securities
are then listed or traded and (ii) maintain the listing of
such Shares or such other securities after issuance. The
Company will take all action as may be necessary to ensure
that the Shares may be issued without violation of any
applicable law or regulation or of any requirement of any
securities exchange on which the Shares are listed or
traded.
5. No Fractional Shares or Scrip. No fractional Shares or
scrip representing fractional Shares shall be issued upon
any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be
entitled, the Warrantholder shall be entitled to receive a
cash payment equal to the Market Price of the Common Stock
less the Exercise Price for such fractional share.
12. No Rights as Shareholders; Transfer Books. This Warrant
does not entitle the Warrantholder to any voting rights or other
rights as a shareholder of the Company prior to the date of
exercise hereof. The Company will at no time close its transfer
books against transfer of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
13. Charges, Taxes and Expenses. Certificates for shares issued
upon exercise of this Warrant shall be issued in the name of the
Warrantholder. Issuance of certificates for shares upon the
exercise of this Warrant shall be made without charge to the
Warrantholder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificates, all of
which taxes and expenses shall be paid by the Company.
14. Transfer/Assignment. This Warrant and any rights hereunder
are not transferable by the Warrantholder, in whole or in part,
in the absence of any effective registration statement related to
this Warrant or an opinion of counsel, satisfactory in form and
substance to the Company, that such registration is not required
under the Securities Act and any applicable state securities
laws. Subject to compliance with the preceding sentence, this
Warrant and all rights hereunder are transferable, in whole or in
part, upon the books of the Company by the registered holder
hereof in person or by duly authorized attorney, and a new
warrant shall be made and delivered by the Company, of the same
tenor and date as this Warrant but registered in the name of the
transferee, upon surrender of this Warrant, duly endorsed, to the
office or agency of the Company described in Section 2. All
expenses, taxes (other than stock transfer taxes) and other
charges payable in connection with the preparation, execution and
delivery of the new warrants pursuant to this Section 8 shall be
paid by the Company. The restrictions imposed by the first
sentence of this Section 8 shall terminate as to the Warrant (i)
when such security has been effectively registered under the
Securities Act and disposed of in accordance with the
registration statement covering such security, or (ii) when, in
the opinion of counsel for the Company, such restrictions are no
longer required in order to achieve compliance with the
Securities Act.
9. Exchange and Registry of Warrant. This Warrant is
exchangeable, upon the surrender hereof by the Warrantholder
at the office or agency of the Company described in Section
2, for a new warrant or warrants of like tenor and date
representing the right to purchase in the aggregate a like
number of shares. The Company shall maintain at the office
or agency described in Section 2 a registry showing the name
and address of the Warrantholder as the registered holder of
this Warrant. This Warrant may be surrendered for exchange
or exercise, in accordance with its terms, at the office of
the Company, and the Company shall be entitled to rely in
all respects, prior to written notice to the contrary, upon
such registry.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or
destruction, of an indemnity letter (reasonably satisfactory
to the Company) by an institutional Warrantholder, or in
other cases, indemnity or security reasonably satisfactory
to it, and in the case of such mutilation, upon surrender
and cancellation of this Warrant, the Company will make and
deliver a new warrant or warrants of like tenor and date, in
lieu of this Warrant.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed
day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business
Day, then such action may be taken or such right may be
exercised on the next succeeding day that is a Business Day.
14. Rule 144 Information. The Company covenants that it will
file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations
promulgated thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any
Warrantholder, make publicly available such information), and it
will take such further action as any Warrantholder may reasonably
request, all to the extent required from time to time to enable
such holder to sell the Warrants without registration under the
Securities Act within the limitation of the exemptions provided
by (i) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission. Upon
the request of any Warrantholder, the Company will deliver to
such Warrantholder a written statement that it has complied with
such requirements.
13. Adjustments and Other Rights. The Exercise Price and the
number of Shares issuable upon exercise of this Warrant
shall be subject to adjustment from time to time as follows:
(A) Common Stock Issued at Less than Market Value. If
the Company issues or sells any Common Stock other than
Excluded Stock without consideration or for consideration
per share less than the Market Price of the Common Stock, on
the last trading day immediately preceding such issuance,
the Exercise Price in effect immediately prior to each such
issuance or sale will immediately (except as provided below)
be reduced to the price determined by multiplying the
Exercise Price, in effect immediately prior to such issuance
or sale, by a fraction, (1) the numerator of which shall be
(x) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale plus (y) the
number of shares of Common Stock which the aggregate
consideration received by the Company for the total number
of such additional shares of Common Stock so issued or sold
would purchase at the Market Price on the last trading day
immediately preceding such issuance or sale and (2) the
denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale. In
such event, the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the issuance giving rise to this
adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence. For the
purposes of any adjustment of the Exercise Price and the
number of Shares issuable upon exercise of this Warrant
pursuant to this Section 13(A), the following provisions
shall be applicable:
(i) In the case of the issuance of Common Stock
for cash, the amount of the consideration received by
the Company shall be deemed to be the amount of the
cash proceeds received by the Company for such Common
Stock before deducting therefrom any discounts or
commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with
the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of
Capital Stock or other securities of the Company) for a
consideration in whole or in part other than cash,
including securities acquired in exchange therefor
(other than securities by their terms so exchangeable),
the consideration other than cash shall be deemed to be
the fair value thereof as determined by the Board,
provided, however, that such fair value as determined
by the Board shall not exceed the aggregate Market
Price of the shares of Common Stock being issued as of
the date the Board authorizes the issuance of such
shares.
