<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PLAINS RESOURCES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 1996
TO THE STOCKHOLDERS OF PLAINS RESOURCES INC.:
The 1996 Annual Meeting of Stockholders (the "Meeting") of Plains
Resources Inc. (the "Company") will be held in the Highland Room of the Four
Seasons Hotel, 1300 Lamar Street, Houston, Texas at 10:00 a.m. local time, on
Thursday, May 23, 1996. At the Meeting, the following matters will be
submitted to the holders of common stock:
The holders of common stock, $.10 par value, of the Company ("Common
Stock") will be asked to:
(i) Elect eight members of the Company's Board of Directors; and
(ii) Consider and act upon a proposal to approve the Plains
Resources Inc. 1996 Stock Incentive Plan; and
(iii) Transact such other business as may properly come before
the Meeting and any adjournment or postponement thereof.
Only holders of Common Stock of record as of the close of business on
March 27, 1996, are entitled to notice of and to vote at the Meeting and any
adjournment or postponement thereof.
By Order of the Board of Directors,
Michael R. Patterson
Vice President, General Counsel & Secretary
April 19, 1996
YOU ARE RESPECTFULLY REQUESTED TO PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED RETURN ENVELOPE.
<PAGE> 3
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 4
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of Plains Resources Inc. (the "Company")
of the enclosed proxy to be used at the 1996 Annual Meeting of Stockholders of
the Company (the "Meeting") to be held in the Highland Room of the Four Seasons
Hotel, 1300 Lamar Street, Houston, Texas at 10:00 a.m. local time, on Thursday,
May 23, 1996, and at any adjournment or postponement of such Meeting. You are
respectfully requested to sign, date, and return the enclosed Proxy Card in the
enclosed return envelope as soon as possible.
This Proxy Statement and the enclosed proxy were first sent or given to
Company stockholders on or about April 19, 1996. The Company's Annual Report
to Stockholders for the fiscal year ended December 31, 1995, including
consolidated financial statements, which accompanies this Proxy Statement, is
not a part of the proxy soliciting material.
The close of business on March 27, 1996 (the "Record Date"), was fixed as
the record date for determination of stockholders of the Company entitled to
notice of and to vote at the Meeting and any adjournment or postponement
thereof. As of said Record Date the outstanding stock of the Company entitled
to vote at the Meeting consisted of 16,183,320 shares of common stock, par
value $.10 per share ("Common Stock").
Holders of Common Stock on the Record Date are entitled to cast one vote
per share, either in person or by proxy, on all questions properly before the
stockholders at the Meeting. All properly executed proxies returned by
holders of Common Stock that are not revoked will be voted (or withheld from
voting) according to the directions, if any, specified thereon. However, if
proxies of holders of Common Stock are returned properly signed but without
voting instructions, such proxies will be voted for the election of the
nominees listed under "Election of Directors - Nominees for Election by Holders
of Common Stock" and for approval of the Plains Resources Inc. 1996 Stock
Incentive Plan. Except as set forth herein, the Board is not aware of any
other matters that are to be brought before the Meeting. However, if any other
matters properly come before the Meeting, the persons named in the enclosed
form of proxy, or their substitutes, will vote the proxy in accordance with
their judgment on such matters.
A proxy given pursuant to this solicitation may be revoked by a
stockholder at any time before it is voted by delivering to the Company a duly
executed instrument of revocation or a proxy bearing a later date or by voting
the shares relating thereto in person at the Meeting. Attendance at the
Meeting will not in and of itself constitute revocation of a proxy. Other than
the election of directors, which requires a plurality of the votes cast, each
matter submitted to the stockholders requires the affirmative vote of a
majority of the shares present or represented by proxy and entitled to vote on
such matter at the Meeting; and in accordance with Delaware law, abstentions
will, and broker non-votes will not, be counted as being present for this
purpose.
This solicitation is being made by mail. After the initial solicitation,
further solicitations of proxies may be made by telephone or oral
communications by officers or employees of the Company who will receive no
extra compensation therefor. The Company will bear the entire cost of this
solicitation, which will include reimbursement to brokerage houses, banks, and
other fiduciaries for their reasonable expenses in forwarding soliciting
materials to their principals.
1
<PAGE> 5
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, the Board has determined that,
following the Meeting the number of directors constituting the Board will be
eight directors. All eight directors are to be elected at the Meeting, and
will serve until the next Annual Meeting of Stockholders or until their
respective successors are elected and qualified.
The nominees for election as directors are identified below. Although
all nominees currently intend to serve on the Board, if any nominee is unable
or unwilling to serve, the Board may (a) nominate another person in
substitution for such nominee, and the proxies will be voted for the election
of such substitute nominee for director or (b) reduce the size of the Board
accordingly.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
- --------------------------------------------------------------------------------
GREG L. ARMSTRONG, age 37 Officer Since 1981 and Director Since 1992
Mr. Armstrong has been President and Chief Executive Officer of the Company
since December 1992. He was President and Chief Operating Officer from October
to December 1992, and Executive Vice President and Chief Financial Officer from
June to October 1992. He was Senior Vice President and Chief Financial Officer
from 1991 to June 1992, Vice President and Chief Financial Officer from 1984 to
1991, Corporate Secretary from 1981 to 1988 and Treasurer from 1984 to 1987.
- --------------------------------------------------------------------------------
ROBERT A. BEZUCH, age 52 Director Since 1990
Mr. Bezuch has been President of Sarisky Associates, Inc. (a venture capital
firm specializing in oil and gas investments) since 1993. He was President of
The Revenue Companies (a venture capital and consulting firm specializing in
oil and gas investments) from 1985 to 1993.
- --------------------------------------------------------------------------------
TOM H. DELIMITROS, age 55 Director Since 1988
Mr. Delimitros has been General Partner of AMT Venture Partners, Ltd. (a
venture capital firm) since 1989. He was a General Partner of Sunwestern
Investment Funds I and II and Senior Vice President of Sunwestern Management,
Inc. (an investment management firm) from 1983 to 1988. He is also a director
of Tetra Technologies, Inc. (a specialty chemical and chemical process
company).
- --------------------------------------------------------------------------------
WILLIAM M. HITCHCOCK, age 56 Director Since 1977
Mr. Hitchcock has been President of Plains Resources International Inc. (a
wholly owned subsidiary of the Company) since January 1992. He was Chairman of
the Board of the Company from August 1981 to October 1992, except for the
period from April 1987 to October 1987 when he served as Vice Chairman. He was
a consultant to the Company from 1982 to 1992. He is a director of
International Colin Energy Inc. (a Canadian oil and gas company).
- --------------------------------------------------------------------------------
DAN M. KRAUSSE, age 70 Director Since 1987
Mr. Krausse has been Chairman of the Board of the Company since December 1992.
He has also been President of The Krausse Company (a private investment firm)
since 1981, and was Chairman of the Board and Chief Executive Officer of
Sunwestern Investment Group (a venture capital firm) from 1983 to 1987. He
also is a director of Springs Industries, Inc. (a textile manufacturing
company), Chairman of the Board of Axis Gas Corporation (a private gas
gathering and processing firm) and Chairman of the Board of Longhorn Partners
Pipeline, L. P. (a private petroleum products system).
- --------------------------------------------------------------------------------
JOHN H. LOLLAR, age 57 Director since 1995
Mr. Lollar, a private investor, was Chairman of the Board, President and Chief
Executive Officer of Cabot Oil & Gas Corporation from 1992 to 1995. He was
President and Chief Operating Officer of Transco Exploration Company from 1982
to 1992. He is also a director of Inspectorate PLC (a private independent
inspection services company).
- --------------------------------------------------------------------------------
2
<PAGE> 6
- --------------------------------------------------------------------------------
ROBERT V. SINNOTT, age 46 Director since 1994
Mr. Sinnott has been Senior Vice President of Kayne Anderson Investment
Management, Inc. (an investment firm) since 1992. He was Vice President and
Senior Securities Officer of the Investment Banking Division of Citibank from
1986 to 1992. He is also a director of Glacier Water Services, Inc. (a vended
water company), KA Industries (a privately held bakery), and National Energy
Group, Inc. (an oil and gas company).
- --------------------------------------------------------------------------------
J. TAFT SYMONDS, age 56 Director Since 1987
Mr. Symonds has been Chairman of the Board of Symonds Trust Co. Ltd. (an
investment firm), and Chairman of the Board of Maurice Pincoffs Company, Inc.
(an international marketing firm) since 1978. He is also Chairman of the Board
of Tetra Technologies, Inc. (a specialty chemical and chemical process
company).
- --------------------------------------------------------------------------------
BOARD ORGANIZATION AND MEETINGS
During 1995, the Board held five Board meetings and the committees of
the Board held a total of six meetings. No director attended fewer than 75% of
the total number of meetings of the Board and the committees of which he was a
member. The committees of the Board consist of the Audit, Compensation,
Finance, and Nominating Committees. The Audit Committee, consisting of Messrs.
