<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-9808
PLAINS RESOURCES INC.
(Exact name of registrant as specified in its charter)
and each of the Subsidiary Guarantors of $50 Million 10.25% Senior Subordinated
Notes due 2006 listed under "General" on Page 2 of this report
Delaware 13-2898764
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Smith Street
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(713) 654-1414
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
16,694,548 shares of common stock $.10 par value, issued and outstanding at
October 31, 1997.
Page 1 of 22
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PLAINS RESOURCES INC. AND SUBSIDIARIES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL
This Quarterly Report on Form 10-Q is filed on behalf of Plains
Resources Inc. (the "Company") and the following wholly-owned subsidiaries,
which are guarantors ("Subsidiary Guarantors") of $50 million principal amount
of 10.25% Senior Subordinated Notes due 2006 (the "Series C & D 10.25% Notes").
<TABLE>
<CAPTION>
State or other jurisdictions of I.R.S. Employer
Subsidiary Guarantors incorporation or organization Identification No.
--------------------- ------------------------------- ------------------
<S> <C> <C>
Calumet Florida, Inc. Delaware 35-1880416
Plains Illinois Inc. Delaware 76-0487569
Plains Marketing & Transportation Inc. Delaware 76-0339476
Plains Resources International Inc. Delaware 76-0040974
PMCT Inc. Delaware 76-0410281
PLX Crude Lines Inc. Delaware 76-0387477
PLX Ingleside Inc. Delaware 76-0493777
Plains Terminal & Transfer Corporation Delaware 76-0376679
Stocker Resources, Inc. California 33-0421175
Stocker Resources, L.P. California 33-0430755
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets:
September 30, 1997 and December 31, 1996 ................................... 3
Condensed Consolidated Statements of Income:
For the three and nine months ended September 30, 1997 and 1996............. 4
Condensed Consolidated Statements of Cash Flows:
For the nine months ended September 30, 1997 and 1996....................... 5
Notes to Condensed Consolidated Financial Statements.......................... 6
Separate financial statements of Calumet Florida, Inc., Plains Illinois Inc.,
Plains Marketing & Transportation Inc., Plains Resources International Inc.,
PMCT Inc., PLX Crude Lines Inc., PLX Ingleside Inc., Plains Terminal & Transfer
Corporation, Stocker Resources, Inc., and Stocker Resources, L.P., as Subsidiary
Guarantors of the Series C & D 10.25% Notes, have not been included herein
because (a) such guarantors are jointly and severally liable for full and
unconditional guarantees of the Series C & D 10.25% Notes and (b) the aggregate
earnings of such guarantors and the Company are equivalent, and the aggregate
net assets and equity of such guarantors and the Company are equivalent, to the
net assets, earnings and equity of the Company on a consolidated basis.
MANAGEMENT'S DISCUSSION AND ANALYSIS.................................................. 10
PART II. OTHER INFORMATION........................................................... 20
</TABLE>
Page 2 of 22
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,085 $ 2,517
Accounts receivable and other 92,627 94,778
Inventory 33,245 4,563
--------- ---------
Total current assets 128,957 101,858
--------- ---------
PROPERTY AND EQUIPMENT
Oil and natural gas properties - full cost
method:
Subject to amortization 460,862 384,019
Not subject to amortization 49,704 41,698
Midstream assets, primarily crude oil terminal
and storage facility 35,419 35,122
Other property and equipment 7,885 8,275
--------- ---------
553,870 469,114
Less allowance for depreciation, depletion and
amortization (174,125) (158,074)
--------- ---------
379,745 311,040
--------- ---------
OTHER ASSETS 16,361 17,351
--------- ---------
$ 525,063 $ 430,249
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current liabilities $ 97,934 $ 93,242
Interest payable 1,368 5,089
Royalties payable and drilling advances 5,436 7,859
Notes payable and other current obligations 25,511 511
--------- ---------
Total current liabilities 130,249 106,701
BANK DEBT 76,700 72,700
SUBORDINATED DEBT 202,717 149,121
OTHER LONG-TERM DEBT 3,067 3,578
OTHER LONG-TERM LIABILITIES 5,119 2,577
--------- ---------
417,852 334,677
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 50,000,000 shares
authorized; issued and outstanding 16,665,849 at
September 30, 1997 and 16,518,645 shares at
December 31, 1996 1,667 1,652
Additional paid-in capital 121,773 120,051
Accumulated deficit (16,229) (26,131)
--------- ---------
107,211 95,572
--------- ---------
$ 525,063 $ 430,249
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 22
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except
per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------
1997 1996 1997 1996
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
REVENUE
Oil and natural gas sales $ 27,265 $ 24,825 $ 79,829 $ 70,597
Marketing, transportation and storage 193,318 144,321 536,332 377,871
Interest and other income 77 99 223 220
-------- -------- -------- --------
220,660 169,245 616,384 448,688
-------- -------- -------- --------
EXPENSES
Production expenses 12,099 9,902 33,064 28,533
Purchases, transportation and storage 189,994 141,727 527,478 370,826
General and administrative 1,990 1,899 6,205 5,941
Depreciation, depletion and amortization 5,993 5,632 17,257 16,053
Interest expense 5,986 4,274 15,877 12,806
Litigation settlement - - - 4,000
-------- -------- -------- --------
216,062 163,434 599,881 438,159
-------- -------- -------- --------
Income before income taxes and
extraordinary item 4,598 5,811 16,503 10,529
Income tax expense (benefit):
Current 80 - 290 -
Deferred 1,759 2,325 6,311 (6,787)
-------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 2,759 3,486 9,902 17,316
EXTRAORDINARY ITEM:
Gain(Loss) on early extinguishment
of debt, net of tax benefit - 1,515 - (5,104)
-------- -------- -------- --------
NET INCOME $ 2,759 $ 5,001 $ 9,902 $ 12,212
======== ======== ======== ========
Net income per common and
common equivalent share:
Before extraordinary item $ 0.15 $ 0.20 $ .55 $ 0.98
Extraordinary item - 0.08 - (0.29)
-------- -------- -------- --------
$ 0.15 $ 0.28 $ 0.55 $ 0.69
======== ======== ======== ========
Weighted average number of common and
common equivalent shares 18,372 17,821 18,158 17,578
======== ======== ======== ========
</TABLE>
See notes to condensed financial statements.