(iii) In the case of the issuance of (a)
options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time
exercisable) or (b) securities by their terms
convertible into or exchangeable for Common Stock
(whether or not at the time so convertible or
exchangeable) or options, warrants or rights to
purchase such convertible or exchangeable securities
(whether or not at the time exercisable):
(1) the aggregate maximum number of shares
of Common Stock deliverable upon
exercise of such options, warrants or
other rights to purchase or acquire
Common Stock shall be deemed to have
been issued at the time such options,
warrants or rights are issued and for a
consideration equal to the consideration
(determined in the manner provided in
Section 13(A)(i) and (ii), if any,
received by the Company upon the
issuance of such options, warrants or
rights plus the minimum purchase price
provided in such options, warrants or
rights for the Common Stock covered
thereby;
(2) the aggregate maximum number of shares
of Common Stock deliverable upon
conversion of or in exchange for any
such convertible or exchangeable
securities, or upon the exercise of
options, warrants or other rights to
purchase or acquire such convertible or
exchangeable securities and the
subsequent conversion or exchange
thereof, shall be deemed to have been
issued at the time such securities were
issued or such options, warrants or
rights were issued and for a
consideration equal to the
consideration, if any, received by the
Company for any such securities and
related options, warrants or rights
(excluding any cash received on account
of accrued interest or accrued
dividends), plus the additional
consideration (determined in the manner
provided in Section 13(A)(i) and (ii),
if any, to be received by the Company
upon the conversion or exchange of such
securities, or upon the exercise of any
related options, warrants or rights to
purchase or acquire such convertible or
exchangeable securities and the
subsequent conversion or exchange
thereof;
(3) on any change in the number of shares of
Common Stock deliverable upon exercise
of any such options, warrants or rights
or conversion or exchange of such
convertible or exchangeable securities
or any change in the consideration to be
received by the Company upon such
exercise, conversion or exchange, but
excluding changes resulting from the
anti-dilution provisions thereof (to the
extent comparable to the anti-dilution
provisions contained herein), the
Exercise Price and the number of Shares
issuable upon exercise of this Warrant
as then in effect shall forthwith be
readjusted to such Exercise Price and
number of Shares as would have been
obtained had an adjustment been made
upon the issuance of such options,
warrants or rights not exercised prior
to such change, or of such convertible
or exchangeable securities not converted
or exchanged prior to such change, upon
the basis of such change;
(4) on the expiration or cancellation of any
such options, warrants or rights
(without exercise), or the termination
of the right to convert or exchange such
convertible or exchangeable securities
(without exercise), if the Exercise
Price and the number of Shares issuable
upon exercise of this Warrant shall have
been adjusted upon the issuance thereof,
the Exercise Price and the number of
Shares issuable upon exercise of this
Warrant shall forthwith be readjusted to
such Exercise Price and number of Shares
as would have been obtained had an
adjustment been made upon the issuance
of such options, warrants, rights or
such convertible or exchangeable
securities on the basis of the issuance
of only the number of shares of Common
Stock actually issued upon the exercise
of such options, warrants or rights, or
upon the conversion or exchange of such
convertible or exchangeable securities;
and
(5) if the Exercise Price and the number of
Shares issuable upon exercise of this
Warrant shall have been adjusted upon
the issuance of any such options,
warrants, rights or convertible or
exchangeable securities, no further
adjustment of the Exercise Price and the
number of Shares issuable upon exercise
of this Warrant shall be made for the
actual issuance of Common Stock upon the
exercise, conversion or exchange
thereof; provided, however, that no
increase in the Exercise Price shall be
made pursuant to subclauses (1) or (2)
of this Section 13(A) (iii).
(D) Stock Splits, Subdivisions, Reclassifications or
Combinations. If the Company shall (1) declare a dividend or
make a distribution on its Common Stock in shares of Common
Stock, (2) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares, or (3) combine or
reclassify the outstanding Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this
Warrant at the time of the record date for such dividend or
distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that the Warrantholder after such date shall be entitled to
purchase the number of shares of Common Stock which such holder
would have owned or been entitled to receive after such date had
this Warrant been exercised immediately prior to such date.
Successive adjustments in the Exercise Price shall be made
whenever any event specified above shall occur. In such event the
Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to
the number obtained by dividing (i) the product of (a) the number
of Shares issuable upon the exercise of this Warrant before such
adjustment and (b) the Exercise Price in effect immediately prior
to the issuance giving rise to this adjustment by (ii) the new
number of shares issuable upon exercise of the Warrant determined
pursuant to the immediately preceding sentence.
(C) Other Distributions. In case the Company shall
fix a record date for the making of a distribution to all
holders of shares of its Common Stock (i) of shares of any
class other than its Common Stock or (ii) of evidence of
indebtedness of the Company or any Subsidiary or (iii) of
assets (excluding Ordinary Cash Dividends, and dividends or
distributions referred to in Section 13(B)), or (iv) of
rights or warrants (excluding those referred to in Section
13(B)), in each such case the Exercise Price in effect
immediately prior thereto shall be reduced immediately
thereafter to the price determined by dividing (x) an amount
equal to the difference resulting from (1) the number of
shares of Common Stock outstanding on such record date
multiplied by the Exercise Price per share on such record
date, less (2) the fair market value (as reasonably
determined by the Board) of said shares or evidences of
indebtedness or assets or rights or warrants to be so
distributed, by (y) the number of shares of Common Stock
outstanding on such record date; such adjustment shall be
made successively whenever such a record date is fixed. In
such event, the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the issuance giving rise to this
adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence. In the
event that such distribution is not so made, the Exercise
Price and the number of Shares issuable upon exercise of
this Warrant then in effect shall be readjusted, effective
as of the date when the Board determines not to distribute
such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the Exercise Price that
would then be in effect and the number of Shares that would
then be issuable upon exercise of this Warrant if such
record date had not been fixed.
(D) Certain Repurchases of Common Stock. In case the
Company effects a Pro Rata Repurchase of Common Stock, then
the Exercise Price shall be reduced to the price determined
by multiplying the Exercise Price in effect immediately
prior to the effective date of such Pro Rata Repurchase by a
fraction of which the numerator shall be (i) the product of
(x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the
Market Price of a share of Common Stock on the trading day
immediately preceding the first public announcement by the
Company or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase
price of the Pro Rata Repurchase, and of which the
denominator shall be the product of (i) the number of shares
of Common Stock outstanding immediately prior to such Pro
Rata Repurchase minus the number of shares of Common Stock
so repurchased and (ii) the Market Price per share of Common
Stock on the trading day immediately preceding the first
public announcement of such Pro Rata Repurchase. In such
event, the number of shares of Common Stock issuable upon
the exercise of this Warrant shall be increased to the
number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (b) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to
this adjustment by (ii) the new Exercise Price determined in
accordance with the immediately preceding sentence.