Bezuch, and Symonds, held two meetings in 1995. The Audit Committee's function
is to consult with the Company's independent auditors jointly with, and
independently of, the management of the Company with respect to the scope and
results of their audit of the Company's financial statements and to review the
Company's financial reporting and accounting principles, policies and practices
and its internal audit objectives, accounting and control policies and
procedures. The Compensation Committee, consisting of Messrs. Bezuch and
Delimitros, held two meetings in 1995. The function of the Compensation
Committee is to recommend salaries, bonuses, deferred compensation, retirement
plans and any other remuneration for the officers of the Company to the Board
for its approval, and to administer the Company's stock option plans. The
Finance Committee, consisting of Messrs. Armstrong, Sinnott, and Symonds held
one meeting during 1995. The Finance Committee's function is to advise and
assist the Company's management on financial matters and recommend to the Board
all major financings undertaken, both debt and equity. The Nominating
Committee, consisting of Messrs. Armstrong, Hitchcock, Krausse, and Symonds,
held one meeting in 1995. The Nominating Committee's function is to recommend
candidates to fill vacancies on the Board, to review the structure and
composition of the Board and to consider the requisite qualifications for Board
service. The Nominating Committee will also consider nominees recommended by
stockholders. Stockholders desiring to make such recommendations for the 1997
Annual Meeting of Stockholders should submit, by December 23, 1996, the
candidate's name, together with biographical information to: Chairman,
Nominating Committee of the Board of Directors of Plains Resources Inc., 1600
Smith Street, Suite 1500, Houston, Texas 77002.
COMPENSATION OF DIRECTORS
Each director who is not otherwise compensated by the Company
("Non-employee Director") receives an attendance fee of $2,000 for each Board
meeting attended (excluding telephonic meetings) plus reimbursement for related
expenses, and an attendance fee of $500 for each committee meeting or
telephonic Board meeting attended. If the 1996 Stock Incentive Plan is
approved by the Stockholders at the Meeting, each Non-employee Director will
receive an annual stock option to purchase 10,000 shares of Common Stock at an
exercise price equal to the fair market price (as defined in the plan) on the
grant date. Such an option would be exercisable not earlier than 6 months
after the grant date and not later than 5 years after the grant date. Mr.
Armstrong, as an employee, is otherwise compensated for his services to the
Company and therefore receives no separate compensation for his services on the
Board. In lieu of the compensation set forth above for Non-employee Directors,
Mr. Krausse, as Chairman of the Board, receives an annual retainer of $60,000,
payable in equal monthly installments. In addition, on January 25, 1996, Mr.
Krausse was granted a stock option under the Company's 1992 Stock Incentive
Plan for the purchase of 40,000 shares of Common Stock at an exercise price of
$7.56 per share, the fair market value of the Common Stock on the grant date.
Such option is currently exercisable for 25% of the shares covered thereby with
the remainder vesting in equal installments of 25% on each of the first three
anniversaries of the grant date.
3
<PAGE> 7
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table provides information on ownership of the Companys'
Common Stock by the directors, nominees, the Chief Executive Officer and the
four other most highly compensated executive officers of the Company (the
"Named Executive Officers") and all directors, nominees and executive officers
of the Company as a group. The following table also sets forth, as of the
Record Date, all persons who are known by the Company to be the beneficial
owners of more than 5% of the outstanding shares of the Company's Common Stock.
<TABLE>
<CAPTION> Shares of Stock
Beneficially Owned
Name As of Record Date (1) Percent of Class
----------------- --------------------- ----------------
<S> <C> <C>
Greg L. Armstrong 200,480 (1) 1.2%
Robert A. Bezuch. 12,000 (2)
Tom H. Delimitros 10,492 (2)
William M. Hitchcock 418,734 (1) 2.6%
Dan M. Krausse 59,420 (1) (2)
John H. Lollar 2,000 (2)
Robert V. Sinnott 7,804 (3) (2)
J. Taft Symonds 30,320 (2)
William C. Egg, Jr. 157,250 (1) 1.0%
Phillip D. Kramer 91,000 (1) (2)
G. M. McCarroll 109,360 (1) (2)
Harry N. Pefanis 82,270 (1) (2)
Directors and all executive officers
as a group (16 persons) 1,392,427 8.2%
Kayne Anderson Investment Management Inc.
1800 Avenue of the Stars, Suite 1425 2,751,173 (4) 17.0%
Los Angeles, CA 90067
Metropolitan Life Insurance Company
One Madison Avenue 2,427,926 (5) 15.0%
New York, NY 10010-3690
</TABLE>
(1) Beneficial ownership includes both outstanding shares of Common Stock
and shares of Common Stock such person has the right to acquire within
60 days after the Record Date, by exercise of outstanding stock options.
Shares subject to exercisable stock options include 178,000 shares for
Mr. Armstrong; 140,500 shares for Mr. Egg; 65,000 shares for Mr.
Hitchcock; 87,000 shares for Mr. Kramer; 50,000 shares for Mr. Krausse;
109,000 shares for Mr. McCarroll and 82,000 shares for Mr. Pefanis.
Beneficial ownership does not include options under the 1996 Stock
Incentive Plan, that were granted subject to stockholder approval of
such plan. See "Proposal for Approval of 1996 Stock Incentive Plan".
(2) This individual beneficially owns less than 1% of the outstanding Common
Stock.
(3) Mr. Sinnott is Senior Vice President of Kayne Anderson Investment
Management Inc. ("Kayne Anderson"). Beneficial ownership of Mr. Sinnott
does not include the holdings of Kayne Anderson as Mr. Sinnott disclaims
beneficial ownership of the shares beneficially owned by Kayne Anderson.
(4) Information regarding beneficial ownership was derived from Kayne
Anderson's Form 4 dated December 7, 1995.
(5) Information regarding beneficial ownership was derived from Schedule 13G
Amendment No. 4 dated February 8, 1996, filed by Metropolitan Life
Insurance Company ("Metropolitan"). In addition, State Street Research
& Management Company, One Financial Center, 38th Floor, Boston,
Massachusetts 02111-2690 ("State Street Research"), a wholly-owned
subsidiary of Metropolitan, filed a Schedule 13G dated February 13,
1996, for 2,060,113 of the same shares reported on Metropolitan's
Schedule 13G. State Street Research advised the Company that all
securities reported in its Schedule 13G are owned by certain of its
clients and State Street Research expressly disclaims beneficial
ownership of the shares reported therein.
4
<PAGE> 8
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee, currently composed of two independent,
Non-employee Directors, makes determinations and recommendations to the Board
concerning the compensation of the Company's executive officers, except for
grants under the Company's stock option plans, which plans are independently
administered by the Committee. In order to make such determinations and
recommendations, at the end of each year the Committee evaluates (i) the
Company's performance relative to its annual objectives, (ii) the Company's
performance relative to changes in the industry (i.e., performance relative to
the opportunities available), and (iii) each executive officer's contribution
to the Company's achievements during the year.
The basic objectives of the executive compensation program are to:
o Enable the Company to attract, retain, motivate and reward high
caliber executive officers who are among the most skilled,
talented and persistent individuals available in a very
competitive marketplace;
o Inspire executive officers to work together as a team to
innovatively and aggressively pursue Company goals;
o Foster a general corporate atmosphere that promotes an
entrepreneurial style of leadership in order to enable the Company
to act quickly and flexibly to implement its plans and pursue
opportunities as they arise;
o Emphasize "pay for performance" by having a significant portion of
the executive officers' total compensation "at risk" in the form
of incentive compensation; and
o Align the long term interests of the executive officers with those
of the Company's stockholders through the use of stock options as
a portion of compensation and thereby encourage the achievement of
performance objectives that enhance stockholder value on a
continuing basis.
The Committee monitors general industry conditions, changes in regulations and
tax laws and other developments which may, from time to time, require
modifications of the executive compensation program in order to ensure the
program is properly structured to achieve its objectives. The Company's
executive compensation program currently is comprised of three major
components; base salary, annual incentive compensation and longer term
incentives through stock options.
BASE SALARIES
Base salaries for each of the Company's executive officers are
determined on an individual basis, taking into consideration the performance of
the individual and his or her contributions to the Company's performance, the
length of service of the individual with the Company, compensation by industry
competitors for comparable positions, internal equities among positions and
general economic conditions. Although no specific weight is assigned to these
factors, the Committee generally targets the third quartile of salary levels
paid within the industry as a primary consideration in setting base salaries.
In order to determine salary levels paid within the industry, the Committee
reviews various industry surveys, proxy information of its competitors and
also, from time to time, consults with independent compensation consulting
firms. The Committee reviews the compensation practices of the companies which
are most comparable to the Company in terms of asset value and which are
included in the Media General Index - Oil and Natural Gas Exploration used in
the Performance Graph on Page 10. The Committee believes that maintaining a
competitive base salary structure is vital to attract and retain talented
executives and that optimal performance is encouraged through the use of
incentive programs, such as annual incentive compensation and stock option
plans, furthering the goal of having "at risk" compensation as an important
component of the executive compensation program.
5
<PAGE> 9
ANNUAL INCENTIVE COMPENSATION
In addition to their base salaries, the Company's executive officers
may earn an annual incentive payment, depending on Company performance relative
to certain objectives set forth in an annual business plan. Such annual
objectives are a combination of operating, financial and strategic goals (such
as oil and gas production levels, oil and gas reserve additions, achievement of
income and/or cash flow targets and successful completion of major projects)
that are considered to be critical to the Company's success. These objectives
are not specifically weighted in the determination of whether to award annual
incentive payments to executive officers since the relative importance of such
objectives may change from year to year and the relative responsibilities of
each executive officer in the achievement of each of the objectives may differ.
After a year-end review of the Company's performance relative to the annual
business plan, the Committee determines the amount of the annual incentive
payment, if any, which will be awarded to an executive officer based on its
subjective evaluation of factors which include the extent to which the
objectives of the annual business plan were achieved, his or her contribution
to the achievement of those objectives and general economic and industry
conditions.