Page 4 of 22
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,902 $ 12,212
Items not affecting cash flows from operating
activities:
Depreciation, depletion and amortization 17,257 16,053
Loss on early extinguishment of debt,
net of tax - 5,104
Deferred income taxes 6,311 (6,787)
Amortization of debt discount and other 202 79
Change in assets and liabilities resulting from
operating activities:
Accounts receivable and other (1,253) (28,167)
Inventory (28,682) (1,857)
Accounts payable and other current
liabilities (4,042) 31,567
Interest payable (3,022) (2,323)
Royalties payable 469 788
-------- --------
Net cash (used in) provided by operating
activities (2,858) 26,669
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of oil and natural gas
properties 185 3,066
Payment for acquisition, exploration and
development costs (75,003) (36,506)
Payment for additions to other property and
assets (3,840) (1,876)
-------- --------
Net cash used in investing activities (78,658) (35,316)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 221,604 217,323
Proceeds from short-term debt 25,000 -
Principal payments of long-term debt (164,500) (208,357)
Costs incurred to redeem long-term debt - (6,468)
Proceeds from exercise of stock options 888 1,619
Other (908) (974)
-------- --------
Net cash provided by financing activities 82,084 3,143
-------- --------
Net increase (decrease) in cash and cash
equivalents 568 (5,504)
Cash and cash equivalents, beginning of period 2,517 6,129
-------- --------
Cash and cash equivalents, end of period $ 3,085 $ 625
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
Page 5 of 22
<PAGE>
PLAINS RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(unaudited)
NOTE 1--ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to interim financial
reporting as prescribed by the Securities and Exchange Commission ("SEC").
For further information, refer to the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 filed with the SEC.
All material adjustments consisting only of normal recurring adjustments
which, in the opinion of management, were necessary for a fair statement of
the results for the interim periods, have been reflected. Certain
reclassifications have been made to the prior year statements to conform with
the current year presentation. The Company evaluates the capitalized costs of
its oil and natural gas properties on an ongoing basis and has utilized the
most recently available information to estimate its reserves at September 30,
1997, in order to determine the realizability of such capitalized costs.
Future events, including drilling activities, product prices and operating
costs, may affect future estimates of such reserves.
NOTE 2 -- PROPERTY ACQUISITIONS
In March 1997, the Company completed the acquisition of Chevron USA's
("Chevron") interest in the Montebello Field for $25 million, effective
February 1, 1997. The assets acquired consist of a 100% working interest and
a 99.2% net revenue interest in 55 producing oil wells and related facilities
and also include approximately 450 acres of surface fee lands. At the
acquisition date, the Montebello Field, which is located approximately 15
miles from the Company's existing California operations, was producing
approximately 800 barrels of oil and 800 Mcf of gas per day and added
approximately 23 million barrels of oil equivalent to the Company's proved
reserves. The acquisition was funded with proceeds from the Company's
revolving credit facility ("Revolving Credit Facility").
On November 12, 1997, the Company acquired a 100% working interest and a 94%
revenue interest in the Arroyo Grande Field in San Luis Obispo County,
California, from subsidiaries of Shell Oil Company ("Shell"). The assets
acquired include surface and development rights to approximately 1,000 acres
included in the 1,500 acre unit. The field is currently producing
approximately 1,600 barrels of 14 degree API gravity oil per day from 70 wells.
The aggregate purchase price of $23.0 million consisted of rights to a non-
producing property interest conveyed to Shell, the issuance of 46,600 shares
of Series D Cumulative Convertible Preferred Stock (the "Series D Preferred
Stock") with an aggregate stated value of $23.3 million, recorded at $20.5
million, net of discount, and a 5 year warrant to purchase 150,000 shares of
the Company's Common Stock (the "Common Stock") at $25 per share. No proved
reserves had been assigned to the rights to the property interest conveyed.
Each share of the Series D Preferred Stock has a stated value of $500 and is
convertible into Common Stock at a ratio of $25.00 of stated value for each
share of Common Stock to be issued. Commencing January 1, 2000, the preferred
stock will bear an annual dividend of $30.00 per share. Prior
Page 6 of 22
<PAGE>
to such date no dividends will accrue. The preferred stock is redeemable at the
Company's option at 140% of stated value. If not previously redeemed or
converted, the preferred stock will automatically convert into 932,000 shares of
Common Stock in 2012.
The difference between the stated value of $23.3 million and the recorded
amount of $20.5 million for the Series D Preferred Stock will be amortized to
retained earnings over the period during which no dividends will accrue on the
Series D Preferred Stock, resulting in an annual dividend cost of
approximately 6%.
NOTE 3 -- LONG-TERM DEBT
On July 23, 1997, the Company sold $50 million of Senior Subordinated Notes
due 2006, Series C, bearing a stated coupon rate of 10.25% (the "Series C
10.25% Notes"). Such notes were issued pursuant to a Rule 144A private
placement at approximately 107.21% of par to yield a minimum yield to worst of
8.79%, or 9.03% yield to maturity. On October 30, 1997, the Company exchanged
a total of $49.95 million of the Series C 10.25% Notes for 10.25% Senior
Subordinated Notes due 2006, Series D, (the "Series D 10.25% Notes"). The
Series D 10.25% Notes are substantially identical (including principal amount,
interest rate, maturity and redemption rights) to the Series C 10.25% Notes
for which they were exchanged, except for certain transfer restrictions
relating to the Series C 10.25% notes.
