EXHIBIT 4(g)
STOCK PURCHASE AGREEMENT
Dated as of December 15, 1999
By and Among
Plains Resources Inc.
and
The Purchasers Named Herein
TABLE OF CONTENTS
Article Page
1 - DEFINITIONS.......................................................... 1
1.1 Certain Defined Terms......................................... 1
1.2 Accounting Terms.............................................. 3
1.3 References.................................................... 4
1.4 Singular and Plural........................................... 4
1.5 Certain Terms................................................. 4
2 - PURCHASE AND SALE OF THE SHARES...................................... 4
2.1 Sale and Purchase............................................. 4
2.2 Certificate of Designation.................................... 4
3 - PURCHASE PRICE AND CLOSING........................................... 4
3.1 Purchase Price................................................ 4
3.2 Closing....................................................... 4
3.3 Deliveries of the Company..................................... 4
3.4 Deliveries of Purchasers...................................... 5
4 - REGISTRATION RIGHTS.................................................. 5
4.1 Registration.................................................. 5
4.2 Registration Procedures....................................... 6
4.3 Registration Expenses......................................... 9
4.4 Indemnification; Contribution................................. 9
4.5 Participation in Underwritten Registrations................... 12
4.6 Rule 144...................................................... 12
5 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 13
5.1 Organization.................................................. 13
5.2 Authority..................................................... 13
5.3 Authorization................................................. 13
5.4 Binding Agreement............................................. 13
5.5 No Conflicts.................................................. 13
5.6 Capitalization................................................ 14
5.7 Valid Issuance................................................ 14
5.8 Absence of Bankruptcy Proceedings............................. 14
5.9 Brokers....................................................... 14
5.10 Financial Statements.......................................... 15
5.11 No Material Adverse Change.................................... 15
5.12 Commission Documents.......................................... 15
5.13 Properties.................................................... 15
5.14 Registration Rights........................................... 16
(i)
5.15 Offering.................................................................. 16
5.16 No Defaults............................................................... 16
5.17 Litigation................................................................ 16
5.18 Compliance with Laws...................................................... 16
5.19 Taxes..................................................................... 16
5.20 ERISA..................................................................... 17
5.21 Compliance with Environmental Laws........................................ 17
6 - REPRESENTATIONS AND WARRANTIES OF PURCHASERS...................................... 17
6.1 General................................................................... 17
6.2 Accredited Investor, Etc.................................................. 18
7 - COVENANTS OF THE COMPANY.......................................................... 19
7.1 Operation of the Business of the Company Pending Closing.................. 19
7.2 Taking of Necessary Action................................................ 19
7.3 Restrictions on Certain Actions........................................... 19
7.4 Use of Proceeds........................................................... 20
7.5 Reservation of Common Stock............................................... 20
7.6 Board Representative...................................................... 20
7.7 Agreement to Seek Amendment of Credit Agreement........................... 20
8 - CLOSING CONDITIONS................................................................ 21
8.1 The Company's Closing Conditions.......................................... 21
8.2 Purchasers' Closing Conditions............................................ 21
9 - TERMINATION....................................................................... 22
9.1 Grounds for Termination................................................... 22
9.2 Effect of Termination..................................................... 22
10 - MISCELLANEOUS.................................................................... 23
10.1 Survival of Representations and Warranties................................ 23
10.2 Indemnification........................................................... 23
10.3 Antitrust Laws............................................................ 23
10.4 Notices................................................................... 23
10.5 Incidental Expenses....................................................... 24
10.6 Entire Agreement.......................................................... 24
10.7 Governing Law............................................................. 24
10.8 Counterparts.............................................................. 24
10.9 Waiver.................................................................... 24
10.10 Binding Effect; Assignment................................................ 24
10.11 Brokers................................................................... 24
10.12 Construction.............................................................. 25
(ii)
Schedule A Purchased Shares
Exhibit A Certificate of Designation - Series F
Exhibit B Opinion of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
Exhibit C Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Exhibit D Certificate of Designation - Series G
(iii)
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of the 15th day of December,
1999, is by and among Plains Resources Inc., a Delaware corporation (the
"Company"), and the Purchasers named on Schedule A hereto (collectively,
"Purchasers").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to issue and sell to each Purchaser, and each
Purchaser has made a commitment to purchase from the Company, in the amount
indicated opposite such Purchaser's name on Schedule A hereto, shares of the
Company's authorized but unissued Series F Cumulative Convertible Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), which shares shall
have such rights, preferences, privileges and restrictions as set forth in the
Certificate of Designation, Preferences and Rights of Series F Cumulative
Convertible Preferred Stock of Plains Resources Inc. attached hereto as Exhibit
A (the "Certificate of Designation") on the terms and subject to the conditions
set forth herein; and
WHEREAS, in connection with the sale of the Preferred Stock hereunder, the
Company will make an irrevocable offer to exchange (the "Exchange Offer") the
Company's Series E Cumulative Convertible Preferred Stock ("Series E Shares")
for a new series of preferred stock designated as the Series G Cumulative
Convertible Preferred Stock (the "Series G Shares") pursuant to the Certificate
of Designation, Preferences and Rights of Series G Cumulative Convertible
Preferred Stock attached hereto as Exhibit D (the "Series G Certificate of
Designation").
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties set forth in this Agreement, the parties to this
Agreement hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Certain Defined Terms. The following terms, as used in this
Agreement, shall have the following meanings:
"Closing" has the meaning given such term in Section 3.2.
"Closing Date" has the meaning given such term in Section 3.2.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder as in effect on the date hereof.
"Commission Documents" has the meaning given such term in Section
5.12.
"Common Stock" means the common stock, $.10 par value, of the Company.
"Conversion Shares" means the shares of Common Stock issuable upon the
conversion of Preferred Stock into, or exchange of Preferred Stock for,
Common Stock.
"Environmental Laws" has the meaning given such term in Section 5.21.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor statute, as at the time in effect. Reference to a particular
section of such Act shall include a reference to the comparable section, if
any, of such successor statute.
"Financial Statements" means the financial statements of the Company
and its consolidated subsidiaries, including the notes thereto, as of and
for the year ended December 31, 1998 and as of and for the nine months
ended September 30, 1999.
"GAAP" means generally accepted accounting principles, as set forth in
the opinions of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements of the Financial Accounting
Standards Board or in such opinions and statements of such other entities
as shall be approved by a significant segment of the accounting profession
in the United States of America.