STOCK OPTIONS
The Company for many years has used stock options as its long-term
incentive program for executive officers. Stock options are used in order to
relate the benefits received by the executive officers to the amount of
appreciation realized by the stockholders over comparable periods. The
decision to award a stock option to an executive officer, as well as the size
of the award, is not specifically formula-driven nor based on any specific
corporate performance factors. The size of any grants are based on subjective
factors such as individual performance, level of responsibility and an
officer's potential to contribute to the long-term success of the Company.
Stock options are granted at exercise prices not less than the market value of
the stock on the date of the grant and are not transferable. Therefore, such
options have no realizable value unless the Company's stock appreciates in
value. Stock options provide the executive officers the opportunity to acquire
and build a meaningful ownership interest in the Company and, therefore,
closely align the executive officers' interests with those of our stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of Mr. Armstrong, the Company's President and Chief
Executive Officer, for 1995 was determined in accordance with the executive
compensation practices for all executive officers as discussed above. In its
annual review of the Company's performance in 1995 relative to the business
plan, the Committee determined that substantially all of the material
objectives of what the Board considered an aggressive business plan were met.
Significant achievements included a 45% increase in proved oil and gas reserve
volumes, a 9% increase in base level oil and gas production, an 813% reserve
replacement ratio, a 17% increase in cash flow, a 13% increase in earnings
before interest, taxes, depreciation and amortization, and a 350% increase in
net income as compared to correlative results for 1994. In recognition of Mr.
Armstrong's exemplary leadership in the Company's significant progress in 1995,
Mr. Armstrong was awarded an annual incentive payment of $140,000 (62% of his
annual base salary). In February 1995, Mr. Armstrong was granted an option to
purchase 50,000 shares of Common Stock under the Company's 1992 Stock Incentive
Plan at an exercise price of $6.25 (the market price on the date of the grant).
This option becomes exercisable in equal installments on the first two
anniversary dates of the grant.
Compensation Committee
Tom H. Delimitros, Chairman
Robert A. Bezuch
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows certain compensation information for the
Company's Chief Executive Officer and the other Named Executive Officers for
services rendered in all capacities during the fiscal years ended December 31,
1995, 1994 and 1993.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Long Term
Compensation
------------
Annual Compensation Awards
------------------------ ------------
Securities All Other
Name and Principal Underlying Compensation (1)
Position Year Salary ($) Bonus ($) Options (#) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Greg L. Armstrong 1995 225,000 140,000 50,000 8,812
President and Chief 1994 225,000 117,000 0 7,403
Executive Officer 1993 225,000 78,750 53,000 7,504
- ---------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. 1995 185,000 100,000 35,000 8,779
Senior Vice President- 1994 185,000 55,000 0 7,381
Exploration and
Production 1993 185,000 37,000 23,000 7,476
- ---------------------------------------------------------------------------------------------------------------
Phillip D. Kramer 1995 150,000 55,000 20,000 7,508
Vice President, Chief 1994 150,000 25,000 0 6,518
Financial Officer and
Treasurer 1993 150,000 30,000 17,000 5,902
- ---------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 1995 150,000 115,000 30,000 7,477
Senior Vice President 1994 150,000 45,000 0 6,502
1993 140,000 30,000 17,000 5,877
- ---------------------------------------------------------------------------------------------------------------
G. M. McCarroll 1995 150,000 45,000 20,000 7,595
Vice President - 1994 150,000 25,000 0 5,887
Exploration and Land 1993 150,000 30,000 19,000 5,650
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes contributions of $4,500 to each Named Executive Officer's
account to match 50% of the officer's contributions under the Company's
Employee 401(K) Plan . Also includes amounts received by the officer
under the Company's 1984 Employee Overriding Royalty Plan which for
1995 were as follows: Mr. Armstrong, $4,312; Mr. Egg, $4,279; Mr.
Kramer, $3,008; Mr. Pefanis, $2,977; and Mr. McCarroll, $3,095. In
December 1993, the 1984 Employee Overriding Royalty Plan was terminated
with respect to the Company's future drilling activities.
7
<PAGE> 11
OPTION GRANTS IN 1995
The following table provides information regarding stock options to
the Named Executive Officers which were granted during 1995. These grants were
made pursuant to the Company's 1992 Stock Incentive Plan (the "1992 Plan"),
which was approved by the Company's stockholders in June 1992. The amounts
shown as potential realizable values are based on assumed annualized rates of
stock price appreciation of 5% and 10% over the term of the options as required
by the regulations of the Securities and Exchange Commission ("SEC"). No gain
to the optionees is possible without an increase in stock price which will
benefit all stockholders proportionately. For comparative purposes, also shown
are the total gains that could be realized over a ten-year period by the
Company's stockholders based on the same assumptions. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grant (1) Appreciation for Option Term
- -------------------------------------------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (2) Fiscal Year ($/Share) Date 5% ($) (3) 10% ($) (4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Greg L. Armstrong 50,000 13.7% $6.25 2/15/05 196,500 498,000
- -------------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. 35,000 9.6% $6.25 2/15/05 137,550 348,600
- -------------------------------------------------------------------------------------------------------------------
Phillip D. Kramer 20,000 5.5% $6.25 2/15/05 78,600 199,200
- -------------------------------------------------------------------------------------------------------------------
G. M. McCarroll 20,000 5.5% $6.25 2/15/05 78,600 199,200
- -------------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 30,000 8.2% $6.25 2/15/05 117,900 298,800
- -------------------------------------------------------------------------------------------------------------------
All Stockholders N/A N/A N/A N/A 63,600,448 161,185,867
(at $10.18 (at $16.21
per share) per share)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) To the extent not already exercisable, these options generally become
exercisable upon a change of control of the Company resulting from (i) a
change in the composition of the Board of Directors pursuant to which
persons who were directors in April, 1992, (or were approved by a majority
of those directors still remaining) cease to constitute at least
two-thirds of the Board, (ii) dissolution or liquidation of the Company,
(iii) a merger or consolidation in which the Company does not survive, or
(iv) the transfer of 20% or more of the voting power of the Company's
stock (except as a result of a merger or consolidation in which the
Company is the surviving corporation). In addition, in the event of such
a change in control, the holders of the option may elect to surrender for
a cash payment equal to the difference between the exercise price and the
market price of the Company's common stock on the date of such event.
These options are not transferable except by will or the laws of descent
and distribution.
(2) These options were granted on February 15, 1995, and became exercisable on
February 15, 1996, for 50% of the shares covered thereby. The right to
purchase the remaining 50% of such shares vests on February 15, 1997.
(3) Assuming stock price appreciates to $10.18 per share.
(4) Assuming stock price appreciates to $16.21 per share.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each of the Named
Executive Officers concerning the exercise of options during 1995 and the
aggregate dollar value of in-the-money, unexercised options held at December
31, 1995. (SEC Regulations define options as "in-the-money" if the fair market
value of the underlying security on such date exceeds the exercise price of the
option.)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Number of Unexercised Options In-the-Money Options
Shares Value At Year End (2) At Year End
Acquired Realized ------------------------------ --------------------------
Name on Exercise ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Greg L. Armstrong 0 0 153,000 50,000 357,125 118,750
- ---------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. 0 0 123,000 35,000 300,875 83,125
- ---------------------------------------------------------------------------------------------------------------
Phillip D. Kramer 10,000 35,205 77,000 20,000 184,125 47,500
- ---------------------------------------------------------------------------------------------------------------
G. M. McCarroll 10,000 34,580 99,000 20,000 241,375 47,500
- ---------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 5,000 19,375 67,000 30,000 156,625 71,250
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Market value of Common Stock at the time of exercise, minus the exercise
price, multiplied by the number of shares underlying the options
exercised.
(2) To the extent not already exercisable, these options generally become
exercisable upon a change of control of the Company resulting from (i) a
change in the composition of the Board of Directors pursuant to which
persons who were directors in April, 1992, (or were approved by a majority
of those directors still remaining) cease to constitute at least
two-thirds of the Board, (ii) dissolution or liquidation of the Company,
(iii) a merger or consolidation in which the Company does not survive, or
(iv) the transfer of 20% or more of the voting power of the Company's
stock (except as a result of a merger or consolidation in which the
Company is the surviving corporation). In addition, in the event of such
a change in control, the holders of the option may elect to surrender for
a cash payment equal to the difference between the exercise price and the
market price of the Company's common stock on the date of such event.
These options are not transferable except by will or the laws of descent
and distribution.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has an employment agreement with Mr. Armstrong for an
initial term of five years, expiring March 1, 1998, which provides for an
initial base salary of $225,000 per year, subject to annual review. If Mr.
Armstrong's employment is terminated (i) without cause, he will be entitled to
receive an amount equal to two times his base salary or (ii) as a result of a
change in control of the Company, he will be entitled to receive an amount
equal to three times his base salary, and in either event, will be entitled to
receive medical benefits for two years following the date of such termination.
Under such agreement, change in control of the Company is defined as a change
occurring (i) through the acquisition of 25% or more of the voting power of the
Company, or (ii) at such time as the Directors in office on the date of the
agreement cease to constitute a majority of the Board. The Board has also
authorized an employment agreement with Mr. Egg for an initial term of five
years providing for an initial base salary of $185,000, subject to annual
review. As authorized, Mr. Egg's employment agreement will have termination
and change in control provisions substantially similar to those in Mr.
Armstrong's agreement described above.
As described in footnote (2) to the table above entitled "Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values", in the
event of certain corporate transactions, changes in control and changes in the
composition of the Board of Directors under certain circumstances, the
exercisability of certain options granted to the Named Executive Officers is
accelerated and the option holder is afforded the right to surrender the option
for a lump sum cash payment.