The stated coupon rate of interest and maturity date of the Series C 10.25%
Notes and the Series D 10.25% Notes (collectively, the "Series C & D 10.25%
Notes") are the same as those of the Company's existing $150 million principal
amount of senior subordinated notes currently outstanding. The Series C & D
10.25% Notes are redeemable, at the option of the Company, on or after
March 15, 2001 at 105.13%, at decreasing prices thereafter prior to March 15,
2004, and thereafter at 100% plus, in each case, accrued interest to the date
of redemption. In addition, prior to March 15, 1999, up to $15 million in
principal amount of the Series C & D 10.25% Notes are redeemable at the option
of the Company, in whole or in part, from time to time, at 110.25% of the
principal amount thereof, with the Net Proceeds (as defined in the Indenture)
of any Public Equity Offering (as defined in the Indenture).
The indenture under which the Series C & D 10.25% Notes were issued (the
"Indenture") contains covenants including, but not limited to, covenants with
respect to the following: (i) limitations on incurrence of additional
indebtedness; (ii) limitations on certain investments; (iii) limitations on
restricted payments; (iv) limitations on disposition of assets; (v)
limitations on dividends and other payment restrictions affecting
subsidiaries; (vi) limitations on transactions with affiliates; (vii)
limitations on liens; and (viii) restrictions on mergers, consolidations and
transfers of assets. In the event of a Change of Control and a corresponding
Rating Decline, as both are defined in the Indenture, the Company will be
required to make an offer to repurchase the Series C & D 10.25% Notes at 101%
of the principal amount thereof, plus accrued and unpaid interest to the date
of the repurchase. The Series C & D 10.25% Notes are unsecured general
obligations of the Company and are subordinated in right of payment to all
existing and future senior indebtedness of the Company and are guaranteed by
all of the Company's subsidiaries.
Proceeds from the sale of the Series C & D 10.25% Notes, net of offering
costs, were approximately $53 million and were used to reduce the balance
outstanding on the Revolving Credit Facility.
In March 1997, the Company's Revolving Credit Facility and borrowing base
thereunder was increased to $165 million from $125 million. The Revolving
Credit Facility, as amended, converts to a term loan on July 1, 1999, with a
final maturity of July 1, 2004, and bears interest at the option of the
Company at LIBOR plus 1.375% or Base Rate (as defined therein). The Revolving
Credit Facility is guaranteed by all of the Company's principal subsidiaries
and is secured by the oil and gas properties of the Company and
Page 7 of 22
<PAGE>
its subsidiaries and the stock of all subsidiaries. At September 30, 1997, the
Company had approximately $76.7 million in borrowings and a $1.0 million standby
letter of credit outstanding under the Revolving Credit Facility.
NOTE 4 -- UNCOMMITTED SECURED TRANSACTIONAL GUIDANCE FACILITY
Plains Marketing and Transportation Inc. ("Plains Marketing ") and PMCT Inc.,
wholly owned subsidiaries of the Company, have a $90 million Transactional
Facility with five banks. The purpose of the Transactional Facility is to
provide standby letters of credit to support the purchase of crude oil for
resale and borrowings to finance crude oil inventory that has been hedged
against future price risk. In August 1997, the sublimit for cash borrowings
under the Transactional Facility was increased to $25 million from $20
million. Letters of credit under the Transactional Facility are generally
issued for seventy-day periods and bear fees of 1 1/8% per annum. Borrowings
incur interest at the option of the borrower at (i) the Base Rate or (ii)
LIBOR plus 1 1/2%. At September 30, 1997, approximately $33.7 million in
letters of credit and $25 million in borrowings were outstanding under the
Transactional Facility.
The Transactional Facility is secured by all of the assets of Plains Marketing
and is guaranteed by the Company. The Company's guarantee is secured by a
$1.0 million standby letter of credit issued on behalf of the Company. All
financings under the Transactional Facility, which expires on November 21,
1997, are at the discretion of the lenders. The Company is currently in the
process of renewing the Transactional Facility and believes that such facility
will be renewed for a one year period.
NOTE 5 -- EARNINGS PER SHARE
Earnings per share is based on the weighted average number of common and
common equivalent shares outstanding. Common equivalent shares include
employee stock options and warrants.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per
Share ("EPS"). SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires a dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures. Basic EPS excludes dilutive securities and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if dilutive securities were converted into
common stock and is computed similarly to fully diluted EPS pursuant to
previous accounting pronouncements. SFAS 128 is effective for periods ending
after December 15, 1997, and requires restatement of all prior period EPS data
presented.
The Company reported primary EPS of $.15 per share and $.28 per share for the
three months ended September 30, 1997 and 1996, respectively, and $.55 per
share and $.69 per share for the nine months ended September 30, 1997 and
1996, respectively. Under SFAS 128, basic EPS would have been $.17 per share
and $.31 per share for the three months ended September 30,1997 and 1996,
respectively, and $.60 per share and $.75 per share for the nine months ended
September 30, 1997 and 1996, respectively. Diluted EPS would have been $.15
per share and $.28 per share for the three months ended September 30, 1997 and
1996, respectively, and $.54 per share and $.68 per share for the nine months
ended September 30, 1997 and 1996, respectively.
Page 8 of 22
<PAGE>
NOTE 6 -- NEW ACCOUNTING PRONOUNCEMENT
In July 1997, the FASB issued Statement of Financial Accounting Standards No.
131 ("SFAS 131"), Disclosures About Segments of an Enterprise and Related
Information, effective for fiscal years beginning after December 15, 1997.