(E) Business Combinations. In case of any Business
Combination or reclassification of Common Stock (other than
a reclassification of Common Stock referred to in Section
13(B)), any Shares issued or issuable upon exercise of this
Warrant shall after the date of such Business Combination or
reclassification be exchangeable for the number of shares of
stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such
consolidation, merger, sale, lease or conveyance) upon
exercise of this Warrant immediately prior to such Business
Combination or reclassification would have been entitled
upon such Business Combination or reclassification; and in
any such case, if necessary, the provisions set forth herein
with respect to the rights and interests thereafter of the
Warrantholder shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of
stock or other securities or property thereafter deliverable
on the exercise of this Warrant. In determining the kind
and amount of stock, securities or the property receivable
upon consummation of such Business Combination, if the
holders of Common Stock have the right to elect the kind or
amount of consideration receivable upon consummation of such
Business Combination, then the Warrantholder shall have the
right to make a similar election upon exercise of this
Warrant with respect to the number of shares of stock or
other securities or property which the Warrantholder will
receive upon exercise of this Warrant.
(F) Rounding of Calculations; Minimum Adjustments.
All calculations under this Section 13 shall be made to the
nearest one-tenth (1/10th) of a cent or to the nearest one-
hundreth (1/100th) of a share, as the case may be. Any
provision of this Section 13 to the contrary
notwithstanding, no adjustment in the Exercise Price or the
number of Shares into which this Warrant is exercisable
shall be made if the amount of such adjustment would be less
than $0.01 or one-tenth (1/10th) of a share of Common Stock,
respectively, but any such amount shall be carried forward
and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or 1/10th of a share
of Common Stock, respectively, or more.
(G) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of
this Section 13 shall require that an adjustment shall
become effective immediately after a record date for an
event, the Company may defer until the occurrence of such
event (i) issuing to the Warrantholder of this Warrant
exercised after such record date and before the occurrence
of such event the additional shares of Common Stock issuable
upon such exercise by reason of the adjustment required by
such event over and above the shares of Common Stock
issuable upon such exercise before giving effect to such
adjustment and (ii) paying to such Warrantholder any amount
of cash in lieu of a fractional share of Common Stock;
provided, however, that the Company upon request shall
deliver to such Warrantholder a due ▇▇▇▇ or other
appropriate instrument evidencing such Warrantholder's right
to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
(H) Statement Regarding Adjustments. Whenever the
Exercise Price or the number of Shares into which this
Warrant is exercisable shall be adjusted as provided in
Section 13, the Company shall forthwith file, at the
principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and
the Exercise Price that shall be in effect and the number of
Shares into which this Warrant shall be exercisable after
such adjustment and the Company shall also cause a copy of
such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in
the Company's records.
(I) Notices. In the event that the Company shall
propose to take any action of the type described in this
Section 13 (but only if the action of the type described in
this Section 13 would result in an adjustment in the
Exercise Price or the number of Shares into which this
Warrant is exercisable or a change in the type of securities
or property to be delivered upon exercise of this Warrant),
the Company shall give notice to the Warrantholder, in the
manner set forth in Section 13(H), which notice shall
specify the record date, if any, with respect to any such
action and the approximate date on which such action is to
take place. Such notice shall also set forth the facts with
respect thereto as shall be reasonably necessary to indicate
the effect on the Exercise Price and the number, kind or
class of shares or other securities or property which shall
be deliverable upon exercise of this Warrant. In the case of
any action which would require the fixing of a record date,
such notice shall be given at least 10 days prior to the
date so fixed, and in case of all other action, such notice
shall be given at least 15 days prior to the taking of such
proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any
such action.
(J) No Impairment. The Company will not, by amendment
of its Articles or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to
be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in taking of all such
action as may be necessary or appropriate in order to
protect the rights of the Warrantholder.
14. Rights. Whenever the Company shall issue shares of Common
Stock upon exercise of this Warrant, the Company shall
issue, together with each such share of Common Stock, one
right to purchase Series A Junior Participating Preferred
Stock of the Company (or other securities in lieu thereof)
pursuant to the Rights Agreement, or any similar rights
issued to holders of Common Stock in addition thereto or in
the replacement therefor (such rights, together with any
additional or replacement rights, being collectively
referred to as the "Rights"), whether or not such Rights
shall be exercisable at such time, but only if such Rights
are issued and outstanding and held by the other holders of
Common Stock (or evidenced by outstanding share certificates
representing Common Stock) at such time and have not expired
or been redeemed.
15. Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Texas and for all
purposes shall be construed in accordance with and governed
by the laws of Texas, without giving effect to the conflict
of laws principles.
16. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder as the
holder of this Warrant relating hereto, the prevailing party
shall be entitled to reasonable attorneys' fees and expenses
incurred in enforcing this Warrant.
17. Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written
consent of the Company and the Warrantholder.
18. Notice. All notices hereunder shall be in writing and shall
be effective (a) on the day on which delivered if delivered
personally or transmitted by telex or telegram or telecopier with
evidence of receipt, (b) one Business Day after the date on which
the same is delivered to a nationally recognized overnight
courier service with evidence of receipt, or (c) five Business
Days after the date on which the same is deposited, postage
prepaid, in the U.S. mail, sent by certified or registered mail,
return receipt requested, and addressed to the party to be
notified at the address indicated below for the Company, or at
the address for the Warrantholder set forth in the registry
maintained by the Company pursuant to Section 9, or at such other
address and/or telecopy or telex number and/or to the attention
of such other person as the Company or the Warrantholder may
designate by ten-day advance written notice.
19. Prohibited Actions. The Company agrees that it will not
take any action which would entitle the Warrantholder to an
adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after such action upon exercise of this
Warrant, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and
other rights, would exceed the total number of shares of Common
Stock then authorized by its Restated Articles of Incorporation.
20. Entire Agreement. This Warrant and the forms attached hereto
contain the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior and
contemporaneous arrangements or undertakings with respect
thereto.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Warrant to
be executed by a duly authorized officer.