9
<PAGE> 13
OFFICERS' RETIREMENT PLAN
In 1990, the Board authorized the implementation of a retirement plan
for certain officers at the level of Vice President and above. The basic terms
of such authorization provide that an officer with at least fifteen years of
service to the Company will be entitled to receive retirement income for a
fifteen-year period, commencing at age 60, in an amount equal to 50% of his
average salary for a five-year period preceding his retirement. It is
anticipated that this retirement plan will be implemented within the next
twelve months.
STOCKHOLDER RETURN COMPARISON
The following graph compares the cumulative total stockholder return
on the Company's Common Stock with the cumulative total return of the Media
General Industry Group Index No. 353, "Oil, Natural Gas Exploration" ("MG Group
Index") and AMEX Market Value Index for five years ended December 31, 1995.
The graph assumes that the value of an investment in the Company's Common Stock
and each index was $100 at December 31, 1990, and that any dividends were
reinvested. Numerical values used for the year-end plot points in the graph
are set forth in the table under the graph.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PLAINS RESOURCES INC.,
MG GROUP INDEX AND AMEX MARKET INDEX
[GRAPH]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Plains Resources Inc. 100 228.57 151.02 106.12 87.76 146.94
MG Group Index 100 95.53 83.75 100.13 101.21 118.39
AMEX Market Index 100 123.17 124.86 148.34 131.04 168.90
</TABLE>
10
<PAGE> 14
PROPOSAL FOR APPROVAL OF 1996 STOCK INCENTIVE PLAN
GENERAL
The Company has in the past used stock options to officers and
employees and stock awards to its Non-employee Directors to attract and retain
officers, employees and directors in the belief that stock ownership and
stock-related compensation plans encourage a community of interest among the
Company's Board, officers, employees and stockholders. No further shares of
Common Stock are currently available for grants of future options and stock
awards under the Company's 1992 Stock Incentive Plan. The Company's management
believes that additional shares of Common Stock should be available for the
granting of additional options and for the awarding of shares of restricted
stock. Accordingly, on February 8, 1996, the Board adopted, subject to
stockholder approval, the Plains Resources Inc. 1996 Stock Incentive Plan (the
"1996 Plan"). The purpose of the 1996 Plan is to strengthen the Company by
providing a performance incentive and to encourage stock ownership by its
employees and directors, thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise and to remain in
the employ or service of the Company.
The 1996 Plan requires approval by the affirmative vote of the holders
of a majority of the Common Stock present, or represented, and entitled to vote
at the Meeting. The complete text of the 1996 Plan is set forth in Appendix A
hereto and the following description of the 1996 Plan is qualified in its
entirety by reference to the plan text. The grant of an option and the award
of shares of restricted stock under the 1996 Plan are collectively referred to
in this summary as an "Award".
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS
PROPOSAL TO APPROVE THE 1996 PLAN.
TERM AND SHARES SUBJECT TO THE 1996 PLAN
Upon stockholder approval, the 1996 Plan will be in effect until May
23, 2001, and no options or awards of Common Stock may be granted under the
1996 Plan after that date. A maximum of 1,500,000 shares of Common Stock may
be issued under the 1996 Plan, subject to adjustment in the event of a Change
in Capitalization (as defined in the 1996 Plan). Such shares may be treasury
shares or authorized but unissued shares. If any outstanding Award expires or
terminates, the shares of Common Stock allocable to the unexercised portion of
such Award may again be available for purposes of Awards under the 1996 Plan.
REGISTRATION OF SHARES
It is the Company's intention to register the shares covered by the
1996 Plan with the Securities and Exchange Commission as soon as practicable
after approval by the stockholders.
ADMINISTRATION
The 1996 Plan (except for formula Awards to Non-employee Directors)
will be administered by a committee (the "Committee") composed of two or more
directors appointed by the Board, each of whom is disinterested within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Committee will have full authority to
administer and interpret the provisions of the 1996 Plan; to determine when and
to whom Awards will be granted; to determine whether Options awarded under the
Plan will be incentive stock options ("ISOs") that meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
Options that are not qualified as ISOs ("NQSOs"); and to prescribe the terms
and conditions of the Awards, subject to the provisions of the 1996 Plan.
11
<PAGE> 15
TERMINATION OR AMENDMENT
The Board is authorized to terminate or amend the 1996 Plan at any
time (except with respect to the provisions on the Awards to Non-employee
Directors, which may not be amended more often that once every six months);
provided, however, that without the consent of the Award recipient, no
amendment shall be made that would impair any Award previously granted under
the 1996 Plan or would deprive any Award recipient of any shares that he or she
may have acquired through or as a result of the 1996 Plan; and provided
further, that, to the extent necessary under Section 16(b) of the Exchange Act
and the rules and regulations promulgated thereunder or other applicable law,
no amendment shall be effective unless approved by the stockholders of the
Company in accordance with applicable law and regulations at a meeting held
within twelve months after the date of the adoption of such amendment.
OPTIONS
The 1996 Plan provides for the granting of stock options ("Options")
to officers, the Chairman of the Board and other employees of the Company or a
subsidiary who are designated by the Committee ("Optionees"). As of March 31,
1996, the Company had 212 officers and employees who would be eligible to be
designated by the Committee as Optionees under the 1996 Plan. Options may
either be ISOs or NQSOs. In addition, the 1996 Plan provides an annual Stock
Option grant ("Non-employee Director Option") to each Non-employee Director.
See "Awards to Non-employee Directors".
Terms and Conditions of Options
The exercise price for Options will be set by the Committee and shall,
in no event, be less than the Fair Market Value (as defined in the 1996 Plan)
of the Common Stock on the date the Option is granted. In general, Options
will be exercisable at such time or times and in such installments as
determined by the Committee. Options will terminate no later than ten years
after the date granted.
Options granted under the 1996 Plan will not be transferable (except
by the laws of descent and distribution). If the Optionee's status as an
employee of the Company or its subsidiary, as applicable, terminates for any
reason other than Cause (as defined in the 1996 Plan), then his or her Option
will be exercisable following the Optionee's termination of employment as
determined by the Committee and as set forth in the written agreement
evidencing the grant of the Option but only to the extent that the Option or
portion thereof was exercisable on the date of termination. If an Optionee's
employment terminates for Cause, the Option will terminate immediately. Upon
the exercise of an Option granted under the 1996 Plan, the purchase price must
be paid in full by any one or a combination of the following methods: (i) cash
or (ii) upon terms and conditions as determined by the Committee, the transfer
to the Company of shares of Common Stock owned by the Optionee for a period of
at least six months prior to the exercise of the Option.
In the event that a Change in Control occurs, all Options will become
immediately and fully exercisable and an Optionee may, during the 90-day period
following the Change in Control, surrender for cancellation any Option (or
portion thereof) for a cash payment (the "Cash Payment") in respect of each
share of Common Stock covered by the Option or portion thereof surrendered,
equal to the excess, if any, of (x) (A) in the case of a NQSO, the greater of
(1) the Fair Market Value of a share of Common Stock on the date of surrender
or (2) the Adjusted Fair Market Value (as defined in the 1996 Plan) of a share
of Common Stock or (B) in the case of an ISO, the Fair Market Value of a share
of Common Stock on the date of surrender, over (y) the per share exercise price
for such shares under the Option or portion thereof surrendered; provided,
however, that in the case of an Option granted within six months prior to the
Change in Control to any Optionee who may be subject to liability under Section
16(b) of the Exchange Act, such Optionee shall be entitled to surrender for
cancellation his or her Option during the 90-day period commencing upon the
expiration of six months from the date of grant of any such Option.
12
<PAGE> 16
AWARDS TO NON-EMPLOYEE DIRECTORS
The 1996 Plan provides that each Non-employee Director at the time of
his election or re-election to the Board shall receive an Option to purchase
10,000 shares of Common Stock. Non-employee Director Options shall provide for
an exercise price equal to the Fair Market Value (as defined in the 1996 Plan)
of the Common Stock on the grant date and shall be exercisable no earlier than
6 months after the grant date and no later than 5 years after the grant date.
All Options granted to Non-employee Directors will be NQSO's.
RESTRICTED STOCK AWARDS TO KEY EMPLOYEES
Awards. Under the 1996 Plan, the Committee may make an award of
restricted stock to eligible employees under the 1996 Plan subject to such
terms and conditions (which need not be the same in each case) as determined by
the Committee, including the period during which the restricted stock may not
be sold, assigned, transferred, pledged or otherwise encumbered (the
"Restricted Period").
Vesting and Transferability Restrictions. During the Restricted
Period certificates for Common Stock will be registered in the recipient's name
but will be deposited with the Company and any distributions with respect to
the shares of Common Stock subject to the restricted stock award will be
retained by the Company until such time, if ever, as the restricted stock with
respect to which such retained distribution shall have become vested. The
retained distributions will not bear interest or be segregated in separate
accounts. The recipient will not be entitled to delivery of the stock
certificate or certificates representing the restricted stock until the
restrictions applicable thereto have expired and the recipient may not sell,
assign, transfer, pledge, exchange, encumber or dispose of (other than by will
or by the applicable laws of descent and distribution) the restricted stock or
any retained distributions therefor during the Restricted Period.
The Committee may determine the vesting restrictions with respect to
each award of restricted stock; provided that any restricted stock award that
is granted to an employee who is then subject to the reporting and short-swing
profit provisions of Section 16 of the Securities Exchange Act of 1934 and the
rules thereunder will vest no earlier than six months following the date on
which the restricted stock is deemed awarded for purposes of such provisions.