"Governmental Authority" means (i) the United States of America or any
state within the United States of America and (ii) any court or any
governmental department, commission, board, bureau, agency or other
instrumentality of the United States of America or of any state within the
United States of America.
"Holder" means the Purchasers and any other holder from time to time
of Preferred Stock or Registrable Securities (other than the Company or any
Subsidiary).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Inspectors" has the meaning given such term in Section 4.2(h).
"Law" means any applicable statute, law, ordinance, regulation, rule,
ruling, order, restriction, requirement, writ, injunction, decree or other
official act of or by any Governmental Authority.
"Material Adverse Effect" with respect to a Person means a material
and adverse effect on the financial condition, results of operations,
business or properties of such Person and its consolidated subsidiaries,
taken as a whole.
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"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, a limited liability
company, a government or any department or agency of a government.
"Pollutants" has the meaning given such term in Section 5.21.
"Purchase Price" has the meaning given such term in Section 3.1.
"Records" has the meaning given such term in Section 4.2(h).
"Registrable Securities" means Conversion Shares until such time as
such shares are sold in a public distribution pursuant to a Registration
Statement under the Securities Act or pursuant to transactions exempt from
registration under the Securities Act where Securities sold in such
transaction may be resold without subsequent registration under the
Securities Act.
"Registration Expenses" has the meaning given such term in Section
4.3.
"Registration Statement" has the meaning given such term in Section
4.2(a).
"Releases" has the meaning given such term in Section 5.21.
"SEC" means the United States Securities and Exchange Commission or
any successor agency.
"Securities Act" means the Securities Act of 1933, or any successor
statute, as at the time in effect. Reference to a particular section of
such Act shall include a reference to the comparable section, if any, of
such successor statute.
"Selling Holder" means a holder of Registrable Securities who is
selling such Registrable Securities pursuant to a Registration Statement.
"Shares" has the meaning given such term in Section 2.1.
"Shelf Registration Statement" has the meaning given such term in
Section 4.1(b).
"Subsidiary" means (a) a corporation a majority of whose voting stock
is at the time, directly or indirectly, owned by the Company, by one or
more subsidiaries of the Company or by the Company and one or more
subsidiaries of the Company or (b) any other Person (other than a
corporation) in which the Company, a subsidiary of the Company or the
Company and one or more subsidiaries of the Company, directly or
indirectly, at the date of determination thereof, has (i) at least a
majority ownership or (ii) the power to elect or direct the election of the
directors or other governing body of such Person.
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1.2 Accounting Terms. For the purposes of this Agreement, all accounting
terms not otherwise defined in this Agreement shall have the meanings assigned
to such terms in accordance with GAAP.
1.3 References. Unless the context otherwise indicates, references in
this Agreement to a particular section, exhibit or schedule are to the
corresponding section of, or the corresponding exhibit or schedule to, this
Agreement.
1.4 Singular and Plural. The definitions contained in Section 1.1 are
equally applicable to both the singular and plural form of the terms defined in
such Section.
1.5 Certain Terms. As used in this Agreement, the term "knowledge" means
actual knowledge, without any requirement for independent investigation or
verification, of any fact, circumstance or condition by the executive officers
(or any of them) of the party involved, and does not include (i) knowledge
imputed to the party involved by reason of knowledge of or notice to any person,
firm or corporation other than its executive officers or (ii) knowledge deemed
to have been constructively given by reason of any filing, registration or
recording of any document or instrument in any public record or with any
Governmental Authority. As used in this Agreement, the term "day" means any
calendar day. As used in this Agreement, all references to "dollars" or the
symbol "$" shall refer to lawful currency of the United States of America.
ARTICLE 2 - PURCHASE AND SALE OF THE SHARES
2.1 Sale and Purchase. Subject to the terms and conditions set forth in
this Agreement, each Purchaser agrees to purchase, and the Company agrees to
issue and sell to each Purchaser, the number of shares of the Preferred Stock
(the "Shares") set forth opposite such Purchaser's name on Schedule A, free and
clear of all liens, claims, pledges, security interests or other encumbrances.
At the Closing, each Purchaser will pay the portion of the Purchase Price set
forth opposite his or its name in Schedule A.
2.2 Certificate of Designation. The Preferred Stock shall have the rights
and preferences set forth in the Certificate of Designation.
ARTICLE 3 - PURCHASE PRICE AND CLOSING
3.1 Purchase Price. The aggregate purchase price that shall be payable at
the Closing by Purchasers to the Company for the Shares shall be $47,000,000
(the "Purchase Price"). At the Closing, each Purchaser shall pay in immediately
available funds to the account designated by the Company the portion of the
Purchase Price set forth opposite his or its name on Schedule A.
3.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on the date and at a location mutually
agreed upon by the Company and the Purchasers, or at such other date or place as
the parties may agree in writing (the "Closing Date").
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3.3 Deliveries of the Company. At Closing, the Company shall deliver to
Purchasers certificates representing the Shares, each such certificate to be
executed by the Company's President and Secretary and to be appropriately
registered in the name of each Purchaser.
3.4 Deliveries of Purchasers. At Closing, Purchasers shall deliver to the
Company the Purchase Price in immediately available funds to the Company as
provided in Section 3.1.
ARTICLE 4 - REGISTRATION RIGHTS
4.1 Registration.
(a) The Company shall, as promptly as reasonably possible, but, in any
event, not later than March 31, 2000, prepare and file with the SEC a shelf
registration statement (the "Shelf Registration Statement") on an
appropriate form pursuant to Rule 415 (or any similar provision that may be
adopted by the SEC) under the Securities Act with respect to the
Registrable Securities.