Dated: January ____, 1999
EEX Corporation
▇.▇. ▇▇▇▇▇
Vice President - Finance and
Treasurer
[Form of Notice of Exercise]
Date:
TO: EEX Corporation
RE: Election to Subscribe for and Purchase Common Stock
The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to subscribe for and purchase the
number of shares of the Common Stock set forth below covered by
such Warrant. The undersigned, in accordance with Section 3 of
the Warrant, hereby agrees to pay the aggregate Exercise Price for
such shares of Common Stock in the manner set forth below. A new
warrant evidencing the remaining shares of Common Stock covered by
such Warrant, but not yet subscribed for and purchased, should be
issued in the name set forth below. If the new warrant is being
transferred, an opinion of counsel is attached hereto with respect
to the transfer of such warrant.
Number of Shares of Common Stock:
Method of Payment of Exercise Price:
Name and Address of Person to be
Issued New Warrant:
Holder:
By:
Name:
Title:
Exhibit 7.2(b)(iv)
REGISTRATION RIGHTS AGREEMENT
by and among
EEX CORPORATION,
WARBURG, ▇▇▇▇▇▇ EQUITY PARTNERS, L.P.,
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY PARTNERS I, C.V.,
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY PARTNERS II, C.V.,
and
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY PARTNERS III, C.V.
Dated as of January ___, 1999
TABLE OF CONTENTS
1. Definitions. 1
2. Securities Subject to this Agreement. 2
(a) Registrable Securities 2
(b) Holders of Registrable Securities 2
3. Demand Registration. 2
(a) Requests for Registration 2
(b) Number of Registrations 3
(c) Effective Registration Expenses 3
(d) No Rights of Company or Other Securityholders to
Piggyback on
Demand Registrations 3
(e) Priority on Demand Registrations. 3
(f) Selection of Underwriters 4
(g) Other Registration Rights Agreements 4
4. Piggyback Registrations. 4
(a) Right to Piggyback 4
(b) Piggyback Expenses 4
(c) Priority on Primary Registrations 4
(d) Priority on Secondary Registrations 5
(e) Underwritten Offering of Different Classes of
Securities 5
(f) Selection of Underwriters 5
5. Registration on Form S-3. 5
6. Holdback Agreements. 6
(a) Restrictions on Public Sale by Holder of Registrable
Securities 6
(b) Restrictions on Public Sale by the Company 6
(c) Deferral of Filing; Suspension of Shelf Registration
Statement 6
7. Registration Procedures. 7
8. Registration Expenses. 9
9. Indemnification; Contribution. 10
(a) Indemnification by Company 10
(b) Indemnification by Holder of Registrable Securities10
(c) Conduct of Indemnification Proceedings 10
(d) Contribution 11
10. Rule 144. 11
11. Participation in Underwritten Registrations. 12
12. Miscellaneous. 12
(a) Right to Suspend. 12
(b) Remedies 12
(c) Amendments and Waivers 12
(d) Registrable Securities Held by the Company or its
Affiliates 12
(e) Notices 13
(f) Successors and Assigns 13
(g) Counterparts 13
(h) Headings 13
(i) Governing Law; Jurisdiction 13
(j) Severability 13
(k) Entire Agreement 13
(l) Attorney's Fees 13
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into this ____ day of January 1999, by and among EEX
Corporation, a Texas corporation (the "Company"), and Warburg,
▇▇▇▇▇▇ Equity Partners, L.P., a Delaware limited partnership,
Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners I, C.V., a Dutch
limited partnership, Warburg, ▇▇▇▇▇▇ Netherlands Equity Partners
II, C.V., a Dutch limited partnership, and Warburg, ▇▇▇▇▇▇
Netherlands Equity Partners III, C.V., a Dutch limited
partnership, (collectively, the "Purchaser").
RECITALS:
This Agreement is made pursuant to the Purchase Agreement,
dated December 22, 1998 between the Company and the Purchaser (the
"Purchase Agreement"). In order to induce the Purchaser to enter
into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution of
this Agreement is a condition to the closing under the Purchase
Agreement.
AGREEMENT:
The parties hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms will have
the following meanings:
"Demand Registration" has the meaning set forth in Section
3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Majority" means 51% or more.
"Person" means any individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section
4(a).
"Preferred Stock" means shares of the Company's Series B 8%
Cumulative Perpetual Preferred Stock.
"Registration Expenses" has the meaning set forth in Section
8(a).
"Registration Notice" has the meaning set forth in Section 5.
"Registrable Securities" means (i) the Shares, (ii) the
Warrants and (iii) any securities issued or issuable with respect
to the Shares or the Warrants by way of exercise, stock dividend
or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Restricted Securities" means the Registrable Securities upon
original issuance thereof, subject to the provisions of Section
2(a).
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"SEC" means the Securities and Exchange Commission.
"Shares" means the shares of Preferred Stock issued and sold
pursuant to the Purchase Agreement and shares of Preferred Stock
or Common Stock issued or issuable as a dividend on such shares.
"Underwritten registration" or "underwritten offering" means
any registration in which securities of the Company are sold
pursuant to a firm commitment underwriting.
"Warrants" means the warrants issued and sold pursuant to the
Purchase Ageement.
(b) All undefined capitalized terms used herein shall have
the meaning set forth in the Purchase Agreement.
2. Securities Subject to this Agreement.
(a) Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities but,
with respect to any particular Registrable Security, only so long
as such security continues to be a Restricted Security. A
Registrable Security ceases to be a Restricted Security when (i)
it has been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering
it, (ii) has been sold pursuant to Rule 144 (or any similar
provisions then in force) under the Securities Act or (iii) it has
otherwise been transferred and a new certificate or other evidence
of ownership for it not bearing the legend set forth in Section
4.5 of the Purchase Agreement (or other legend of similar import)
has been delivered (not subject to any stop transfer order) by or
on behalf of the Company and no other restriction on transfer
exists.
(b) Holders of Registrable Securities. A Person is deemed to be
a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such
Registrable Securities, disregarding any legal restrictions upon
the exercise of such right, whether or not such acquisition has
actually been effected.
3. Demand Registration.
(a) Requests for Registration. Subject to the provisions of
Section 3(b), any holder or holders of the then outstanding
Registrable Securities may request at any time a registration by
the Company under the Securities Act of all or part of his
Registrable Securities (a "Demand Registration"). Within ten days
after receipt of such request, the Company will serve written
notice by overnight carrier of such registration request to all
holders of Registrable Securities and will, subject to the
provisions of Section 3(b), include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 business
days after distribution to the applicable holder of the Company's
notice. All requests made pursuant to this Section 3(a) will
specify the amount of Registrable Securities to be registered and
will also specify the intended method of disposition thereof;
provided, however, that such method of disposition will be limited
to an underwritten offering if requested by the holders of a
Majority of the Registrable Securities requested to be included in
such registration.