If an Award recipient's status as an employee of the Company or its
subsidiary, as applicable, terminates for Cause (as defined in the 1996 Plan),
any of his restricted stock awards that are not then vested will be forfeited.
In the event a Change of Control occurs, all restricted stock awards
outstanding on the date of the Change of Control will become immediately and
fully vested.
Rights as a Stockholder. Restricted stock will constitute issued and
outstanding Common Stock for all corporate purposes. Subject to the terms of
the 1996 Plan and the recipient's agreement with respect to the Award, the
recipient will have the right to vote the restricted stock awarded to such
recipient and to receive and retain all regular cash dividends, and to exercise
all other rights, powers and privileges of a holder of Common Stock with
respect to such restricted stock.
FEDERAL INCOME TAX CONSEQUENCES - OPTIONS
Under current interpretations of the Code, the grant of an ISO to an
Optionee will not result in any income tax consequences to the Optionee.
Generally the exercise of an ISO will not result in any income tax consequences
to an Optionee if the ISO is exercised by the Optionee during his employment
with the Company or a subsidiary or within a specified period after termination
of employment due to death, retirement for age or disability under then
established rules of the Company or severance for disability. However, the
excess of the fair market value of the acquired shares as of the date of
exercise over the option price may constitute income for
13
<PAGE> 17
purpose of the Optionee's alternative minimum tax computation. An Optionee who
sells shares acquired pursuant to the exercise of an ISO after the expiration
of two years from the date of grant of the ISO and at least one year after the
transfer of the ISO shares (the "Waiting Period") will generally recognize long
term capital gain or loss on such sale. An Optionee who sells his ISO shares
prior to the expiration of the Waiting Period (an "Early Disposition")
generally will recognize ordinary income in the year of sale in an amount equal
to the excess, if any of (a) the lesser of (i) the fair market value of the
shares as of the date of exercise and (ii) the amount realized on the sale,
over (b) the option price. Any additional amount realized on an Early
Disposition should be treated by the Optionee as short or long term capital
gain, depending on the Optionee's holding period for the shares. If the shares
are sold for less than the option price, the Optionee will not recognize any
ordinary income but will recognize a short or long term capital loss, depending
on the holding period. Absent an Early Disposition, the Company will not be
entitled to a deduction either as a result of the grant of an ISO, the exercise
of an ISO or the sale of ISO shares by the Optionee. If there is an Early
Disposition of ISO shares, the Company will be able to deduct the amount of
ordinary income recognized by the participant with respect to the sale.
Under current interpretations of the Code, the grant of an NQSO,
including a Non-employee Director Option, to an Optionee will not result in the
recognition of any taxable income by the Optionee. An Optionee will generally
recognize income at the date of exercise of an NQSO on the difference between
(a) the fair market value of the shares acquired pursuant to the exercise of
the NQSO and (b) the exercise price of the NQSO. The Company should be
entitled to a deduction in the same amount as the income recognized by an
Optionee due to the exercise of an NQSO.
In general, upon the surrender of an Option for a Cash Payment, the
Optionee will recognize ordinary income in an amount equal to the Cash Payment
and the Company will be entitled to a business expense deduction in the same
amount.
Under certain circumstances, the acceleration of the exercisability of
Options granted under the 1996 Plan or the making of a Cash Payment in
connection with a Change in Control of the Company might be deemed in whole or
in part an "excess parachute payment" for purposes of the golden parachute tax
provisions of Section 280G of the Code. To the extent it is so considered, the
Optionee may be subject to a 20% excise tax and the Company may be denied a tax
deduction.
FEDERAL INCOME TAX CONSEQUENCES - RESTRICTED STOCK.
Under current interpretations of the Code, the recipient will
recognize income as the Award vests. The Company should be entitled to a
deduction for the income attributable to the restricted stock, subject to
certain limitations that apply if the recipient's aggregate compensation is
greater than $1 million. Although amounts in excess of $1 million may not,
under certain circumstances, be deductible by the Company, the Company does not
anticipate that any recipient's compensation will exceed the $1 million limit
on deductions.
Under certain circumstances, the acceleration of the vesting of the
restricted stock granted under the 1996 Plan in connection with a Change in
Control of the Company might be deemed in whole or in part an "excess parachute
payment" for purposes of the golden parachute tax provisions of Section 280G of
the Code. To the extent it is so considered, the Award recipient may be
subject to a 20% excise tax and the Company may be denied a tax deduction.
SECTION 83(B) ELECTIONS BY EMPLOYEES
The 1996 Plan provides that no employee may exercise the election
permitted under Section 83(b) of the Code with respect to an Award without the
written permission of the Treasurer of the Company. If the Treasurer of the
Company permits such an election with respect to any Award, the Company will
require the Award recipient to pay the Company an amount necessary to satisfy
the Company's tax withholding obligation.
14
<PAGE> 18
OPTIONS GRANTED SUBJECT TO STOCKHOLDER APPROVAL OF THE 1996 PLAN
Subject to stockholder approval of the 1996 Plan, Options to purchase
a total of 218,000 shares of Common Stock have been granted under the 1996 Plan
to certain of the Company's officers. If the 1996 Plan is approved by the
stockholders, 25% of such Options will be exercisable six months after the date
of stockholder approval of the plan, with the remainder vesting in equal
installments of 25% on each of the first three anniversary dates following the
date of grant. The exercise price of such Options is $7.8125 per share, which
was the Fair Market Value (as defined in the 1996 Plan) of the Common Stock on
the date of grant. These Options will expire five years from the date of
grant. The foregoing Options provide for the purchase of the following number
of shares by the following persons and groups: Mr. Armstrong, 45,000 shares;
Mr. Egg, 36,000 shares; Mr. Kramer 26,000 shares; Mr. McCarroll, 24,000 shares;
Mr. Pefanis, 33,000 shares; and all executive officers as a group (eight
persons), 218,000 shares.
ADDITIONAL INFORMATION
No restricted stock or stock Options will be awarded under the 1996
Plan unless the plan is approved by the stockholders of the Company. If
approved, future awards of restricted stock and stock options under the 1996
Plan will be subject to the discretion of the Compensation Committee.
Therefore, benefits or amounts received by or allocated to the executive
officers, current executive officers as a group, current directors who are not
executive officers as a group, and all employees as a group, are not currently
determinable.
VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL
The Board of Directors of the Company has adopted the 1996 Plan.
However, the 1996 Plan will not be effective unless the holders of at least a
majority of the shares of Common Stock present in person or by proxy at the
Meeting and entitled to vote thereon vote "FOR" the approval of the 1996 Plan.
The enclosed form of proxy provides a means for stockholders to vote for the
approval of the 1996 Plan, to vote against the approval of the 1996 Plan or to
abstain from voting with regard to approval of the 1996 Plan. Each properly
executed proxy received in time for the Meeting will be voted as specified
therein. If a stockholder executes and returns a proxy but does not specify
otherwise, the shares represented by such stockholder's proxy will be counted
for approval of the 1996 Plan. Abstentions will be counted toward the
calculation of a quorum but are not treated as either a vote for or against the
proposal. Therefore, an abstention has the same effect as a vote against the
proposal. Under Delaware law, any unvoted positions in brokerage accounts,
while present for general quorum purposes, are not entitled to vote.
Therefore, such unvoted shares will have no effect on the outcome of the vote
on the 1996 Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE 1996 PLAN.
15
<PAGE> 19
AUDITORS
The Board has selected Price Waterhouse as the Company's independent
accountants for 1996. Price Waterhouse is an international accounting firm and
has audited the Company's financial statements since 1977.
A representative of Price Waterhouse will be present at the Meeting, will
have an opportunity to make a statement if he desires to do so, and will be
available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1997
Annual Meeting must be received by the Company's Secretary on or before
December 23, 1996, to be considered for inclusion in the Company's proxy
statement and form of proxy for such meeting.
By Order of The Board of Directors,
Michael R. Patterson
Vice President, General Counsel & Secretary
April 19, 1996
16
<PAGE> 20
APPENDIX A
PLAINS RESOURCES INC.
1996 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this 1996 Stock Incentive Plan is to strengthen
Plains Resources Inc. by providing a performance incentive and to encourage
stock ownership by its officers, employees and directors, thereby encouraging
them to devote their abilities and industry to the success of the Company's
business enterprise and encouraging them to remain in the employ or service of
the Company. It is intended that this purpose be achieved by extending to
officers, employees and directors of the Company an added long-term incentive
for high levels of performance and unusual efforts through the grant to
officers and employees of options to purchase shares of the Company's common
stock and the grant to officers, employees and directors of shares of the
Company's common stock under this Plan.
2. Administration.
2.1 The Plan shall be administered by the Committee which
shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings.
A quorum shall consist of not less than two members of the Committee and a
majority of a quorum may authorize any action. Any decision or determination
reduced to writing and signed by a majority of all of the members shall be as
fully effective as if made by a majority vote at a meeting duly called and
held. Each member of the Committee shall be a Disinterested Director. No
member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee
for all costs and expenses and, to the full extent permitted by applicable law,
any liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
2.2 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to determine those
Eligible Employees to whom Awards shall be granted under the Plan and the
number of Incentive Stock Options, Nonqualified Stock Options and/or Shares to
be granted to each Eligible Employee; to prescribe the terms and conditions
(which need not be identical) of each Award, including the purchase price per
Share subject to each Option; and to make any amendment or modification to any
Agreement consistent with the terms of the Plan;
2.3 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Awards
granted thereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Award recipients
and all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of
absence which may be granted to an Award recipient on an individual basis
without constituting a termination of employment or service for purposes of the
Plan;
A-1
<PAGE> 21
(c) to exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan;
(d) generally, to exercise such powers and to perform
such acts as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.