(b) The Company agrees to use its best efforts to have the Shelf
Registration Statement declared effective as soon as practicable after the
filing thereof and to keep the Shelf Registration Statement continuously
effective until the earlier of (1) the fourth anniversary of the Closing
Date; or (2) such time as all of the Registrable Securities can be resold
pursuant to Rule 144(k) under the Securities Act (or any successor
provision). Further, the Company shall cause the Registrable Securities to
be listed on the American Stock Exchange as soon as practicable after the
Closing Date, when and as issued, and shall maintain the listing of such
Registrable Securities after their issuance; provided that the Company
shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would reasonably be expected to result in
Holders of Registrable Securities covered thereby not being able to offer
and sell such Registrable Securities during that period using the
prospectus included in the Shelf Registration Statement, unless such action
is required by applicable law (including, but not limited to, reasonable
periods necessary to prepare appropriate disclosure); and provided,
further, that the foregoing proviso shall not apply to actions taken by the
Company in good faith and for business reasons ("Suspension Event"),
including, without limitation, a merger, consolidation or similar
transaction, the acquisition or divestiture of assets and the offering or
sale of securities, so long as the Company promptly thereafter complies
with the requirements of Section 4.2(f) hereof, if applicable, and so long
as the Company gives prompt notice of the existence of such Suspension
Event to Holders of Registrable Securities. Any such period during which
the Company fails to keep the Shelf Registration Statement effective and
usable for offers and sales of Registrable Securities is referred to as a
"Suspension Period." A Suspension Period shall commence on and include the
date that the Company gives notice that the Shelf Registration Statement is
no longer effective or the prospectus included therein is no longer usable
for offers and sales of Registrable Securities and shall
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end on the date when each Selling Holder either receives the copies of the
supplemented or amended prospectus contemplated by Section 4.2(f) hereof or
is advised in writing by the Company that use of the prospectus may be
resumed. If one or more Suspension Periods occur, the date referenced in
(1) above shall be extended by the number of days in each such Suspension
Period.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or
supplement, as the case may be, (i) to comply in all material respects with
the applicable requirements of the Securities Act and the rules and
regulations of the SEC and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading other
than statements or omissions made in reliance upon and in conformity with
information furnished to the Company in writing by the Holders of
Registrable Securities expressly for use in such Shelf Registration
Statement and the related prospectus or any amendment or supplement
thereto.
4.2 Registration Procedures. In connection with any registration pursuant
to Section 4.1 hereof, the following provisions shall apply:
(a) The Company shall (i) prior to filing the Shelf Registration
Statement or any other registration statement registering Registrable
Securities (in either case, "Registration Statement") or prospectus or any
amendments or supplements thereto, furnish to one counsel selected by the
Holders of Registrable Securities of a majority in aggregate principal
amount or number of shares, as the case may be, of the Registrable
Securities covered by such Registration Statement copies of all such
documents proposed to be filed, which documents will be subject to the
review of such counsel, and (ii) as soon as reasonably possible, furnish to
each Selling Holder, prior to filing a Registration Statement, copies of
such Registration Statement as proposed to be filed, and thereafter furnish
to such Selling Holder 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 Selling Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Selling Holder.
(b) The Company shall notify the Selling Holders in writing:
(i) when the Registration Statement and any amendment thereto
has been filed with the SEC and when the Registration
Statement or any post-effective amendment thereto has become
effective;
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(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such
purpose.
(c) The Company shall use its best efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any Selling Holder reasonably requests and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such Selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Selling Holder;
provided 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 paragraph (c), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any
such jurisdiction.
(d) The Company shall use reasonable efforts to prevent the issuance
or obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time.
(e) The Company shall use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the Selling Holder or Selling Holders
thereof to consummate the disposition of such Registrable Securities.
(f) The Company shall notify each Selling Holder of such Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the occurrence of an event requiring
the preparation of a supplement or amendment to such prospectus 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 required to be stated therein or necessary to
make the statements therein not misleading and promptly file with the SEC
and make available to each Selling Holder any such supplement or amendment,
provided that no such filing shall be required during the existence of a
Suspension Event.
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(g) If requested in writing by the Holders beneficially owning at
least 25% collectively of the Registrable Securities, the Company shall
enter into customary agreements (including an underwriting agreement in
customary form with underwriters selected by such Holders and reasonably
approved by the Company), shall take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such
Registrable Securities, and shall notify each other Holder of Registrable
Securities of such underwritten offerings and offer such Holders the
opportunity to have their Registrable Securities included in such
underwritten offering; provided, however, that the Company shall not be
required to participate in more than two underwritten offerings under the
Shelf Registration Statement pursuant to this Section 4.2(g).
(h) The Company shall make available for inspection by any Selling
Holder of such Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other professional retained by any such Selling Holder or
underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company and
its Subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause the Company's and its subsidiaries' officers, directors and
employees to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Each Selling
Holder of such Registrable Securities agrees that information obtained by
it as a result of such inspections which is deemed confidential shall not
be used by it as the basis for any market transactions in securities of the
Company unless and until such is made generally available to the public by,
on behalf of or with the consent of, the Company. Notwithstanding the
previous sentence, the parties agree that the Company shall have no
obligation to make generally available to the public any confidential
information, regardless of whether the Company provides such data to the
Selling Holders or the Inspectors. Except as required by law or judicial
process, no Selling Holder shall disclose any such confidential information
to any Person other than an Inspector, and each Selling Holder will cause
any Inspector retained by it to maintain the confidentiality of such
information. Each Selling Holder of such Registrable Securities further
agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.
(i) In the event of a sale pursuant to an underwritten offering, the
Company shall use its best efforts to obtain (i) a comfort letter or
comfort letters from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
comfort letters as the Selling Holders of a majority of Registrable
Securities being sold or the managing underwriter reasonably requests and
(ii) an opinion of counsel to the Company covering such matters as are
customarily covered by such opinions, which opinion may be that of the
Company's General Counsel as to matters upon which the Company's
underwriters have relied upon the opinions of such
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General Counsel in connection with the Company's prior underwritten
offerings of its securities.
(j) The Company will use its best efforts to comply with all the rules
and regulations of the SEC to the extent and so long as they are applicable
to the Registration Statement and will make generally available to its
security holders after the effective date of the applicable Registration
Statement an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act.
The Company may require each Selling Holder of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing and such other
information as may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 4.2(f)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.2(f) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such Selling Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
4.3 Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Article 4, 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 in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), 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, and fees and disbursements of counsel for the Company
and its independent certified public accountants (including the expenses of any
special audit or comfort letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain such
insurance), the reasonable fees and expenses of any special experts retained by
the Company in connection with such registration, fees and expenses of other
persons retained by the Company, and reasonable fees and expenses of one counsel
for the Holders (who shall be reasonably acceptable to the Company) incurred in
connection with each registration hereunder (but not including any underwriting
discounts or commissions attributable to the sale of Registrable Securities)
(all such expenses being herein called "Registration Expenses"), will be borne
by the Company.
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4.4 Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Selling Holder of Registrable Securities, its
officers, directors, partners and agents and each person, if any, who
controls such Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages (whether in contract, tort or otherwise),
liabilities and expenses (including reasonable costs of investigation)
whatsoever (as incurred or suffered) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities
or in any amendment or supplement thereto or in any preliminary prospectus,
or arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of, or are based upon,
any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such Selling Holder or on
such Selling Holder's behalf expressly for use therein. The Company also
agrees to indemnify any underwriters of the Registrable Securities, their
officers, partners and directors and each person who controls such
underwriters on substantially the same basis as that of the indemnification
of the Selling Holders provided in this Section 4.4(a) or such other
indemnification customarily obtained by underwriters at the time of
offering.