(b) Number of Registrations. The holders of Registrable
Securities will be entitled to request an aggregate of three
Demand Registrations. A registration initiated as a Demand
Registration will not constitute a Demand Registration (i) unless
such registration has been declared effective by the SEC and
remains effective for the period set forth in Section 7(a)(iii);
provided, however, that, if more than 10% of the Registrable
Securities requested to be included in a Demand Registration which
is an underwritten registration can be excluded therefrom by
reason of the provisions of Section 3(e), the holders of
Registrable Securities will be entitled to one additional Demand
Registration (in which the Company will pay the Registration
Expenses) and (ii) if after such registration has been declared
effective by the SEC it is subject to any stop order, injunction
or other adverse order or action of the SEC or other governmental
authority.
(c) Effective Registration Expenses. Except as provided in
Section 3(d), any registration initiated as a Demand Registration,
the Company will pay all Registration Expenses, whether or not the
registration has been declared effective.
(d) No Rights of Company or Other Securityholders to Piggyback on
Demand Registrations. Neither the Company nor any of its
securityholders (other than the holders of Registrable Securities
in such capacity) has any right to include any of the Company's
securities in a registration statement initiated as a Demand
Registration under this Section 3, unless (i) such securities are
of the same class as the Registrable Securities being registered,
(ii) the holders of a Majority of the Registrable Securities being
registered in such registration consent to such inclusion in
writing, subject to Section 3(e), (iii) if such Demand
Registration is an underwritten offering, the managing
underwriters agree that some or all of such securities can be
included without adversely affecting such offering or offering
price and (iv) the Company or the selling securityholders, as
applicable, agree to sell their securities on the same terms and
conditions as apply to Registrable Securities and the holders of
such Registrable Securities. If any securityholders of the
Company (other than the holders of Registrable Securities in such
capacity) register securities of the Company in a Demand
Registration (in accordance with the provisions of this Section
3(d)), such securityholders will pay the fees and expenses of
counsel to such securityholders and their pro rata share of the
Registration Expenses if such pro rata share of the Registration
Expenses for such registration are not paid by the Company for any
reason.
(e) Priority on Demand Registrations. If a Demand Registration
is an underwritten offering and the managing underwriters advise
the Company and the selling holders of the Registrable Securities
in writing that in their opinion the number of Registrable
Securities requested to be included exceeds the number of
securities which can be sold in such offering without adversely
affecting the proposed offering or the offering price, the Company
will include in such registration the number of Registrable
Securities which in the opinion of such underwriters can be sold
without adversely affecting the proposed offering or the offering
price, and such securities will be allocated pro rata among the
holders of Registrable Securities on the basis of the number of
the Registrable Securities requested to be included in such
registration by their respective holders. If securities (other
than Registrable Securities) are proposed to be included by the
Company or its other securityholders in a Demand Registration
which is an underwritten offering (subject to and in accordance
with the provisions of Section 3(d)) and the managing underwriters
advise the Company and the selling holders of Registrable
Securities in writing that some but not all of said other
securities can be sold without adversely affecting the proposed
offering or the offering price in such underwritten offering, in
addition to all of the Registrable Securities being registered,
those securities which are permitted to be included will be
allocated (i) first, to the Company and (ii) second, to the
securityholders of such securities, allocated among them in such
proportions as such securityholders and the Company may agree.
(f) Selection of Underwriters. If any Demand Registration is an
underwritten offering, or a best efforts underwritten offering,
the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by the
holders of a Majority of the Registrable Securities requested to
be included in such offering; provided, however, such investment
bankers and managers must be reasonably satisfactory to the
Company.
(g) Other Registration Rights Agreements. Without the prior
written consent of the holders of a Majority of the Registrable
Securities, the Company will neither enter into any new
registration rights agreements that conflict with the terms of
this Agreement nor permit the exercise of any other registration
rights in a manner that conflicts with the terms of the
registration rights granted hereunder.
4. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to
register any securities under the Securities Act, other than
pursuant to a Demand Registration under Section 3 (a "Piggyback
Registration"), the Company will give written notice to all
holders of Registrable Securities of its intention to effect such
a registration not later than the earlier to occur of (i) the
tenth day following receipt by the Company of notice of exercise
of other demand registration rights or (ii) 45 days prior to the
anticipated filing date. Subject to the provisions of Sections
4(c) and (d), the Company will include in such Piggyback
Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within
ten business days after the receipt by the applicable holder of
Registrable Securities of the Company's notice. The holders of
Registrable Securities will be permitted to withdraw all or any
part of such holder's Registrable Securities from a Piggyback
Registration at any time prior to the date such Piggyback
Registration becomes effective with the SEC. If a Piggyback
Registration is an underwritten offering effected under (i)
Section 4(c), all Persons whose securities are included in the
Piggyback Registration will be obligated to sell their securities
on the same terms and conditions as apply to the securities being
issued and sold by the Company or (ii) Section 4(d), all Persons
whose securities are included in the Piggyback Registration will
be obligated to sell their securities on the same terms and
conditions as apply to the securities being sold by the Person or
Persons who initiated the Piggyback Registration under Section
4(d).