SFAS 131 introduces a new model for segment reporting and requires disclosures
for each segment that are similar to those required under current standards
with the addition of quarterly disclosure requirements and a finer
partitioning of geographic disclosures. Reportable segments are based on
products and services, geography, legal structure, management structure or any
manner in which management disaggregates a company. This statement replaces
the notion of industry and geographic segments in current FASB standards.
Management is currently evaluating the impact of this statement on the
Company's disclosures.
Page 9 of 22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Three month periods ended September 30, 1997 and 1996
For the quarter ended September 30, 1997, the Company reported net income of
$2.8 million, or $.15 per share compared to net income for the third quarter
of 1996 of $3.5 million, or $.20 per share before extraordinary items.
Including a $1.5 million extraordinary tax benefit in the third quarter of
1996, net income for the prior year period totaled $5.0 million, or $.28 per
share. Cash flow from operations (net income plus noncash expenses) was $10.5
million and earnings before interest, taxes, depreciation, depletion and
amortization ("EBITDA") was $16.6 million in the current quarter. Such
results compare to $11.4 million and $15.7 million, respectively, for the
third quarter of 1996.
Upstream Results
The following table sets forth certain upstream operating information of the
Company for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------
1997 1996
--------- ---------
(in thousands, except per
unit data)
(unaudited)
<S> <C> <C>
Average Daily Production Volumes
Barrels of Oil Equivalent ("BOE")
California................................ 11.2 9.4
Gulf Coast................................ 5.2 5.1
Illinois Basin............................ 3.6 3.5
------ ------
Total (93% oil)........................... 20.0 18.0
====== ======
Unit Economics
Average sales price per BOE............... $14.81 $14.97
Production expenses per BOE............... 6.57 5.97
------ ------
Gross margin per BOE...................... 8.24 9.00
Upstream G&A expenses per BOE............. 0.59 0.72
------ ------
Gross profit per BOE...................... $ 7.65 $ 8.28
====== ======
</TABLE>
Oil and natural gas production for the third quarter of 1997 increased
approximately 11% to an average of 20,000 BOE per day as compared to the third
quarter 1996 average of 18,000 BOE per day. Total production for the three
month periods ended September 30, 1997 and 1996, was 1.8 million BOE and 1.7
million BOE, respectively. The increase in production volumes is attributable
to the Company's acquisition and exploitation activities. Production in the
Company's California and Illinois Basin properties increased approximately 19%
and 6%, respectively, over last year's third quarter levels. Excluding the
production from the Montebello Field which was acquired during the first
quarter of 1997 (the "Montebello Acquisition"), California production was
10,200 BOE per day which represents a 9% increase over the comparative prior
year period. Production from the Company's Gulf Coast properties, primarily
South Florida, was relatively unchanged at approximately 5,200 barrels per day
versus 5,100 barrels per day last year. The Company's South Florida
properties experienced production downtime during the quarter
Page 10 of 22
<PAGE>
totaling approximately 34,000 barrels of oil, primarily due to mechanical
complications on certain key wells. Such production downtime equates to
approximately 370 barrels per day or 7% of the prior year period's reported
production of 5,100 barrels per day. Due to the high volume of production that
is generated by a few wells in South Florida, abrupt or abnormal declines or
downtime due to mechanical, marketing, or other conditions on any of the
properties in this area could have a significant impact on production.
Oil and natural gas revenues increased 10% to $27.3 million for the third
quarter of 1997 due to increased production volumes. On a composite basis,
approximately 93% of the current quarter's production was crude oil. During
the 1996 third quarter, the benchmark NYMEX West Texas Intermediate crude oil
price averaged $22.33 per barrel, $2.56 per barrel or 13% higher than the
$19.77 per barrel average for the current year quarter. However, as a result
of improvement in the contract prices associated with the Company's crude oil
production subject to fixed price contracts or hedging arrangements, average
unit prices were significantly less affected. The Company's average product
price, which represents a combination of fixed and floating price sales
arrangements and incorporates location and quality discounts from the
benchmark NYMEX price was $14.81 per BOE, down 1% from the 1996 third quarter
average price of $14.97 per BOE. The Company hedged approximately 15,200
barrels per day in the third quarter of 1997 at an average NYMEX benchmark
price of approximately $19.19 per barrel before deductions for quality and
location differentials. During last year's third quarter, approximately
12,500 barrels per day were hedged at an average NYMEX benchmark price of
approximately $17.99 per barrel. Hedging transactions had the effect of
decreasing the Company's average price per BOE by $.46 and $2.68 in the third
quarter of 1997 and 1996, respectively. The Company's aggregate quality and
location differential to the NYMEX crude oil benchmark price averaged $4.05
per barrel during the third quarter of 1997 compared to $3.77 during the third
quarter of last year.
Unit production expenses increased approximately 10% to $6.57 per BOE during
the 1997 third quarter primarily as a result of the current year impact of the
Montebello Field, which is expected to have higher unit costs than the average
of the Company's other properties through the first part of 1998, and workover
expenses attributable to equipment failures in South Florida. During the
quarter, the unit production expenses of the Montebello Field were $9.86 per
BOE as the Company performed a substantial amount of work designed to improve
long-term operations in the field. Total production expenses increased to
$12.1 million from $9.9 million for the third quarter of 1996 primarily due to
the Montebello Acquisition and South Florida workovers, as well as increased
production levels.
Upstream, the Company's unit gross margin (well head revenue less production
expenses) was $8.24 per BOE, an 8% decrease compared to $9.00 per BOE recorded
in last year's third quarter. Unit gross profit, which deducts general and
administrative ("G&A") expenses attributable to the upstream segment, was
$7.65 per BOE, also down 8% from the 1996 amount of $8.28 per BOE. The
decrease is directly related to lower unit sales prices and higher unit
production expenses, partially offset by lower unit G&A costs.