3. Stock Subject to the Plan and Awards.
3.1 The maximum number of Shares with respect to which Awards may
be granted under the Plan is 1,500,000 Shares (or the number and kind of shares
of stock or other securities to which such Shares are adjusted upon a Change in
Capitalization pursuant to Section 6 or 7) and the Company shall reserve for
the purposes of the Plan, out of its authorized but unissued Shares or out of
Shares held in the Company's treasury, or partly out of each, such number of
Shares as shall be determined by the Board.
3.2 Whenever any outstanding Award or portion thereof expires, is
cancelled or is otherwise terminated for any reason (other than upon the
surrender of the Option pursuant to Section 5.5 hereof), the Shares allocable
to the cancelled or otherwise terminated Award or portion thereof may again be
the subject of Awards granted hereunder.
4. Option Grants for Eligible Employees.
4.1 Authority of Committee. The Committee shall have full and
final authority to select those Eligible Employees who will receive Options,
the terms and conditions of which shall be set forth in Agreements; provided,
however, that no Eligible Employee shall receive any Incentive Stock Options
unless he is an employee of the Company, a Parent or a Subsidiary at the time
the Incentive Stock Option is granted.
4.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement, provided that the
purchase price per Share under each Option shall not be less than 100% of the
Fair Market Value of a Share on the date the Option is granted (110% in the
case of an Incentive Stock Option granted to a Ten-Percent Stockholder).
4.3 Duration. Options granted hereunder shall be for such term as
the Committee shall determine, provided that no Option shall be exercisable
after the expiration of ten (10) years from the date it is granted (five (5)
years in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder). The Committee may, subsequent to the granting of any Option,
extend the term thereof but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
4.4 Vesting. Subject to Section 5.5 hereof, each Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than
the date the Option expires. The Committee may accelerate the exercisability
of any Option or portion thereof at any time.
4.5 Modification or Substitution. The Committee may, in its
discretion, modify outstanding Options or accept the surrender of outstanding
Options (to the extent not exercised) and grant new Options in substitution for
them. Notwithstanding the foregoing, no modification of an Option shall
adversely alter or impair any rights or obligations under the Option without
the Optionee's written consent.
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4.6 Restriction. With respect to Optionees subject to Section
16(b) of the Exchange Act, no Shares acquired upon exercise of an Option may be
disposed of before six (6) months from the date the Option is granted.
4.7 Maximum Value of Stock Subject to Options That are Incentive
Stock Options. To the extent that the aggregate Fair Market Value (determined
as of the date the Option is granted) of the stock with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee in
any calendar year (under this Plan and any other incentive stock option plan(s)
of the Company and any Parent or Subsidiary) exceeds $100,000, the Options
shall be treated as Nonqualified Stock Options. In making this determination,
Options shall be taken into account in the order in which they were granted.
5. Terms and Conditions Applicable to All Options.
5.1 Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will or the laws
of descent and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding and
conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee. Any attempted sale, assignment, pledge or
emcumbrance of an Option, other than a transfer by will or the laws of descent
and distribution, shall be void and the Company shall not be bound thereby.
5.2 Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise, as determined by the Committee in its
discretion, by any one or a combination of the following: (i) cash or (ii)
upon such terms and conditions as determined by the Committee, transferring to
the Company Shares owned by the Optionee for a period of at least six (6)
months prior to the exercise of the Option. The written notice pursuant to
this Section 5.2 may also provide instructions from the Optionee to the Company
that upon receipt of the purchase price in cash from the Optionee's broker or
dealer, designated as such on the written notice, in payment for any Shares
purchased pursuant to the exercise of an Option, the Company shall issue such
Shares directly to the designated broker or dealer. Any Shares transferred to
the Company as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the date of exercise of such Option. If requested
by the Committee, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
5.3 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until
(i) the Option shall have been exercised pursuant to the terms thereof, (ii)
the Company shall have issued and delivered the Shares to the Optionee and
(iii) the Optionee's name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.
5.4 Termination of Employment.
(a) If an Optionee's employment terminates for any reason
other than Cause, the Option shall be exercisable following the Optionee's
termination of employment as determined by the Committee and
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as set forth in the Agreement but only to the extent that the Option or portion
thereof was exercisable on the date of termination.
(b) If an Optionee's employment terminates for Cause, the
Option shall terminate immediately and no rights thereunder may be exercised.
The Committee may, at the time an Option is granted, or at any time
thereafter, in its sole discretion, provide that the exercisability of the
Option shall, in whole or in part, be accelerated to the date of the Optionee's
termination of employment. In no event may any Option be exercised by anyone
after the expiration of the term of the Option, nor may any action taken by the
Committee hereunder decrease the term of any Option to a period less than that
provided for in the Agreement. The decision of the Committee as to the cause
of an Optionee's discharge and the damage done to the Company will be final.
5.5 Effect of Change in Control. Notwithstanding anything
contained in the Plan or an Agreement to the contrary, in the event of a Change
in Control, (i) all Options outstanding on the date of such Change in Control
shall become immediately and fully exercisable and (ii) any Optionee will be
permitted to surrender for cancellation within ninety (90) days after such
Change in Control, any Option or portion of an Option to the extent not yet
exercised and the Optionee will be entitled to receive a cash payment in the
amount equal to the excess, if any, of (x) (A) in the case of a Nonqualified
Stock Option, the greater of (1) the Fair Market Value, on the date of
surrender, of the Shares subject to the Option or portion thereof surrendered
or (2) the Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered or (B) in the case of an Incentive Stock Option,
the Fair Market Value, on the date of surrender, of the Shares subject to the
Option or portion thereof surrendered, over (y) the aggregate purchase price
for such Shares under the Option or portion thereof surrendered; provided,
however, that in the case of an Option granted within six (6) months prior to
the Change in Control to any Optionee who may be subject to liability under
Section 16(b) of the Exchange Act, such Optionee shall be entitled to surrender
for cancellation his or her Option during the ninety (90) day period commencing
upon the expiration of six (6) months from the date of grant of any such Option
and to receive the amount determined under this Section 5.5.
5.6 Withholding of Taxes.
(a) The Company shall have the right to deduct from any
distribution of cash to any Optionee, an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to any Option. If an Optionee is
entitled to receive Shares upon exercise of an Option, the Optionee shall pay
the Withholding Taxes to the Company prior to the issuance of such Shares. In
satisfaction of the Withholding Taxes to the Company, the Optionee may make a
written election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the Shares issuable
to him or her upon exercise of the Option having an aggregate Fair Market
Value, on the date of exercise, equal to the Withholding Taxes, provided that
in respect of an Optionee who may be subject to liability under Section 16(b)
of the Exchange Act either (i) (A) the Optionee makes the Tax Election at least
six (6) months after the date the Option was granted, (B) the Option is
exercised during the ten (10) day period beginning on the third business day
and ending on the twelfth business day following the release for publication of
the Company's quarterly or annual statements of earnings (a "Window Period")
and (C) the Tax Election is made during the Window Period in which the Option
is exercised or prior to such Window Period and subsequent to the immediately
preceding Window Period or (ii) (A) the Tax Election is made at least six (6)
months prior to the date the Option is exercised and (B) the Tax Election is
irrevocable with respect to the exercise of all Options which are exercised
prior to the expiration of six (6) months following an election to revoke the
Tax Election. Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, (i) modify the provisions in the preceding
sentence or impose such other restrictions or limitations on
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Tax Elections as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act, and (ii) permit
Tax Elections to be made at such other times and subject to such other
conditions as the Committee determines will constitute exempt transactions
under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated thereunder,
of any Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the day after
the date of transfer of such Share or Shares to the Optionee pursuant to such
exercise, the Optionee shall, within ten (10) days of such disposition, notify
the Company thereof, by delivery of written notice to the Company at its
principal executive office.
6. Adjustment Upon Changes in Capitalization.
6.1 Subject to Section 7, in the event of a Change in
Capitalization which results in a subdivision or consolidation of Shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of Shares outstanding, without the Company receiving
compensation therefor in money, services or property, the number, class and per
share price of Shares subject to outstanding Options shall be appropriately
adjusted in such a manner as to entitle Optionees to receive, upon exercise of
their Options, for the same aggregate cash consideration, the same total number
and class or classes of Shares as they would have received had they exercised
their Option in full immediately prior to the event requiring the adjustment.
In addition, in the event of any Change in Capitalization (including a Change
in Capitalization described in the preceding sentence), the Committee shall
conclusively determine the appropriate adjustments (in addition to those
described in the preceding sentence), if any, to the maximum number and class
of Shares or other stock or securities with respect to which Awards may be
granted under the Plan, the number and class of Shares or other stock or
securities which are subject to outstanding Options granted under the Plan and
the purchase price of Options, if applicable.
6.2 Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in
the purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the extent
otherwise permitted by Sections 422 and 424 of the Code.
6.3 If, by reason of a Change in Capitalization, an Optionee shall
be entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions which were applicable to the
Shares subject to the Option, as the case may be, prior to such Change in
Capitalization.