(b) Piggyback Expenses. The Registration Expenses of the holders
of Registrable Securities included in a Piggyback Registration
will be paid by the Company.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten registration on behalf of the
Company, and the managing underwriters advise the Company in
writing that in their opinion the total number or dollar amount of
securities requested to be included in such registration exceeds
the number or dollar amount of securities which can be sold in
such offering without adversely affecting the offering or the
offering price, the Company will include in such registration: (i)
first, all securities the Company proposes to sell, (ii) second,
up to the full number or dollar amount of Registrable Securities
requested to be included in such registration in excess of the
number or dollar amount of securities the Company proposes to sell
which, in the opinion of such underwriters, can be sold without
adversely affecting the offering or the offering price (allocated
pro rata among the holders of such Registrable Securities on the
basis of the dollar amount or number of Securities requested to be
included therein by each such holder) and (iii) third, such other
securities (provided such securities are of the same class as the
securities being sold by the Company) as are requested to be
included in such registration equal to the balance, if any,
allocated among the holders of such securities in such proportions
as the Company and such holders may agree.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf
of holders of the Company's securities, and the managing
underwriters advise the Company in writing that in their opinion
the dollar amount or number of securities requested to be included
in such registration exceeds the dollar amount or number of
securities which can be sold in such offering without adversely
affecting the offering or the offering price, the Company will
include in such registration (i) first, the number or dollar
amount of securities which in the opinion of such underwriters can
be sold without adversely affecting the offering or the offering
price of the securities intended to be included therein on behalf
of the holders of the Company's securities, allocated among the
holders of such securities in such proportions as the Company and
such holders may agree, and (ii) to the extent of the balance, if
any, the Registrable Securities requested to be included in such
registration, allocated pro rata among the holders of such
Registrable Securities on the basis of the dollar amount or number
of securities requested to be included therein by each such
holder.
(e) Underwritten Offering of Different Classes of Securities.
Notwithstanding anything to the contrary in this Section 4, if a
Piggyback Registration is an underwritten offering of a class of
securities of the Company different from the Registrable
Securities proposed to be included in such offering and the
managing underwriters advise that in their opinion Registrable
Securities of a different class cannot be included in such
offering without adversely affecting the offering or the offering
price, then the holders of the Registrable Securities shall not be
entitled to include Registrable Securities in such registration.
(f) Selection of Underwriters. If any Piggyback Registration is
an underwritten offering, the Company will have the sole right to
select the investment banker or investment bankers and manager or
managers to administer the offering.
5. Registration on Form S-3.
As one of its Demand Registration rights provided in Section
3, a holder of the Registrable Securities shall be entitled to
request by a notice in writing to the Company ("Registration
Notice") that the Company register for resale all or a portion of
their Registrable Securities on Form S-3 (or any similar short
form registration) if the Company and the transaction then qualify
for the use of such short form registration. On receipt of the
Registration Notice, the Company will notify all of the holders of
Registrable Securities entitled to notice of a proposed
registration pursuant to Section 3(a) of such request. Upon
receipt by the Company of the Registration Notice, the Company
will, subject to Section 6(c) and Section 12(a) use its reasonable
best efforts to file a registration statement on Form S-3 (or any
similar short form registration) in accordance with the terms of
this Section 5 as soon as practicable after receipt of such
Registration Notice. The Company will, subject to Sections 6(c)
and 12(a), use its reasonable best efforts to maintain the
effectiveness of the registration statement until the earlier of
(i) [the tenth anniversary of the closing date] (to the fullest
extent permitted by law) or (ii) the date on which the holders of
the Registrable Securities Beneficially Own 5% or less of the
Common Stock. All Registration Expenses shall be borne by the
Company, except for underwriting commissions and discounts
attributable to Registrable Securities sold by the holders
thereof, which discounts and commissions shall be paid by such
holders. The Company and other holders of securities of the
Company may not register securities under a registration statement
filed pursuant to this Section 5, without the consent of at least
a Majority of the Registrable Securities. A holder of Registrable
Securities that are covered by a registration statement pursuant
to this Section 5 will give the Company at least 48 hours written
notice prior to any resales by such holder thereunder.
6. Holdback Agreements.
(a) Restrictions on Public Sale by Holder of Registrable
Securities. Each holder of Registrable Securities agrees not to
effect any public sale or distribution of equity securities of the
Company (other than any distribution of equity securities,
substantially pro rata, to its partners or any public sale or
distribution of Preferred Stock), including a sale pursuant to
Rule 144 under the Securities Act, during the 90-day period
beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which a
holder of Registrable Securities is entitled to participate
(except as part of such underwritten registration), to the full
extent of the Registrable Securities requested by such holder to
be included in such registration statement. Any such restriction
as contemplated by this Section 6(a) may only apply once in any
twelve month period.
(b) Restrictions on Public Sale by the Company. Except for any
resales by the holder of Registrable Securities made pursuant to
Section 5, the Company agrees not to offer, register or effect any
sale or distribution on behalf of itself or on behalf of another
security holder of the Company's equity securities, or any
securities convertible into or exchangeable or exercisable for
such equity securities during the 90-day period beginning on (i)
the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such
underwritten registration or as part of an employee benefit plan
registered pursuant to registrations on Form S-8 or any successor
form to Form S-8) or (ii) the pricing of an underwritten offering
pursuant to a shelf registration statement filed pursuant to
Section 5. Any such restriction as contemplated by this Section
6(b) may only apply once in any twelve month period.
(c) Deferral of Filing; Suspension of Shelf Registration
Statement. The Company may, subject to the last sentence of this
Section 6(c), defer the filing (but not the preparation) of a
registration statement required by Section 3 or Section 5 until a
date not later than 90 days (less the number of days during the
previous twelve months that the use of a prospectus was suspended
pursuant to this Section 6(c) or Section 12(a)) after the date of
receipt by the Company of a request for a Demand Registration if
at the time the Company receives such request the Company is
engaged in confidential negotiations or other confidential
business activities, disclosure of which would be required in such
registration statement (but would not be required if such
registration statement were not filed) and the Board of Directors
of the Company determines in good faith that such disclosure would
be materially detrimental to the Company and its shareholders. A
deferral of the filing of a registration statement shall be filed
forthwith if the negotiations or other activities are disclosed or
terminated. In order to defer the filing of a registration
statement pursuant to this Section 6(c), the Company shall
promptly, upon determining to seek such deferral, deliver to each
requesting holder a certificate signed by the President or Chief
Financial Officer of the Company stating that the Company is
deferring such filing pursuant to this Section 6(c). Within 20
days after receiving such certificate, the requesting holder may
withdraw such request by giving notice to the Company; if
withdrawn, the request for a Demand Registration shall be deemed
not to have been made for all purposes of this Agreement. In
addition, if the Company receives notice of a proposed sale under
a shelf registration statement filed pursuant to Section 5, the
Company may, subject to the last sentence of this Section 6(c),
give notice to the holder requesting such sale that such sale
under such shelf registration statement must be deferred and not
made for up to 90 days (less the number of days during the
previous twelve months that the use of a prospectus was suspended
pursuant to this Section 6(c) or Section 12(a)) after the date of
receipt by the Company of such notice of proposed sale if at the
time the Company receives such notice, the Company is engaged in
confidential negotiations or other confidential business
activities, disclosure of which would be required to be made in
the prospectus included in such shelf registration statement (but
would not be required if such sale were not made) in order to
prevent such prospectus from containing any untrue statement of a
material fact or omitting to state any material fact necessary to
make the statements therein not misleading and the Board of
Directors of the Company determines in good faith that such
disclosure would be materially detrimental to the Company. A
deferral of such proposed sale pursuant to this Section 6(c) shall
be lifted, and the sale may be forthwith made if the negotiations
or other activities are disclosed or terminated. In order to defer
the proposed sale pursuant to this Section 6(c), the Company shall
promptly, upon determining to seek such deferral, deliver to such
requesting holder, a certificate signed by the President or Chief
Financial Officer of the Company stating that the Company is
deferring such proposed sale pursuant to this Section 6(c). The
Company may defer the filing of a Demand Registration Statement
only once during any twelve month period.