(b) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any Selling Holder (or its officers, directors, partners
or agents) or any person controlling any such Selling Holder in respect of
which indemnity may be sought from the Company, the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Selling Holder, and shall assume the payment of all
expenses. Such Selling Holder or any controlling person of such Selling
Holder shall have the right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Selling Holder or such
controlling person unless (i) the Company has agreed to pay such fees and
expenses or (ii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Selling Holder or such
controlling person and the Company, and such Selling Holder or such
controlling person shall have been advised by counsel that there may be one
or more legal defenses available to such Selling Holder or such controlling
person which conflict with those available to the Company (in which case,
if such Selling Holder or such controlling person notifies the Company in
writing that it elects to employ separate counsel at the expense of the
Company, the Company shall not have the right to assume the defense of such
action or proceeding on behalf of such Selling Holder or such controlling
person, it being understood, however, that the Company shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one
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separate firm of attorneys (together with appropriate local counsel) at any
time for such Selling Holder and such controlling persons, which firm shall
be designated in writing by such Selling Holder). The Company shall not be
liable for any settlement of any such action or proceeding effected without
the Company's written consent, but if settled with its written consent, or
if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless such Selling
Holder and such controlling person from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
(c) Indemnification by Selling Holders. Each Selling Holder agrees,
severally but not jointly, to indemnify and hold harmless the Company, its
directors and officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act, as amended, to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with respect to
information furnished in writing by such Selling Holder or on such Selling
Holder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against the Company or its directors or
officers, or any such controlling person, in respect of which indemnity may
be sought against such Selling Holder, such Selling Holder shall have the
rights and duties given to the Company, and the Company or its directors or
officers or such controlling person shall have the rights and duties given
to such Selling Holder, by the preceding paragraph. Each Selling Holder
also agrees to indemnify and hold harmless underwriters of the Registrable
Securities, their officers and directors and each person who controls such
underwriters on substantially the same basis as that of the indemnification
of the Company provided in this Section 4.4(c).
(d) Contribution. If the indemnification provided for in this Section
4.4 is unavailable to the Company, the Selling Holders or the underwriters
in respect of any losses, claims, damages, liabilities or judgments
referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) as between the Company and the
Selling Holders on the one hand and the underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Holders on the one hand and the underwriters on
the other from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Holders on the one hand and
of the underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations and (ii)
as between the Company on the one hand and each Selling Holder on the
other, in such proportion as is appropriate to reflect the relative fault
of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable
-11-
considerations. The relative benefits received by the Company and the
Selling Holders on the one hand and the underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Holders bear to the total
underwriting discounts and commissions received by the underwriters, in
each case as set forth in the table on the cover page of the prospectus.
The relative fault of the Company and the Selling Holders on the one hand
and of the underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Holders or
by the underwriters. The relative fault of the Company on the one hand and
of each Selling Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4(d), no underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
Selling Holder were offered to the public exceeds the amount of any damages
which such Selling Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
4.5 Participation in Underwritten Registrations. No person may participate
in any underwritten registration hereunder unless such person (a) 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 (b)
completes and executes all questionnaires,
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powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Agreement.
4.6 Rule 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act, and
that it will take such further action as any holder of Conversion Shares may
reasonably request, all to the extent required from time to time to enable
holders of Conversion Shares to sell Conversion Shares without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any holder of Conversion Shares, the Company will deliver to such
holder a written statement as to whether it has complied with such requirements.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Purchasers, except as set forth
in a disclosure schedule attached to this Agreement, as follows:
5.1 Organization. The Company and each of its Subsidiaries that is a
corporation is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of the
Company's Subsidiaries that is a limited partnership has been duly formed and is
validly existing as a limited partnership under the laws of the jurisdiction of
its formation. Each of the Company's Subsidiaries that is a limited liability
company has been duly organized and is validly existing as a limited liability
company under the laws of its jurisdiction of organization. The Company and each
of its Subsidiaries is duly qualified or licensed to do business as a foreign
corporation, foreign limited partnership or foreign limited liability company,
and in good standing, in every jurisdiction in which its ownership of property
or the conduct of its business requires such qualification or licensing, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect upon the Company. Attached hereto as Exhibit A is a true and
complete copy of the Certificate of Designation. True and complete copies of the
Second Restated Certificate of Incorporation and Bylaws of the Company, each as
amended to date, have been provided to Purchasers.
5.2 Authority. The Company has all requisite corporate power and authority
to carry on its business as presently conducted and to enter into this Agreement
and to perform its obligations contemplated hereunder.
5.3 Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of the Company and its
stockholders.
5.4 Binding Agreement. This Agreement has been duly executed and delivered
by the Company, and this Agreement constitutes a legal, valid and binding
obligation of the Company,
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enforceable against it in accordance with its terms, subject to applicable
bankruptcy and other similar laws of general application with respect to
creditors and subject to principles of equity and public policy that affect
enforceability of agreements generally.
5.5 No Conflicts. Neither the execution or delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, including the Exchange
Offer, will result in a breach or violation of, or constitute a default under,
the certificate of incorporation, bylaws or other governing documents of the
Company or its Subsidiaries, or any agreement, indenture or other instrument to
which any of the Company or its Subsidiaries is a party or by which any of them
is bound or to which any of their properties are subject, nor will the
performance by the Company and its Subsidiaries of any of their obligations
hereunder violate any Law or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or assets of the Company or its
Subsidiaries. No permit, consent, approval, authorization or order of any
Governmental Authority or other Person is required in connection with the
consummation by the Company and its Subsidiaries of the transactions
contemplated by this Agreement, except such as have been obtained.
5.6 Capitalization. The authorized capital stock of the Company consists
of 50,000,000 shares of common stock, par value $.10 per share, of which
17,924,050 are issued and outstanding, and 2,000,000 shares of preferred stock,
par value $1.00 per share, of which there are 46,600 shares of Series D
Cumulative Convertible Preferred Stock issued and outstanding and 177,625 shares
of Series E Cumulative Convertible Preferred Stock issued and outstanding. All
of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. The Company has reserved
a total of 3,029,307 shares of Common Stock for issuance pursuant to existing
employee benefit plans, of which 2,821,429 shares are currently issuable upon
exercise. In addition, 251,350 shares of Common Stock are issuable upon exercise
of various outstanding warrants. Except for the foregoing, there are no
outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character obligating the Company to
purchase, redeem, issue, transfer or deliver any shares of Common Stock,
preferred stock or other equity security.