7. Effect of Certain Transactions.
Subject to Section 5.5, in the event of (i) the liquidation or
dissolution or the Company or (ii) a merger or consolidation of the Company (a
"Transaction"), the Plan and the Options issued hereunder shall continue in
effect in accordance with their respective terms and each Optionee shall be
entitled to receive in respect of each Share subject to any outstanding
Options, as the case may be, upon exercise of any Option, the same number and
kind of stock, securities, cash, property or other consideration that each
holder of a Share was entitled to receive in the Transaction in respect of a
Share. In the event that, after a Transaction, there occurs any change of a
type described in Section 16.6 hereof with respect to the shares of the
surviving or resulting corporation, then adjustments similar to, and subject to
the same conditions as, those in Section 6 hereof shall be made by the
Committee.
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8. Option Grants for Non-employee Directors.
8.1 Award. On the date of the Company's annual meeting at which
the Non-employee Director is elected or reelected to serve, each Non-employee
Director shall be granted a Nonqualified Stock Option to purchase 10,000
Shares, provided that the Plan is in effect on that day.
8.2 Restriction. No Shares transferred to a Non-employee Director
pursuant to the exercise of a Nonqualified Stock Option granted under Section
8.1 may be disposed of by him before six (6) months after the date the Option
is granted.
8.3 Purchase Price. The purchase price per Share under a
Nonqualified Stock Option granted pursuant to Section 8.1 shall be 100% of the
Fair Market Value of a Share on the date the Option is granted.
8.4 Duration. Each Nonqualified Stock Option granted pursuant to
Section 8.1 shall expire five (5) years from the date it is granted.
8.5 Other Terms and Conditions. The provisions of Section 5 shall
apply to all Options granted pursuant to Section 8.1.
8.6 Amendment. Notwithstanding the provisions of Section 10
hereof, the terms of this Section 8 shall not be amended more than once every
six months, other than to comport with the changes in the Code, or the rules
under the Code.
9. Restricted Stock Awards.
9.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those
Eligible Employees who will receive Restricted Stock Awards, the terms and
conditions of which shall be set forth in Agreements.
9.2 Transferability Restrictions and Stockholder Rights With
Respect to Restricted Stock. Except as provided herein, Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered during a
Restricted Period. Any attempted sale, assignment, transfer, pledge or
encumbrance of Restricted Stock in violation of this Plan shall be void and the
Company shall not be bound thereby. During the Restricted Period, certificates
representing the Restricted Stock and any Retained Distributions shall be
registered in the recipient's name and bear a restrictive legend to the effect
that ownership of such Restricted Stock (and any such Retained Distributions)
and the enjoyment of all rights appurtenant thereto are subject to the
restrictions, terms and conditions provided in this Plan and the applicable
Agreement. Such certificates shall be deposited by the recipient with the
Company, together with stock powers or other instruments of assignment, each
endorsed in blank, which will permit transfer to the Company of all or any
portion of the Restricted Stock and any securities constituting Retained
Distributions that are forfeited in accordance with this Plan and the
applicable Agreement. Restricted Stock shall constitute issued and outstanding
shares of Common Stock for all corporate purposes. Subject to the terms of
this Plan and the Agreement with respect to the Award, the recipient shall have
the right to vote the Restricted Stock awarded to such recipient and to receive
and retain all regular cash dividends, and to exercise all other rights, powers
and privileges of a holder of Common Stock, with respect to such Restricted
Stock, with the exception that (i) the recipient shall not be entitled to
delivery of the stock certificate or certificates representing such Restricted
Stock until the restrictions applicable thereto shall have expired, (ii) the
Company shall retain custody of all Retained Distributions made or declared
with respect to the Restricted Stock (and such Retained Distributions shall be
subject to the same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted Stock with
respect to which such Retained Distributions shall have been made, paid or
declared shall have become vested, and such Retained
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Distributions shall not bear interest or be segregated in separate accounts and
(iii) the recipient may not sell, assign, transfer, pledge, exchange, encumber
or dispose of the Restricted Stock or any Retained Distributions during the
Restricted Period. Nothing in this Section shall prevent transfers by will or
by the applicable laws of descent and distribution.
9.3 Vesting of Restricted Stock. Restricted Stock Awards shall be
subject to such vesting restrictions, if any, as the Committee shall determine
in its sole discretion; provided that any Restricted Stock Award that is
granted to an Employee who is then subject to the reporting and short-swing
profit provisions of Section 16 of the Exchange Act and the rules thereunder
shall vest no earlier than six months following the date on which the
Restricted Stock is deemed awarded for purposes of such provisions.
9.4 Effect of Change in Control. Notwithstanding anything
contained in the Plan or an Agreement to the contrary, in the event of a Change
in Control, all Restricted Stock Awards outstanding on the date of such Change
in Control shall become immediately and fully vested.
9.5 Consequence of Vesting. Subject to Section 13.5, when shares
of Restricted Stock become vested, the Restricted Period shall be terminated as
to those shares, and the Company shall deliver to the Restricted Stock Award
recipient (or his estate, if applicable) a certificate representing those
Shares and all Retained Distributions made or declared with respect to those
Shares, reduced as necessary to satisfy the Company's tax withholding
obligation.
9.6 Forfeiture for Cause. Notwithstanding any other provision of
this Plan, if the Committee finds that the Restricted Stock Award recipient's
employment terminated for Cause, any of his Restricted Stock Awards that are
not then vested will be forfeited. The decision of the Committee as to the
cause of an Award recipient's discharge and the damage done to the Company will
be final.
9.7 Withholding of Taxes. The Company shall meet its tax
withholding obligations under the Code and applicable state or local law
arising upon the vesting of Restricted Stock by delivering to the Restricted
Stock recipient (or his estate, if applicable) a reduced number of Shares in
the manner specified herein. At the time of vesting of shares of Restricted
Stock, the Company shall (i) calculate the amount of withholding tax due on the
assumption that all such vested shares of Restricted Stock are made available
for delivery, (ii) reduce the number of such Shares made available for delivery
so that the Fair Market Value of the Shares withheld on the vesting date
approximates the amount of tax the Company is obliged to withhold and (iii) in
lieu of the withheld shares, remit cash to the United States Treasury and other
applicable governmental authorities, on behalf of the Award recipient, in the
amount of the withholding tax due. The Company shall withhold only whole
Shares to satisfy its withholding obligation. Where the Fair Market Value of
the withheld Shares does not equal the Company's withholding tax obligation,
the Company shall withhold Shares with a Fair Market Value slightly in excess
of the amount of its withholding obligation and shall remit the excess cash to
the Restricted Stock Award recipient (or his estate, if applicable) with the
Shares of Common Stock made available for delivery. The withheld Shares of
Restricted Stock not made available for delivery by the Company shall be
retained as treasury stock or will be cancelled and, in either case, the
recipient's right, title and interest in such Restricted Stock shall terminate.
10. Termination and Amendment of the Plan.
10.1 The Plan shall terminate on May 23, 2001, and no Awards may be
granted thereafter. The Board may sooner terminate or, except as otherwise
provided, amend the Plan at any time and from time to time; provided, however,
that to the extent necessary under Section 16(b) of the Exchange Act and the
rules and regulations promulgated thereunder or other applicable law, no
amendment shall be effective unless approved
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by the stockholders of the Company in accordance with applicable law and
regulations at an annual or special meeting held within twelve (12) months
after the date of adoption of such amendment.
10.2 Except as provided in Sections 6 and 7 hereof, rights and
obligations under any Award granted before any amendment or termination of the
Plan shall not be adversely altered or impaired by such amendment or
termination, except with the consent of the Award recipient, nor shall any
amendment or termination deprive any Award recipient of any Shares which he may
have acquired through or as a result of the Plan.
11. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement
or as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options and shares otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
12. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but
not intended to be exhaustive thereof, nothing in the Plan shall be construed
to:
(i) give any person any right to be granted an
Award other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan or any Agreement;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or
understanding, expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period of time.
13. Regulations and Other Approvals; Governing Law.
13.1 This Plan and the rights of all persons claiming hereunder
shall be construed and determined in accordance with the laws of the State of
Delaware.
13.2 The obligation of the Company to sell or deliver Shares with
respect to Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
13.3 The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
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13.4 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Employees granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
13.5 Each Award is subject to the requirement that, if at any time
the Committee determines, in its good faith discretion, the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or
the issuance of Shares, no Awards shall be granted or payment made or Shares
issued, in whole or in part, unless such listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee. Notwithstanding any other provision herein to the
contrary, if within ten (10) days preceding the expiration date of an Option,
the Company is unable to issue Shares thereunder, the expiration date of said
Option shall be extended and written notice given to the Optionee (at least
seven (7) days prior to the expiration date) of such extension so as to provide
a reasonable opportunity for the Optionee to exercise the Option; provided,
however, in no event shall such extension exceed the period during which the
Company was unable to issue Shares under the Option plus ten (10) days.
13.6 The Company will use its best efforts to effect and maintain
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of all Shares which may be awarded pursuant to the Plan and all Shares
issuable upon the exercise of an Option granted pursuant to the Plan.
13.7 Notwithstanding anything contained in the Plan to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required by the Securities
Act and Rule 144 or other regulations thereunder. The Committee may require
any individual receiving Shares pursuant to the Plan, as a condition precedent
to receipt of such Shares upon exercise of an Option or upon the awarding of
Shares, to represent and warrant to the Company in writing that the Shares
acquired by such individual are acquired without a view to any distribution
thereof and will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable
under the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares shall
be appropriately amended to reflect their status as restricted securities as
aforesaid.
14. Miscellaneous.
14.1 Multiple Agreements. The terms of each Award may differ from
other Awards granted under the Plan at the same time, or at some other time.