Unit G&A expense in the upstream segment declined 18% to $.59 per BOE from
$.72 per BOE in the third quarter of 1996 primarily due to increased
production levels. Unit depreciation, depletion and amortization ("DD&A")
declined to $2.85 per BOE for the third quarter of 1997 from $3.00 per BOE in
the 1996 comparative quarter. Such reduction is attributable to the increase
in proved reserves from the Company's acquisition and exploitation activities.
Page 11 of 22
<PAGE>
Midstream Results
The following table sets forth certain midstream operating information of the
Company for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Operating Results
Gross margin.................................... $3,324 $2,594
G&A expense..................................... 910 710
------ ------
Gross profit.................................... $2,414 $1,884
====== ======
Average Daily Volumes
Crude oil barrels marketed...................... 75 56
Crude oil terminal throughput barrels........... 56 54
------ ------
131 110
====== ======
</TABLE>
Despite significant downward pressure on marketing margins throughout the
industry generally, strength in the Company's storage and terminalling
activities enabled this segment to generate its strongest quarterly results to
date. The Company's midstream segment reported gross margin (marketing,
transportation and storage revenues less purchases, transportation and storage
expenses) of $3.3 million for the third quarter of 1997, reflecting a 28%
increase over the $2.6 million reported for the 1996 quarter. Net of interest
expense associated with contango inventory transactions, gross margin was $2.8
million for the current year quarter, an increase of approximately 8% over the
prior year amount. Gross revenues were $193.3 million and $144.3 million for
the respective periods. Gross profit (gross margin less midstream G&A
expenses) also increased 28% to $2.4 million versus $1.9 million in the third
quarter of 1996. Midstream G&A expenses increased from $710,000 to $910,000
in the current year quarter primarily as a result of additional personnel
added to further expand marketing activities. Average crude oil volumes
marketed increased approximately 34% to 75,000 barrels per day from the 56,000
barrels per day averaged during the 1996 quarter. Throughput activity at the
Company's Cushing, Oklahoma, storage and terminal facility (the "Cushing
Terminal") increased 4% to an average of 56,000 barrels per day. The 1996
third quarter throughput averaged approximately 54,000 barrels per day.
A strong backward market for crude oil existed during 1996 and the first
quarter of 1997. However, during the second and third quarters of 1997, the
market transitioned to a flat to slightly contango market. Typically, margins
for crude oil marketing are strongest in a backward market. During a contango
market, when marketing margins are generally smaller, the Company's storage
operations at the Cushing Terminal typically become more profitable due to (i)
the Company's ability to take delivery of crude oil which is simultaneously
purchased and resold at a profit for delivery in a subsequent month and (ii)
the increased demand by customers for storage capacity.
General
Total G&A expenses increased approximately 5% to $2.0 million for the third
quarter of 1997 as a result of increased G&A expenses in the midstream
segment. Interest expense for the quarter ended September 30, 1997, increased
by $1.7 million, or approximately 40% over the prior year quarter.
Approximately 30% of this increase is attributable to short-term borrowings
for the purchase of crude oil
Page 12 of 22
<PAGE>
inventory associated with contango crude oil transactions. The remainder of the
increase is primarily associated with borrowings as a result of the Company's
exploitation and acquisition activities, lower capitalized interest and a higher
interest rate from refinancing $50 million of bank debt with senior subordinated
notes maturing in March 2006. The senior subordinated notes were issued at a
yield to maturity of approximately 9%.
During the third quarter of 1997, the Company recognized a deferred tax
provision of $1.8 million and a current tax provision of $.1 million. During
the third quarter of 1996, the Company recognized a deferred tax provision of
$2.3 million and an offsetting $1.5 million deferred tax benefit reported as
an extraordinary item. Such deferred tax benefit is attributable to the first
quarter 1996 extraordinary loss from the early redemption of the Company's
$100 million of 12% Senior Subordinated Notes (the "12% Notes").
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per
Share ("EPS"). SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires a dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures. Basic EPS excludes dilutive securities and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if dilutive securities were converted into
common stock and is computed similarly to fully diluted EPS pursuant to
previous accounting pronouncements. SFAS 128 is effective for periods ending
after December 15, 1997, and requires restatement of all prior period EPS data
presented.
The Company reported primary EPS of $.15 per share and $.28 per share for the
three months ended September 30, 1997 and 1996, respectively. Under SFAS 128,
basic EPS would have been $.17 per share and $.31 per share for the three
months ended September 30,1997 and 1996, respectively, and diluted EPS would
have been $.15 per share and $.28 per share for the same respective periods.
Nine month periods ended September 30, 1997 and 1996
For the nine months ended September 30, 1997, the Company reported net income
of $9.9 million, or $.55 per share, compared to net income for the same period
of 1996 of $12.2 million, or $.69 per share. The 1996 period includes the
recognition of nonrecurring tax benefits and an extraordinary charge from the
refinancing of subordinated notes. Pretax income for the first nine months of
1997 was $16.5 million as compared to $10.5 million for 1996. For the nine
months ended September 30, 1997, cash flow from operations (net income plus
noncash expenses) increased to $33.7 million from $26.6 million in 1996, and
EBITDA increased to $49.6 million in 1997 from $39.4 million in 1996. The
improvement in operating results is primarily attributable to increased
production volumes in the upstream segment and continued expansion of
marketing and terminalling activities in the midstream segment. Net cash used
in operating activities, as reported in the consolidated statements of cash
flows was $2.9 million for the nine months ended September 30, 1997, as
compared to net cash provided by operating activities of $26.7 million for the
1996 comparative period primarily due to crude oil inventory purchased for
resale at the Cushing Terminal. Such inventory has been hedged against price
risk.