5.7 Valid Issuance.
(a) The issuance, sale and delivery of the Shares in accordance with
this Agreement and the issuance and delivery of the Series G Shares in the
Exchange Offer, and the making of the Exchange Offer have been duly authorized
by all necessary corporate action on the part of the Company and its
stockholders, and the Shares when so issued, sold and delivered against payment
therefor in accordance with this Agreement and the Series G Shares, when so
issued and delivered in exchange for Series E Shares in accordance with the
terms of the Exchange Offer will be duly and validly issued, fully paid and
nonassessable.
(b) The issuance and delivery of the Conversion Shares and the Common
Stock issuable upon conversion of the Series G Shares have been duly authorized
by all necessary
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corporate action on the part of the Company and its stockholders, and the
Conversion Shares and the Common Stock issuable upon conversion of the Series G
Shares have been duly reserved for issuance and, when issued, will be duly and
validly issued, fully paid and nonassessable.
5.8 Absence of Bankruptcy Proceedings. There are no bankruptcy,
reorganization or arrangement proceedings pending against, being contemplated
by, or to the knowledge of the Company, threatened against, the Company or any
of its Subsidiaries.
5.9 Brokers. No broker or finder has acted for or on behalf of the Company
in connection with the investment in the Shares by the Purchasers, and no broker
or finder is entitled to any brokerage or finder's fee or commission in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of the Company in connection with the investment in the Shares by
the Purchasers.
5.10 Financial Statements. The Financial Statements (i) present fairly the
financial position of the Company and its consolidated Subsidiaries as of
December 31, 1998 and September 30, 1999, (ii) present fairly the results of
operations, cash flows and changes in stockholders' equity of the Company and
its consolidated Subsidiaries for the year ended December 31, 1998 and the nine
months ended September 30, 1999 and (iii) were prepared in accordance with GAAP
consistently followed throughout the periods involved, except as otherwise noted
therein. The Company has no material liabilities, contingent or otherwise, not
reflected in the balance sheet as of December 31, 1998 (or the notes thereto) or
the balance sheet as of September 30, 1999 (or the notes thereto) included in
the Financial Statements, other than any such liabilities incurred in the
ordinary course of business since December 31, 1998.
5.11 No Material Adverse Change. Since December 31, 1998, there has not
been any material adverse change in the financial condition, results of
operations, business or properties of the Company.
5.12 Commission Documents. The Company has filed all registration
statements, proxy statements, reports and other documents required to be filed
by it under the Securities Act or the Exchange Act, and all amendments thereto
(collectively, the "Commission Documents"). Each Commission Document complied as
to form when filed in all material respects with the rules and regulations of
the SEC and did not on the date of filing contain any untrue statement of a
material fact or omit 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.
5.13 Properties.
(a) Each of the Company and its Subsidiaries has good and defensible
title to all of its respective interests in oil and gas leases, free and
clear of any encumbrances, except as described in the Commission Documents,
subject only to liens for taxes or charges of mechanics or materialmen not
yet due and to encumbrances under gas sales contracts, operating
agreements, unitization and pooling agreements and other similar
-15-
agreements as are customarily found in connection with comparable drilling
and producing operations and to title defects and other encumbrances that
are, singularly and in the aggregate, not material in amount and do not
interfere with its use or enjoyment of its oil and gas properties. Each of
the Company and its Subsidiaries has complied in all material respects with
the terms of the oil and gas leases in which it purports to own an
interest, and all of such leases are in full force and effect (except where
the failure so to comply or to be in full force and effect will not have a
Material Adverse Effect upon the Company).
(b) The Company and its Subsidiaries do not own any material
properties or other assets that are not described in the Commission
Documents. Each of the Company and its Subsidiaries has good and
defensible title to all properties and assets described in the Commission
Documents as owned by it, in valid, subsisting and enforceable leases for
the properties described in the Commission Documents as leased by them, in
each case free and clear of all liens, charges, encumbrances or
restrictions, except for such as are described in the Commission Documents
and such as do not have a Material Adverse Effect on the Company.
5.14 Registration Rights. Except for the Registration Rights Agreement
dated February 25, 1991 by and among the Company, The Aetna Casualty and Surety
Company and Aetna Life Insurance Company, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to include such securities in the Shelf Registration
Statement.
5.15 Offering. Subject to the accuracy of the Purchasers' representations
in Article 6 hereof, the offer, sale and issuance of the Shares and the
Conversion Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and the securities laws of any
state having jurisdiction with respect to the transactions contemplated by this
Agreement, and neither the Company nor anyone acting on its behalf has or will
take any action that would cause the loss of such exemption.
5.16 No Defaults. Neither the Company nor any Subsidiary is (a) in
violation of any provision of its charter or bylaws or other governing
documents, (b) in breach, violation or default, in any material respect, of or
under any material contract, lease, commitment or instrument to which it is a
party or by which it is bound or to which any of its properties or assets are
subject, and no event has occurred which (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would constitute such
a breach, violation or default or (c) in material violation of any Law.
5.17 Litigation. There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or its Subsidiaries or any properties or rights of any of them by or
before any Governmental Authority that (i) relates to or challenges the legality
of this Agreement or the Preferred Stock, (ii) would reasonably be expected to
have a Material Adverse Effect upon the Company (except as disclosed in the
Commission Documents) or (iii) would reasonably be expected to impair the
ability of the Company to perform
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fully on a timely basis any obligations that it has under this Agreement, or any
documents related hereto.
5.18 Compliance with Laws. The Company and its Subsidiaries are in
compliance in all material respects with all laws and regulations in all
jurisdictions in which the Company and its Subsidiaries are presently doing
business and where the failure to effect such compliance would reasonably be
expected to have a Material Adverse Effect upon the Company.
5.19 Taxes. All tax returns required to be filed by the Company and its
Subsidiaries in any jurisdiction have been so filed, and all taxes, assessments,
fees and other charges shown thereon to be due and payable have been paid, other
than those being contested in good faith. The Company does not know of any
actual or proposed material additional tax assessments for any fiscal period
against it or any of its Subsidiaries. None of the Company's or its
Subsidiaries' tax returns is under audit, and no waivers of the statute of
limitations or extensions of time with respect to any tax returns have been
granted to the Company or any of its Subsidiaries, except such audits, waivers
or extensions as would not reasonably be expected to have a Material Adverse
Effect upon the Company.