The Committee may also grant more than one Award to a given Eligible Employee
during the term of the Plan, either in addition to, or in substitution for, one
or more Awards previously granted to that Eligible Employee.
14.2 Section 83(b) Elections. No Eligible Employee shall exercise
the election permitted under Section 83(b) of the Code with respect to an Award
without written approval of the Treasurer of the Company. If the Treasurer
permits such an election with respect to any Award, the Company shall require
the Award recipient to pay the Company an amount necessary to satisfy the
Company's tax withholding obligation.
15. Effective Date.
The effective date of the Plan shall be the date of its adoption by
the Board, subject only to the approval by the affirmative votes of the holders
of a majority of the Company's Common Stock present, or represented,
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and entitled to vote at a meeting of stockholders duly held in accordance with
the applicable laws of the State of Delaware within twelve (12) months of such
adoption.
16. Definitions. For purposes of the Plan:
16.1 "Adjusted Fair Market Value" means, in the event of a Change
in Control, the greater of (i) the highest price per Share paid to holders of
the Shares in any transaction (or series of transactions) constituting or
resulting in a Change in Control or (ii) the highest Fair Market Value of a
Share during the ninety (90) day period ending on the date of a Change in
Control.
16.2 "Agreement" means the written agreement between the Company
and an Award recipient evidencing the grant of an Award and setting forth the
terms and conditions thereof.
16.3 "Award" shall mean an Option (which may be designated as an
Incentive Stock Option or a Nonqualified Stock Option) or a Restricted Stock
Award granted under this Plan.
16.4 "Board" means the Board of Directors of the Company.
16.5 "Cause" means (i) the willful engaging by the Award recipient
in gross misconduct resulting in demonstrable material injury to the Company,
or (ii) the nonappealable conviction of the Award recipient of a felony
involving moral turpitude. For purposes of this definition, no act or failure
to act on the Award recipient's part shall be considered "willful" unless done,
or omitted to be done, by him not in good faith and without reasonable belief
that his act or omission was in the best interest of the Company or otherwise
likely to result in no material injury thereto.
16.6 "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, public offering, private placement, change in
corporate structure or otherwise.
16.7 A "Change in Control" means the occurrence during the term of
the Plan of:
(i) The "acquisition" by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of any
securities of the Company which generally entitles the holder thereof to vote
for the election of directors of the Company (the "Voting Securities") which,
when added to the Voting Securities then "Beneficially Owned" by such person,
would result in such Person "Beneficially Owning" twenty percent (20%) or more
of the combined voting power of the Company's then outstanding Voting
Securities; provided, however, that for purposes of this paragraph (i), a
Person shall not be deemed to have made an acquisition of Voting Securities if
such Person: (a) acquires Voting Securities as a result of a stock split,
stock dividend or other corporate restructuring in which all stockholders of
the class of such Voting Securities are treated on a pro rata basis; (b)
acquires the Voting Securities directly from the Company; (c) becomes the
Beneficial Owner of more than the permitted percentage of Voting Securities
solely as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by such Person; (d) is the
Company or any corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Controlled Entity"); (e) acquires Voting
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Securities in connection with a "Non-Control Transaction" (as defined in
paragraph (iii)(a) below); or (f) becomes the Beneficial Owner of more than the
permitted percentage of Voting Securities as a result of a transaction approved
by a majority of the Incumbent Board (as defined in paragraph (ii) below); or
(ii) The individuals who, as of February 8, 1996,
are members of the Board of Directors of the Company (the "Incumbent Board"),
cease for any reason to constitute at least two-thirds of the Board of
Directors of the Company; provided, however, that if either the election of any
new director or the nomination for election of any new director by the
Company's stockholders was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) Approval by stockholders of the Company of:
(a) A merger, consolidation or reorganization
involving the Company (a "Business Combination"), unless
(1) the stockholders of the Company,
immediately before the Business Combination, own, directly or indirectly
immediately following the Business Combination, at least seventy-five percent
(75%) of the combined voting power of the outstanding voting securities of the
corporation resulting from the Business Combination (the "Surviving
Corporation") in substantially the same proportion as their ownership of the
Voting Securities immediately before the Business Combination, and
(2) the individuals who were members of
the Incumbent Board immediately prior to the execution of the agreement
providing for the Business Combination constitute at least two-thirds of the
members of the Board of Directors of the Surviving Corporation, and
(3) no Person (other than (x) the
Company or any Controlled Entity, (y) a trustee or other fiduciary holding
securities under one or more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the Company, the Surviving
Corporation or any Controlled Entity, or (z) any Person who, immediately prior
to the Business Combination, had Beneficial Ownership of twenty percent (20%)
or more of the then outstanding Voting Securities) has Beneficial Ownership of
twenty percent (20%) or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities (a transaction described in
this subparagraph (a) (1), (2) or (3) shall be referred to as a "Non-Control
Transaction");
(b) A complete liquidation or dissolution of the
Company; or
(c) An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Controlled Entity).
Notwithstanding the foregoing, if an Eligible Employee's employment is
terminated and the employee reasonably demonstrates that such termination (x)
was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control and who effectuates a
Change in Control or (y) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually
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occurs, then for all purposes hereof, the date of a Change in Control with
respect to the Eligible Employee shall mean the date immediately prior to the
date of such termination of employment.
A Change in Control shall not be deemed to occur solely because twenty
percent (20%) or more of the then outstanding Voting Securities is Beneficially
Owned by (x) a trustee or other fiduciary holding securities under one or more
employee benefit plans or arrangements (or any trust forming a part thereof)
maintained by the Company or any Controlled Entity or (y) any corporation
which, immediately prior to its acquisition of such interest, is owned directly
or indirectly by the stockholders of the Company in the same proportion as
their ownership of stock in the Company immediately prior to such acquisition.
16.8 "Code" means the Internal Revenue Code of 1986, as amended.
16.9 "Committee" means a committee consisting of at least two (2)
Disinterested Directors appointed by the Board to administer the Plan and to
perform the functions set forth herein.
16.10 "Company" means Plains Resources Inc.
16.11 "Disability" means a physical or mental infirmity which
impairs the Optionee's ability to perform substantially his or her duties for a
period of one hundred eighty (180) consecutive days or which the Committee
determines constitutes a Disability.
16.12 "Disinterested Director" means a director of the Company who
is "disinterested" within the meaning of Rule 16b-3 under the Exchange Act.
16.13 "Eligible Employee" means any officer, the Chairman of the
Board, or any employee of the Company or a Subsidiary.
16.14 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
16.15 "Fair Market Value" on any date means the closing sale price
per Share on the day before such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on the day before
such date as quoted on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are regularly
quoted, or, if there have been no published bid or asked quotations with
respect to Shares on the day before such date, the Fair Market Value shall be
the value established by the Board in good faith and in accordance with Section
422 of the Code.
16.16 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
16.17 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
16.18 "Non-employee Director" means a director of the Company who is
not an employee of the Company or any Subsidiary.
16.19 "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or either or both of them.
16.20 "Optionee" means a person to whom an Option has been granted
under the Plan.
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<PAGE> 32
16.21 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
16.22 "Plan" means the Plains Resources Inc. 1996 Stock Incentive
Plan.
16.23 "Restricted Period" shall mean the period designated by the
Committee during which Restricted Stock may not be sold, assigned, transferred,
pledged, or otherwise encumbered.
16.24 "Restricted Stock" shall mean those Shares issued pursuant to
a Restricted Stock Award that are subject to the restrictions, terms, and
conditions set forth in this Plan and any related Agreement.
16.25 "Restricted Stock Award" shall mean an award of Restricted
Stock pursuant to Section 9 hereof.
16.26 "Retained Distributions" shall mean any securities or other
property (other than regular cash dividends) distributed by the Company in
respect of Restricted Stock during any Restricted Period.
16.27 "Shares" means the common stock, par value $.10 per share, of
the Company.
16.28 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
16.29 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.
16.30 "Ten-Percent Stockholder" means an Eligible Employee, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.
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<PAGE> 33
PROXY PLAINS RESOURCES INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Phillip D. Kramer and Michael R. Patterson, and
each of them, as Proxies with full power of substitution, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of Common
Stock of Plains Resources Inc. which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders to be held in the Highland Room of the Four
Seasons Hotel, Houston, Texas, on May 23, 1996, at 10:00 a.m. local time, and
any adjournment or postponement thereof.
1. ELECTION OF DIRECTORS [ ] FOR ALL NOMINEES LISTED BELOW (EXCEPT AS
MARKED TO THE CONTRARY BELOW)
[ ] WITHHOLD FOR ALL NOMINEES LISTED BELOW
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE FOLLOWING LIST:
GREG L. ARMSTRONG, ROBERT A. BEZUCH, TOM H. DELIMITROS,
WILLIAM M. HITCHCOCK, DAN M. KRAUSSE, JOHN H. LOLLAR,
ROBERT V. SINNOTT AND J. TAFT SYMONDS
2. APPROVAL OF PLAINS RESOURCES INC. 1996 STOCK INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be signed on the other side)
(Continued from the other side)
In his discretion, the Proxy is authorized to vote upon such other business as
may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as your name appears on the
left. If signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such; if signing for corporation,
sign in full corporate name by authorized officer;
and if signing for a partnership, sign in the
partnership name by authorized person. When
shares are in the names of more than one person,
each should sign.
Date:____________________________, 1996.
________________________________________
________________________________________
Signature(s) of Stockholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