Page 13 of 22
<PAGE>
Upstream Results
The following table sets forth certain operating information of the Company
for the periods presented:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------
1997 1996
-------- --------
(in thousands, except per unit data)
(unaudited)
<S> <C> <C>
Average Daily Production Volumes
Barrels of Oil Equivalent
California 10.7 9.1
Gulf Coast 5.4 4.6
Illinois Basin 3.5 3.5
------ ------
Total (93% oil) 19.6 17.2
====== ======
Unit Economics
Average sales price per BOE $14.91 $15.02
Production expenses per BOE 6.17 6.07
------ ------
Gross margin per BOE 8.74 8.95
Upstream G&A expenses per BOE 0.67 0.80
------ ------
Gross profit per BOE $ 8.07 $ 8.15
====== ======
</TABLE>
Oil and natural gas production for the first nine months of 1997 averaged
approximately 19,600 BOE per day, a 14% increase over the 17,200 BOE per day
averaged during the 1996 period. Total production for the first nine months
of 1997 increased to 5.4 million BOE versus the 4.7 million BOE produced in
the 1996 comparative period. The Company's unit gross margin was $8.74 per
BOE versus $8.95 per BOE in 1996. Unit gross profit, which deducts G&A costs
attributable to the upstream segment, was $8.07 per BOE for the first nine
months of 1997, down slightly from $8.15 per BOE during the 1996 period.
The increase in production volumes is attributable to the Company's
acquisition and exploitation activities. Net daily production from the
Company's California properties for the first nine months 1997 increased to
approximately 10,700 BOE per day, up 1,600 BOE per day, or 18% over last
year's comparative period. Excluding the production from the Montebello
Field, California production was 9,800 BOE per day which represents an 8%
increase over the comparative prior year period. Net daily production in the
Illinois Basin averaged approximately 3,500 barrels per day during the first
nine months of 1997 which is flat with the 1996 period. Net production from
the Company's Gulf Coast properties, primarily South Florida, increased
approximately 17% to average 5,400 barrels of oil per day for the nine months
ended September 30, 1997 as compared to 4,600 barrels per day in last year's
comparative period.
Oil and natural gas revenues increased 13% to $79.8 million for the first nine
months of 1997 due to increased production volumes. The Company's average
product price, which represents a combination of fixed and floating price
sales arrangements and incorporates location and quality discounts from the
benchmark NYMEX prices, decreased 1% to $14.91 per BOE primarily due to an
increase in the crude oil price differential from NYMEX for the Company's
production and slightly lower market commodity prices. During the current
year, the NYMEX benchmark price averaged $20.85 per barrel, down 1% as
compared to an average of $21.15 in the correlative period of 1996. The
Company had hedges on approximately 15,000 barrels per day for the first nine
months of 1997 at an average NYMEX benchmark
Page 14 of 22
<PAGE>
price of $19.34 per barrel. Hedging transactions had the effect of decreasing
the Company's average price per BOE by $1.49 and $1.94 in the first nine months
of 1997 and 1996, respectively.
Unit production expenses increased approximately 2% to $6.17 per BOE for the
nine months ended September 30, 1997, and total production expenses increased
to $33.1 million from $28.5 million for the first nine months of 1996. Such
increases are primarily due to the Montebello Acquisition and increased
production levels.
Midstream Results
The following table sets forth certain midstream operating information of the
Company for the periods presented:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------
1997 1996
-------- --------
(in thousands)
<S> <C> <C>
Operating Results
Gross margin..................................... $8,854 $7,045
Gulf Coast....................................... 2,616 2,181
------ ------
Gross profit..................................... $6,238 $4,864
====== ======
Average Daily Volumes
Crude oil barrels marketed....................... 70 57
Crude oil terminal throughput barrels............ 69 55
------ ------
139 55
====== ======
</TABLE>
Despite significant downward pressure on marketing margins throughout the
industry generally, strength in the Company's storage and terminalling
activities enabled this segment to report a gross margin (marketing,
transportation and storage revenues less purchases, transportation and storage
expenses) of $8.9 million for the first nine months of 1997, reflecting an
approximate 26% increase over the $7.0 million reported for the 1996 period.
Net of interest expense associated with contango inventory transactions, gross
margin was $8.3 million for the current year period, an increase of 18% over
the prior year amount. Gross revenues were $536.3 million and $377.9 million
for the respective periods. Midstream G&A expenses increased from $2.2 million
to $2.6 million in the current year period primarily as a result of additional
personnel added to further expand marketing activities. Total average daily
crude oil volumes marketed and terminalled during the first nine months of
1997 were 70,000 barrels and 69,000 barrels, respectively. Such amounts
represent respective increases of 23% and 25% as compared with average daily
volumes of 57,000 barrels and 55,000 barrels in last year's comparative
period. Gross profit (gross margin less midstream G&A expenses) increased
28%, totaling $6.2 million versus $4.9 million in the first nine months of
last year.
A strong backward market for crude oil existed during 1996 and the first
quarter of 1997. However, during the second and third quarters of 1997, the
market transitioned to a flat to slightly contango market. Typically, margins
for crude oil marketing are strongest in a backward market. During a contango
market, when marketing margins are generally smaller, the Company's storage
operations at the Cushing Terminal typically become more profitable due to (i)
the Company's ability to take delivery of crude oil which is simultaneously
purchased and resold at a profit for delivery in a subsequent month and (ii)
the increased demand by customers for storage capacity.
Page 15 of 22
<PAGE>
General
For the first nine months of 1997, upstream unit G&A expenses decreased 16% to
$.67 per BOE as compared to $.80 per BOE in last year's period due primarily
to increased production volumes. Total G&A expenses, including midstream
activities, were $6.2 million for the nine months ended September 30, 1997,
compared to $5.9 million for the 1996 period. The increase is primarily
attributable to increased expenses associated with the Company's midstream
activities.