5.20 ERISA. Neither the execution and delivery of this Agreement nor the
sale of the Shares to be purchased by the Purchasers is a prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) on the
part of the Company or any of its Subsidiaries that is not exempt by statute,
regulation or class exemption. The Company is in compliance in all material
respects with all presently applicable provisions of ERISA; no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any material liability; the
Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Section 412 (whether or not waived) or 4971 of the Code; and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, that
would cause the loss of such qualification.
5.21 Compliance with Environmental Laws. The business and properties of the
Company and its Subsidiaries have been operated in compliance with all
applicable federal, state or local laws, rules, regulations or orders
(collectively, "Environmental Laws") relating to pollution or protection of the
environment, including, without limitation, any law, rule, regulation or order
relating to emissions, discharges, releases or threatened releases ("Releases")
of chemicals, pollutants, contaminants, wastes, petroleum or petroleum products,
toxic substances or hazardous substances ("Pollutants") for which noncompliance
would have a Material Adverse Effect upon the Company. Neither the Company nor
any Subsidiary has received any written communication, whether from a
Governmental Authority, citizens' group, landowner, employee or otherwise, nor,
to the knowledge of the Company, has the Company or any Subsidiary received any
oral communication from a Governmental Authority, alleging that (i) the Company
or any such Subsidiary is not in compliance with any Environmental Law
applicable to it and its business
-17-
and properties, or (ii) any employee or third party has suffered bodily injury
or property damage as a result of one or more Releases of Pollutants arising out
of or resulting from the operations of the Company, its Subsidiaries, or prior
owners and operators of their business or property, which allegation, if true,
would have a Material Adverse Effect upon the Company. Except as disclosed in
the Commission Documents, neither the Company nor any Subsidiary has any
material obligation to remediate, repair or replace any property, whether real
or personal, owned by the Company, its Subsidiaries or any third party, as a
result of one or more Releases of Pollutants arising out of or resulting from
the operations of the Company, its Subsidiaries, or prior owners and operators
of their business or properties.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
OF PURCHASERS
6.1 General. Each Purchaser severally represents and warrants with respect
to itself to the Company as of the date hereof as follows:
(a) Organization. Each Purchaser that is a corporation, limited liability
company or limited partnership is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
(b) Authority. Each Purchaser that is a corporation, a limited partnership
or a limited liability company has all requisite power and authority to enter
into this Agreement and the other documents and agreements contemplated hereby,
to purchase the Shares on the terms described in this Agreement, and to perform
its other obligations contemplated by this Agreement.
(c) Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereunder have been duly and validly
authorized by all requisite corporate, partnership or limited liability company
action on the part of each Purchaser that is a corporation, a limited
partnership or a limited liability company.
(d) Binding Agreement. This Agreement has been duly executed and delivered
by each Purchaser and constitutes a legal, valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with its terms,
subject to bankruptcy and other similar laws of general application with respect
to creditors and subject to principles of equity and public policy that affect
enforceability of agreements generally.
(e) No Conflicts. Neither the execution nor delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in a breach
or violation of, or constitute a default under, the governing documents of any
Purchaser that is a corporation, a limited partnership or a limited liability
company, or any material agreement, indenture or other instrument to which the
Purchasers are a party or by which any of them are bound or to which any of
their properties are subject, nor will the performance by the Purchasers of
their obligations hereunder violate any Law or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or assets
of the Purchasers. No permit, consent, approval,
-18-
authorization or order of any Governmental Authority or other Person is required
in connection with the consummation by the Purchasers of the transactions
contemplated by this Agreement, except such as have been obtained and as
otherwise contemplated by this Agreement.
(f) Absence of Bankruptcy Proceedings. There are no bankruptcy,
reorganization or arrangement proceedings pending against, being contemplated
by, or to any Purchaser's knowledge, threatened against, any Purchaser.
(g) No Brokers. No broker or finder has acted for or on behalf of
Purchasers in connection with the investment in the Shares by the Purchasers,
and no broker or finder is entitled to any brokerage or finder's fee or
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Purchasers in connection with the
investment in the Shares by the Purchasers.
6.2 Accredited Investor, Etc. Each Purchaser severally represents and
warrants that it is an "accredited investor" within the meaning of Rule 501
under the Securities Act. Each Purchaser severally represents and warrants that
it is acquiring the Shares for its own account and not for distribution or
resale, with no present intention of distributing or reselling said Shares or
Conversion Shares or any part thereof; provided that the disposition of such
Purchaser's property shall at all times remain within its control. Each
Purchaser severally agrees: (a) that such Purchaser will not sell, assign,
pledge, give, transfer or otherwise dispose of the Shares or any interest
therein, or make any offer or attempt to do any of the foregoing, except
pursuant to a registration of the Shares under the Securities Act and all
applicable state securities laws or in a transaction which, in the written
opinion of counsel for such Purchaser satisfactory to the Company (which
requirement may be waived by the Company upon advice of counsel), is exempt from
the registration provisions of the Securities Act and all applicable state
securities laws; (b) that the certificate(s) for the Shares will bear a legend
making reference to the foregoing restrictions for so long as such legend may be
required pursuant to applicable federal securities laws; and (c) that the
Company and any transfer agent for the Shares shall not be required to give
effect to any purported transfer of any of the Shares except upon compliance
with the foregoing restrictions.
ARTICLE 7 - COVENANTS OF THE COMPANY
7.1 Operation of the Business of the Company Pending Closing. From and
after the date of execution of this Agreement and until the agreements to
purchase and sell Shares are consummated or lapse pursuant hereto, except as
otherwise consented to by Purchasers in writing and subject to the constraints
of applicable operating and other agreements, the Company will continue to
operate its business in the ordinary course of business, in accordance, in all
material respects, with all applicable Laws.
7.2 Taking of Necessary Action. Subject to the terms and conditions of
this Agreement and to applicable law, each of the parties to this Agreement
shall use all reasonable efforts
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promptly to take or cause to be taken all action and promptly to do or cause to
be done all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
7.3 Restrictions on Certain Actions. From and after the date hereof to
the day immediately following the issuance of the Shares hereunder, the Company
will not:
(a) Pay or declare any dividend payable in shares of its Common Stock
or take any other action which, if taken after the date of such issuance,
would result under the terms of the Certificate of Designation in a change
in the number of Conversion Shares into which the Shares may be converted;
or
(b) Make any amendment to the Second Restated Certificate of
Incorporation of the Company, or file any resolution of the board of
directors with the Delaware Secretary of State containing any provisions,
which would impair the rights of the Holders.