7. Registration Procedures.
(a) Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered in
accordance with the terms and conditions of this Agreement, the
Company will use its best efforts to effect the registration and
to permit the sale of such Registrable Securities in accordance
with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(i) prepare and file with the SEC, not later than 30 days after
receipt of a request to file a registration statement with respect
to such Registrable Securities, a registration statement with
respect to such Registrable Securities, and use its best efforts
to cause such registration statement to become effective;
provided, however, before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company
will furnish to the counsel selected in accordance with Section
8(b) by the holders of a Majority of the Registrable Securities
being registered in such registration statement copies of all such
documents proposed to be filed, which documents will be subject to
the review of such counsel; each such registration statement will
be on a form for which the Company then qualifies, which is
available for the sale of the Registrable Securities in accordance
with the intended method of disposition thereof and which is
reasonably satisfactory to the holders of a Majority of the
Registrable Securities being registered (or the managing
underwriters in the case of a firm or best efforts underwriting
offering);
(ii) notify each seller of Registrable Securities of any stop
order issued by the SEC and take all reasonable actions required
to prevent the entry of such stop order or to remove it at the
earliest possible time if entered;
(iii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90
days, or such shorter period as may be required if all Registrable
Securities covered by such registration statement are sold prior
to the expiration of such 90-day period (except in connection with
an underwritten offering, in which case such registration
statement shall be kept effective as long as the underwriters
reasonably request in the underwriting agreement), and comply with
the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(iv) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto),
the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such
seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(v) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such
seller; provided, however, that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section
7(a)(v), (ii) subject itself to taxation in any such jurisdiction
or (iii) consent to general service of process in any such
jurisdiction;
(vi) use its best efforts to cause the Registrable Securities
covered by such 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 Registrable Securities;
(vii) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration
statement or any document incorporated therein by reference
contains an untrue statement of a material fact or omits to state
any material fact necessary to make the statements therein not
misleading, and prepare and file promptly with the SEC a
supplement or amendment to such prospectus or any such document
incorporated therein by reference so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading;
(viii) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the
Company are then listed;
(ix) provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities,
in each case not later than the effective date of such
registration statement;
(x) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions in connection therewith as the holders of a Majority of
the Registrable Securities being registered or the underwriters,
if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(xi) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration
statement;
(xii) obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters as
the holders of a Majority of the Registrable Securities being
registered or the managing underwriters reasonably request; and
(xiii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with
the first month after the effective date of the Registration
Statement, which earnings statement will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish to the Company such information regarding the distribution
of such securities as the Company may from time to time reasonably
request.
8. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and
disbursements of counsel for the underwriters in connection with
blue sky qualifications of the Registrable Securities), printing
expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel for the Company and counsel for the
sellers of the Registrable Securities (subject to the provisions
of Section 8(b)) and of all independent certified public
accountants (including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance),
underwriters (excluding discounts and commissions but including
liability insurance if the Company so desires or if the
underwriters so require), the reasonable fees and expenses of any
special experts retained by the Company or at the request of the
managing underwriters in connection with such registration and
fees and expenses of other Persons retained by the Company (all
such expenses being herein called "Registration Expenses"), will
be borne as provided in this Agreement, except that the Company
will, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of
any annual audit, the expense of liability insurance referred to
above and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities
exchange on which similar securities issued by the Company are
then listed.
(b) In connection with each registration hereunder, the Company
will reimburse the holders of Registrable Securities being
registered in such registration for the reasonable fees and
disbursements of no more than one counsel (or more than one
counsel if an actual conflict exists among such selling holders)
chosen by the holders of a Majority of the Registrable Securities
being registered.
9. Indemnification; Contribution.
(a) Indemnification by Company. The Company agrees to indemnify
to the full extent permitted by law, each holder of Registrable
Securities, its officers, directors and constituent partners and
each Person who controls such holder (within the meaning of the
Securities Act and the Exchange Act) against all losses, claims,
damages, liabilities and expenses (or actions in respect thereof)
arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or 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 the same are contained in any
information furnished in writing to the Company by such holder
expressly for use therein or caused by such holder's failure to
deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished
such holder with a sufficient number of copies of the same. The
Company will reimburse each holder of Registrable Securities, its
officers, directors, constituent partners and controlling Persons
for any legal and other expenses as incurred in connection with
investigating or defending any such losses, claims, damages,
liabilities, expenses or actions. In connection with a firm
commitment or best efforts underwritten offering, the Company will
indemnify the underwriters or agents, their officers, directors,
constituent partners and each Person who controls such
underwriters (within the meaning of the Securities Act and the
Exchange Act) or agents to the same extent as provided above (or
such greater extent as may be customarily required by the managing
underwriters) with respect to the indemnification of the holders
of Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. In
connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will
furnish to the Company in writing such information and affidavits
as the Company reasonably requests for use in connection with any
such registration statement or prospectus and agrees to indemnify,
to the extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the
meaning of the Securities Act and the Exchange Act) against any
losses, claims, damages, liabilities and expenses resulting from
any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be
stated in the registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any
written information or affidavit furnished by such holder
specifically for such registration statement and then only to the
extent of the net proceeds received by such holder of Registrable
Securities. The holders of Registrable Securities will reimburse,
to the extent of the net proceeds received by the holders of
Registrable Securities, the Company, its officers, directors and
controlling persons for any legal and other expenses as incurred
in connection with investigation or defending any such losses,
claims, damages, liabilities, expenses or actions.