DD&A expense increased to $17.3 million from $16.1 million reported in the
first nine months of 1996 due primarily to higher production volumes. The
Company's unit DD&A rate was $2.82 and $3.00 per BOE for the nine months ended
September 30, 1997 and 1996, respectively. Interest expense for the nine
months ended September 30, 1997, increased to $15.9 million from $12.8 million
reported for the comparative prior year period primarily due to higher
outstanding debt levels as a result of capital expenditures related to the
Company's acquisition and exploitation activities, short term borrowings for
the purchase of crude oil inventory associated with contango crude oil
transactions and a decrease in capitalized interest. The effect of higher
debt levels was partially offset by a slightly lower overall average interest
rate. Capitalized interest was $2.3 million and $2.7 million for the nine
months ended September 30, 1997 and 1996, respectively.
For the nine months ended September 30, 1997, the Company recognized a
deferred tax provision of $6.3 million and a current tax provision of $.3
million. For the 1996 period, the Company recognized a net deferred tax
benefit before extraordinary item of $6.8 million. Such amount consists of a
$4.2 million deferred tax provision on the Company's income before
extraordinary item and an $11 million benefit related to the reversal of a
portion of the valuation reserve against the Company's deferred tax asset.
The Company reported primary EPS of $.55 per share and $.69 per share for the
nine months ended September 30, 1997 and 1996, respectively. Under SFAS 128,
basic EPS would have been $.60 per share and $.75 per share for the nine
months ended September 30, 1997 and 1996, respectively, and diluted EPS would
have been $.54 per share and $.68 per share for the same respective periods.
In July 1997, the FASB issued Statement of Financial Accounting Standards No.
131 ("SFAS 131"), Disclosures About Segments of an Enterprise and Related
Information, effective for fiscal years beginning after December 15, 1997.
SFAS 131 introduces a new model for segment reporting and requires disclosures
for each segment that are similar to those required under current standards
with the addition of quarterly disclosure requirements and a finer
partitioning of geographic disclosures. Reportable segments are based on
products and services, geography, legal structure, management structure or any
manner in which management disaggregates a company. This statement replaces
the notion of industry and geographic segments in current FASB standards.
Management is currently evaluating the impact of this statement on the
Company's disclosures.
Capital Resources, Liquidity and Financial Condition
In March 1997, the Company completed the acquisition of Chevron USA's interest
in the Montebello Field for $25 million, effective February 1, 1997. The
assets acquired consist of a 100% working interest and a 99.2% net revenue
interest in 55 producing oil wells and related facilities and also include
approximately 450 acres of surface fee lands. At the acquisition date, the
Montebello Field, which is located approximately 15 miles from the Company's
existing California operations, was producing approximately 800 barrels of oil
and 800 Mcf of gas per day and added approximately 23 million barrels of oil
equivalent
Page 16 of 22
<PAGE>
to the Company's proved reserves. The Montebello Acquisition was funded with
proceeds from the Company's revolving credit facility ("Revolving Credit
Facility").
On November 12, 1997, the Company acquired a 100% working interest and a 94%
revenue interest in the Arroyo Grande Field in San Luis Obispo County,
California, from subsidiaries of Shell Oil Company ("Shell"). The assets
acquired include surface and development rights to approximately 1,000 acres
included in the 1,500 acre unit. The field is currently producing
approximately 1,600 barrels of 14 degree API gravity oil per day from 70 wells.
The aggregate purchase price of $23.0 million consisted of rights to a non-
producing property interest conveyed to Shell, the issuance of 46,600 shares
of Series D Cumulative Convertible Preferred Stock (the "Series D Preferred
Stock") with an aggregate stated value of $23.3 million, recorded at $20.5
million, net of discount, and a 5 year warrant to purchase 150,000 shares of
the Company's Common Stock (the "Common Stock") at $25 per share. No proved
reserves had been assigned to the rights to the property interest conveyed.
Each share of the Series D Preferred Stock has a stated value of $500 and is
convertible into Common Stock at a ratio of $25.00 of stated value for each
share of Common Stock to be issued. Commencing January 1, 2000, the preferred
stock will bear an annual dividend of $30.00 per share. Prior to such date no
dividends will accrue. The preferred stock is redeemable at the Company's
option at 140% of stated value. If not previously redeemed or converted, the
preferred stock will automatically convert into 932,000 shares of Common Stock
in 2012.
In March 1997, the Company's Revolving Credit Facility and borrowing base
thereunder was increased to $165 million from $125 million. The Revolving
Credit Facility, as amended, converts to a term loan on July 1, 1999, with a
final maturity of July 1, 2004, and bears interest at the option of the
Company at LIBOR plus 1.375% or Base Rate (as defined therein). The Revolving
Credit Facility is guaranteed by all of the Company's principal subsidiaries
and is secured by the oil and gas properties of the Company and its
subsidiaries and the stock of all subsidiaries. At September 30, 1997, the
Company had approximately $76.7 million in borrowings and a $1.0 million
standby letter of credit outstanding under the Revolving Credit Facility.
On July 23, 1997, the Company sold $50 million of Senior Subordinated Notes
due 2006, Series C, bearing a stated coupon rate of 10.25% (the "Series C
10.25% Notes"). Such notes were issued pursuant to a Rule 144A private
placement at approximately 107.21% of par to yield a minimum yield to worst of
8.79%, or 9.03% yield to maturity. On October 30, 1997, the Company exchanged
a total of $49.95 million of the Series C 10.25% Notes for 10.25% Senior
Subordinated Notes due 2006, Series D, (the "Series D 10.25% Notes"). The
Series D 10.25% Notes are substantially identical (including principal amount,
interest rate, maturity and redemption rights) to the Series C 10.25% Notes
for which they were exchanged, except for certain transfer restrictions
relating to the Series C 10.25% Notes.