7.4 Use of Proceeds. The Company shall use the proceeds from the sale of
the Shares to make a loan to the general partner of Plains Marketing, L.P.,
which will in turn loan the proceeds to Plains Marketing, L.P.
7.5 Reservation of Common Stock. The Company shall at all times provide
for, reserve and keep available out of its authorized but unissued Common Stock,
solely for the purpose of issuance upon conversion or exchange of the Shares,
such number of shares of Common Stock as shall then be issuable upon conversion
or exchange of all issued and outstanding shares of Shares.
7.6 Board Representative. At any time following the Closing and for as
long as the Preferred Stock remains outstanding, the Company agrees that it will
take all reasonable steps within 30 days after so requested by EnCap, to cause
its board of directors to be expanded by one and to appoint a nominee (who shall
be an employee of EnCap) designated by EnCap thereto. Thereafter, EnCap shall
have the right annually to give notice to the Company of the director (who shall
be an employee of EnCap) whom it wishes to be nominated to the board of
directors of the Company at the Company's annual meeting of stockholders. This
notice shall be given by EnCap to the Company in writing in a timely manner
which will permit the Company to cause such person to be included in the
Company's proxy statement and other necessary disclosures, communications and
filings. In the event any person so nominated by EnCap serves on the board of
directors and then fails to serve or continue to serve for any reason, EnCap
shall have the right to nominate a successor to serve on the board of directors
in accordance with this paragraph. Any person so nominated by EnCap will be
recommended by the board of directors to the Company's stockholders for
election. Notwithstanding the foregoing, the Company shall have the right to
reject any individual designated or nominated by EnCap on any reasonable grounds
by providing notice of such rejection and the grounds for such rejection. Such
notice of rejection shall be given
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by the Company in such time reasonably to permit EnCap to designate a substitute
nominee in accordance with this Section 7.6.
7.7 Agreement to Seek Amendment of Credit Agreement. The Company agrees to
use its commercial best efforts to obtain, prior to the expiration of eighteen
months from the date hereof, an amendment (the "Amendment") of the Fourth
Amended and Restated Credit Agreement dated as of May 22, 1998, between the
Company, First Union National Bank ("FUNB"), as agent (succeeding ING (U.S.)
Capital Corporation in such capacity), and the lender parties named therein, as
amended by the First Amendment thereto dated as of November 17, 1998, the Second
Amendment thereto dated as of March 15, 1999, the Third Amendment thereto dated
as of June 21, 1999, the Fourth Amendment thereto dated as of September 15,
1999, and the Fifth Amendment thereto dated as of December 1, 1999 (the "Credit
Agreement"), to permit the Company to make cash dividend payments under the
terms of the Certificate of Designation and the Series G Certificate of
Designation. If the Amendment is not obtained within such eighteen month period,
the Company may seek extensions of such time period from time-to-time, and
Purchasers agree that the consent thereto will not be unreasonably withheld.
ARTICLE 8 - CLOSING CONDITIONS
8.1 The Company's Closing Conditions. The obligations of the Company
under this Agreement are subject, at the option of the Company, to the
satisfaction at or prior to each Closing of the following conditions:
(a) All representations of Purchasers contained in this Agreement
shall be true at and as of the Closing as if such representations were made
at and as of the Closing, and Purchasers shall have performed and satisfied
all agreements required by this Agreement to be performed and satisfied by
Purchasers at or prior to the Closing; and
(b) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by the Company) shall be pending or
threatened before any Governmental Authority seeking to restrain the
Company or prohibit the Closing or seeking damages against the Company as a
result of the consummation of this Agreement.
8.2 Purchasers' Closing Conditions. The obligations of Purchasers under
this Agreement are subject, at the option of Purchasers, to the satisfaction at
or prior to each Closing of the following conditions:
(a) All representations of the Company contained in this Agreement
shall be true at and as of the Closing as if such representations were made
at and as of the Closing, and the Company shall have performed and
satisfied all agreements required by this Agreement to be performed and
satisfied by the Company at or prior to the Closing;
-21-
(b) Purchasers shall have received a certificate dated as of the
Closing, executed by a duly authorized officer of the Company, to the
effect that to such officer's knowledge the conditions set forth in Section
8.2(a) above are satisfied at and as of the Closing;
(c) Purchasers shall have received a legal opinion dated as of the
Closing from Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., in substantially the form of
Exhibit B hereto;
(d) Purchasers shall have received a legal opinion dated as of the
Closing from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, general counsel of the Company, in
substantially the form of Exhibit C hereto;
(e) Purchasers shall have received a certificate of the Secretary or
the Assistant Secretary of the Company certifying, among other things, as
to the due authorization of the transactions contemplated hereby;
(f) Purchaser shall have received certificates of existence and good
standing for the Company and each of its Subsidiaries in the jurisdiction
of its incorporation and each jurisdiction in which it is qualified or
licensed to do business and own material assets;
(g) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Purchasers) shall be pending or
threatened before any Governmental Authority seeking to restrain Purchasers
or prohibit the Closing or the Exchange Offer, seeking damages against
Purchasers as a result of the consummation of this Agreement or the
Exchange Offer;
(h) The Certificate of Designation shall have been duly filed by the
Company with the Secretary of State of the State of Delaware and the
Purchasers shall have received satisfactory evidence thereof;
(i) Except for the Certificate of Designation, no amendments to the
Second Restated Certificate of Incorporation or Bylaws of the Company as in
effect on the date hereof shall have been effected;
(j) Purchasers shall have received a copy of any required written
consent or waiver by any third party or Governmental Authority to the
transactions contemplated hereby; and
(k) The Company shall have made the Exchange Offer, and the Series G
Certificate of Designation shall have been filed with the Secretary of
State of the State of Delaware.
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ARTICLE 9 - TERMINATION
9.1 Grounds for Termination. This Agreement may be terminated at any time
prior to Closing:
(a) By mutual agreement of the Company, on one hand, and the
Purchasers, on the other hand; and
(b) By the Company or any Purchaser if the Closing shall not have
occurred on or before December 31, 1999, provided, however, that no party
shall be entitled to terminate this Agreement under this Section 9.1(b) if
the Closing has failed to occur because such party negligently or willfully
failed to perform or observe in any material respect its covenants and
agreements hereunder.