(c) Conduct of Indemnification Proceedings. Any Person entitled
to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification (but omission of such notice shall not relieve the
indemnifying party from liability hereunder except to the extent
such indemnifying party is actually prejudiced by such failure to
give notice) and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If
such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of an
unconditional release from all liability in respect to such claim
or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to
such claim, unless an actual conflict of interest exists between
such indemnified party and any other of such indemnified parties
with respect to such claim, in which event the indemnifying party
will be obligated to pay the fees and expenses of such additional
counsel or counsels.
(d) Contribution. If the indemnification provided for in Section
9(a) is unavailable or insufficient to hold harmless each of the
indemnified parties against any losses, claims, damages,
liabilities and expenses (or actions in respect thereof) to which
such persons may become subject under the Securities Act, then the
indemnifying party shall, in lieu of indemnifying each party
entitled to indemnification hereunder, contribute to the amount
paid or payable by such party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying
party on the one hand and such indemnified persons on the other in
connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of such persons shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact, or omission
or alleged omission to state a material fact, relates to
information supplied by or concerning the indemnifying party on
the one hand, or by such indemnified person on the other, and such
person's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9(d) were determined by pro
rata allocation or by any other allocation that does not take into
account the equitable considerations referred to in this Section
9(d). No person guilty of fraudulent misrepresentation within the
meaning of the Act shall be entitled to contribution from any
person that is not guilty of such fraudulent misrepresentation.
10. Rule 144.
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or,
if the Company is not required to file such reports, it will, upon
the request of any holder of Registrable Securities, make publicly
available such information), and it will take such further action
as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder
to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a
written statement that it has complied with such requirements.
11. Participation in Underwritten Registrations.
No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all customary
questionnaires, powers of attorney, underwriting agreements and
other documents required under the terms of such underwriting
arrangements.
12. Miscellaneous.
(a) Right to Suspend. The Company may, by notice in writing to
each holder of Registrable Securities, require the holder of
Registrable Securities to suspend use of any prospectus included
in a registration statement filed hereunder if the Company
reasonably determines that it contains an untrue statement of a
material fact or omits to state any material fact necessary to
make the statements therein not misleading or that any transaction
in which the Company is engaged or proposes to engage would
require an amendment to such registration statement or a
supplement to such prospectus (including any such amendment or
supplement made through incorporation by reference to a report
filed under Section 13 of the Exchange Act). Each holder of
Registrable Securities agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind
described in this Section 12(a), such holder will forthwith
discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until
such holder's receipt of the copies of a properly supplemented or
amended prospectus, and, if so directed by the Company, such
holder will deliver to the Company all copies, other than
permanent file copies, then in such holder's possession, of the
most recent prospectus covering such Registrable Securities at the
time of receipt of such notice. In the event the Company gives
any such notice, the time period mentioned in Section 7(a)(iii),
if applicable, will be extended by the number of days during the
period from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities
covered by such registration statement has received the copies of
such supplemented or amended prospectus. The Company agrees to
use its reasonable best efforts to cause any suspension of use of
any prospectus pursuant to this paragraph to be as short a period
of time as possible.
(b) Remedies. Each holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of
its rights under this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless
the Company has obtained the written consent of at least a
Majority of the outstanding Registrable Securities.
(d) Registrable Securities Held by the Company or its Affiliates.
For the purposes of Section 3(b), when determining whether the
required minimum principal amount or number of Registrable
Securities has been requested to be included in a Demand
Registration, Registrable Securities held by the Company or any
affiliate thereof (other than a Purchaser, if it is such an
affiliate), unless they are requested to be included in a
registration statement, will not be counted for the purposes of
determining whether such required minimum number or principal
amount of Registrable Securities has been requested to be so
included. Whenever the consent or approval of holders of all or
any specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or any of
its affiliates (other than a Purchaser if it is such an affiliate)
will not be counted in determining whether such consent or
approval was given by such holders.
(e) Notices. All notices hereunder shall be in writing and shall
be effective (a) on the day on which delivered if delivered
personally or transmitted by telex or telegram or telecopier with
evidence of receipt, (b) one business day after the date on which
the same is delivered to a nationally recognized overnight courier
service with evidence of receipt, or (c) five business days after
the date on which the same is deposited, postage prepaid, in the
U.S. mail, sent by certified or registered mail, return receipt
requested, and addressed to the party to be notified at the
address indicated below for the Company, or at the address for the
holder of the Registrable Securities set forth in a registry
maintained by the Company, or at such other address and/or
telecopy or telex number and/or to the attention of such other
person as the Company or the holder of the Registrable Securities
may designate by ten-day advance written notice.
(f) Successors and Assigns. This Agreement will 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 Registrable
Securities.
(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 will be deemed to be
an original and all of which taken together will constitute one
and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and will not limit or otherwise affect the
meaning hereof.
(i) Governing Law; Jurisdiction. This Agreement will be governed
by and construed in accordance with the laws of the State of
Texas, without giving effect to conflict of law principles. Any
holder of Registrable Securities may bring any action or
proceeding to enforce or arising out of this Agreement or in the
instruments and agreements annexed hereto in any court of
competent jurisdiction.
(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 will 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 by the
Company with respect to the securities sold pursuant to the
Purchase Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter.
(l) Attorney's Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision
hereof or thereof is validly asserted as a defense, the successful
party will be entitled to recover reasonable attorney's fees in
addition to any other available remedy.
Remainder of page intentionally blank.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
EEX CORPORATION
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President, Finance
and Administration and Chief
Financial Officer
WARBURG, ▇▇▇▇▇▇ EQUITY PARTNERS,
L.P.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Partner
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY
PARTNERS I, C.V.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Partner
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY
PARTNERS II, C.V.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Partner
WARBURG, ▇▇▇▇▇▇ NETHERLANDS EQUITY
PARTNERS III, C.V.
By: Warburg, ▇▇▇▇▇▇ & Co.
Its: General Partner
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Partner