9.2 Effect of Termination. In the event that the Closing does not occur
as a result of any party hereto exercising its rights to terminate pursuant to
this Article 9, then this Agreement shall be null and void and, except as
expressly provided herein, no party shall have any rights or obligations under
this Agreement, except that nothing herein shall relieve any party from
liability for any willful or negligent failure to perform or observe in any
material respect any agreement or covenant contained herein. In the event the
termination of this Agreement results from the willful or negligent failure of
any party to perform in any material respect any agreement or covenant herein,
then the other parties shall be entitled to all remedies available at law or in
equity and shall be entitled to recover court costs and reasonable attorneys'
fees in addition to any other relief to which such party may be entitled.
ARTICLE 10 - MISCELLANEOUS
10.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements of the Company contained in this Agreement
or made in writing by the Company in connection herewith, and all
representations and warranties of any Purchaser contained in this Agreement or
made in writing by any Purchaser in connection herewith, shall survive the
execution, delivery and performance of this Agreement and the purchase and sale
of the Shares, regardless of any investigation made by such party or on such
party's behalf and without any other document being delivered at the Closing.
10.2 Indemnification. The Company shall indemnify and hold harmless each
Purchaser, and each Purchaser shall severally and not jointly indemnify and hold
harmless the Company, from and against any and all claims, losses, damages and
liabilities (and actions in respect thereof) and any and all costs and expenses
(including reasonable attorneys' fees and expenses) that such person may sustain
or incur as a result of any misrepresentation or breach of warranty or the
nonperformance of any obligation on the part of the other under this Agreement.
10.3 Antitrust Laws. Purchasers and the Company agree to use their best
efforts to make such filings with and provide such information to the Federal
Trade Commission or the
-23-
Department of Justice with respect to the transactions contemplated by this
Agreement as may be required under the HSR Act, sufficiently in advance of any
transaction which may require such filing so as to permit the lapse of the
normal waiting periods described in the HSR Act in advance of such transaction
and to join in a request for early termination. Purchasers and the Company agree
to use such best efforts to obtain all governmental approvals required to
consummate the transactions contemplated by this Agreement and to cause early
termination of the waiting period under the HSR Act.
10.4 Notices. Except as otherwise expressly provided in this Agreement,
all communications required or permitted under this Agreement shall be in
writing and any such communication or delivery shall be deemed to have been duly
given and received when actually delivered to the address set forth below of the
party to be notified personally (by a recognized commercial courier or delivery
service that provides a receipt) or by telecopier (confirmed in writing by a
personal delivery as set forth above), addressed as follows:
If to the Company: Plains Resources Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchasers, to them at the addresses as listed on Schedule A:
Any party may, by written notice so delivered to the other, change the address
to which delivery shall thereafter be made.
10.5 Incidental Expenses. The Company shall promptly pay after receipt of
an invoice all accrued fees and expenses of Purchasers, including fees and
expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to Purchasers, in connection with
the negotiation, preparation, execution and delivery of the Agreement and
related documents and the consummation of the transactions contemplated hereby.
10.6 Entire Agreement. This Agreement embodies the entire agreement
between the parties with respect to the subject matter of this Agreement
(superseding all prior agreements, arrangements, understandings and
solicitations of interest or offers related to the subject matter of this
Agreement), and this Agreement may be supplemented, altered, amended, modified
or revoked by writing only, signed by the Company and the Holders of at least
66 2/3% of the Registrable Securities. The headings in this Agreement are for
convenience only and shall have no significance in the interpretation of any
term or provision of this Agreement.
10.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
RULES CONCERNING CONFLICTS OF LAWS.
-24-
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, and each and every counterpart shall be deemed for all purposes
one agreement.
10.9 Waiver. Any of the terms, provisions, covenants, representations,
warranties or conditions contained in this Agreement may be waived only by a
written instrument executed by the party waiving compliance. No waiver by any
party of any condition, or of the breach of any term, provision, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other term, provision, covenant,
representation or warranty.
10.10 Binding Effect; Assignment. All the terms, provisions, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties to this
Agreement and their respective successors and assigns; but this Agreement and
the rights and obligations hereunder shall not be assignable or delegable by any
party without the express written consent of the non-assigning or non-delegating
parties.
10.11 Brokers. Without limiting the parties' respective representations in
Sections 59 and 61, each party agrees to indemnify and hold the other harmless
from and against any claim for a brokerage or finder's fee or commission in
connection with this Agreement to the extent such claim arises from or is
attributable to the actions of such indemnifying party.
10.12 Construction. Each party hereby acknowledges and agrees that such
party has consulted legal counsel in connection with the negotiation of this
Agreement and that such party has bargaining power equal to that of the other
party in connection with the negotiation and execution of this Agreement.
Accordingly, the parties agree the rule of contract construction to the effect
that an agreement shall be construed against the draftsman shall have no
application in the construction or interpretation of this Agreement.
-25-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
PLAINS RESOURCES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
PURCHASERS:
ENCAP ENERGY CAPITAL FUND III, L.P.
Encap Investments L.C., General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
ENCAP ENERGY CAPITAL FUND III-B, L.P.
Encap Investments L.C., General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
BOCP ENERGY PARTNERS, L.P.
Encap Investments L.C., General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Director
ARBCO ASSOCIATES, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ Schladovsky
----------------------------------------
Name: ▇▇▇▇▇ Schladovsky
Title: General Counsel
KAYNE, ▇▇▇▇▇▇▇▇ NON-TRADITIONAL INVESTMENTS,
L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ Schladovsky
-----------------------------------------
Name: ▇▇▇▇▇ Schladovsky
Title: General Counsel
OFFENSE GROUP ASSOCIATES, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ Schladovsky
-----------------------------------------
Name: ▇▇▇▇▇ Schladovsky
Title: General Counsel
OPPORTUNITY ASSOCIATES, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ Schladovsky
-----------------------------------------
Name: ▇▇▇▇▇ Schladovsky
Title: General Counsel
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY FUND, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ Schladovsky
-----------------------------------------
Name: ▇▇▇▇▇ Schladovsky
Title: General Counsel
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ OFFSHORE LIMITED
By: /s/ ▇▇▇▇▇ Schladovsky
-----------------------------------------
Name: ▇▇▇▇▇ Schladovsky
Title: General Counsel
HALLCO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
BUENA VISTA FOUR ASSOCIATES
By: /s/ ▇. ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇. ▇. ▇▇▇▇▇
Title: Partner
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INSURANCE TRUST
UAD 1/3/90
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Trustee
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ FAMILY TRUST DTD 12/18/90
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
EOS PARTNERS, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