The stated coupon rate of interest and maturity date of the Series C 10.25%
Notes and the Series D 10.25% Notes (collectively, the "Series C & D 10.25%
Notes") are the same as those of the Company's existing $150 million principal
amount of senior subordinated notes currently outstanding (the "Series A & B
10.25% Notes"). The Series C & D 10.25% Notes are redeemable, at the option
of the Company, on or after March 15, 2001 at 105.13%, at decreasing prices
thereafter prior to March 15, 2004, and thereafter at 100% plus, in each case,
accrued interest to the date of redemption. In addition, prior to March 15,
1999, up to $15 million in principal amount of the Series C & D 10.25% Notes
are redeemable at the option of the Company, in whole or in part, from time to
time, at 110.25% of the principal amount thereof, with the Net Proceeds (as
defined in the Indenture) of any Public Equity Offering (as defined in the
Indenture).
Page 17 of 22
<PAGE>
Proceeds from the sale of the Series C & D 10.25% Notes, net of offering costs,
were approximately $53 million and were used to reduce the balance outstanding
on the Revolving Credit Facility.
Plains Marketing and Transportation Inc. ("Plains Marketing ") and PMCT Inc.,
wholly owned subsidiaries of the Company, have a $90 million Transactional
Facility with five banks. The purpose of the Transactional Facility is to
provide standby letters of credit to support the purchase of crude oil for
resale and borrowings to finance crude oil inventory that has been hedged
against future price risk. In August 1997, the sublimit for cash borrowings
under the Transactional Facility was increased to $25 million from $20
million. Letters of credit under the Transactional Facility are generally
issued for seventy-day periods and bear fees of 1 1/8% per annum. Borrowings
incur interest at the option of the borrower at (i) the Base Rate or (ii)
LIBOR plus 1 1/2%. At September 30, 1997, approximately $33.7 million in
letters of credit and $25 million in borrowings were outstanding under the
Transactional Facility.
The Transactional Facility is secured by all of the assets of Plains Marketing
and is guaranteed by the Company. The Company's guarantee is secured by a
$1.0 million standby letter of credit issued on behalf of the Company. All
financings under the Transactional Facility, which expires on November 21,
1997, are at the discretion of the lenders. The Company is currently in the
process of renewing the Transactional Facility and believes that such facility
will be renewed for a one year period.
At September 30, 1997, the Company had a working capital deficit of
approximately $1.3 million compared to a deficit of $4.8 million at December
31, 1996. The Company has historically operated with a working capital
deficit due primarily to ongoing capital expenditures that have been financed
through cash flow and the Revolving Credit Facility.
Investing and Financing Activities
Net cash flows used in investing activities were $78.7 million and $35.3
million for the nine months ended September 30, 1997 and 1996, respectively.
Investing activities include payments for acquisition, exploration and
development costs of $75.0 million and $36.5 million for these same periods,
respectively. Included in the 1997 amount is approximately $25 million
related to the Montebello Acquisition. Also included in investing activities
are proceeds from the sale of certain nonstrategic properties of $.2 million
and $3.1 million for the nine months ended September 30, 1997 and 1996,
respectively.
Net cash provided by financing activities amounted to $82.1 million and $3.1
million for the nine months ended September 30, 1997 and 1996, respectively.
Approximately $25 million borrowed under the Revolving Credit Facility to fund
the Montebello Acquisition is included in proceeds from long-term debt in
1997. Also included in financing activities during 1997 are net proceeds of
approximately $53 million from the sale of the Series C & D 10.25% Notes and a
corresponding payment on the Revolving Credit Facility. Financing activities
during 1996 include net proceeds of approximately $144.6 million from the sale
of the Series A & B 10.25% Notes, approximately $107 million for the repayment
of the 12% Notes, including the 6% call premium and the net defeasance costs,
and approximately $42 million for the repayment of the acquisition bridge
indebtedness incurred to fund the acquisition of the Illinois Basin
properties. Included in both years are net proceeds from borrowings under the
Revolving Credit Facility as a result of acquisition, exploration and
development activities. Financing activities during 1997 include proceeds of
$25 million from short-term borrowings and $6 million from long-term borrowings
to finance crude oil inventory transactions at the Cushing Terminal. The
short-term borrowings were made under the Plains Marketing Transactional
Facility and all inventory acquired has been hedged against price risk.
Page 18 of 22
<PAGE>
Changing Oil and Natural Gas Prices
The Company is heavily dependent on crude oil prices which have historically
been volatile. Although the Company has routinely hedged a substantial
portion of its crude oil production and intends to continue this practice,
future crude oil price declines would have a negative impact on the Company's
overall results, and therefore its liquidity. Furthermore, low crude oil
prices could affect the Company's ability to raise capital on terms favorable
to the Company. For the fourth quarter of 1997, the Company has entered into
various fixed price and floating price collar arrangements. Such arrangements
generally provide the Company with downside price protection on approximately
14,000 barrels of oil per day at a NYMEX benchmark price of approximately
$19.00 per barrel, but permit the Company to receive the benefit of increases
in the NYMEX benchmark price up to $24.00 per barrel on 4,000 of such barrels.
Thus, based on the Company's average third quarter 1997 oil production rate,
these arrangements generally provide the Company with downside price
protection for 76% of its production and upside price participation for 46% of
its production up to $24.00 per barrel, while 24% of such production and
excess volumes, if any, remain unhedged. In addition, the Company also has
fixed price arrangements on approximately 12,000 barrels per day for 1998 at a
NYMEX benchmark price of approximately $19.80 per barrel. The hedge prices
are before deductions for quality and area differentials.
Forward-Looking Statements and Associated Risks
All statements, other than statements of historical facts, included in the
Report which address activities, events or developments that the Company
expects or anticipates will or may occur in the future are forward-looking
statements. Such forward-looking statements are subject to risks and
uncertainties including, among other things, market conditions, drilling and
operating hazards, uncertainties inherent in estimating oil and gas reserves
and other factors discussed in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
Page 19 of 22
<PAGE>
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Material Modification of Rights of Registrant's Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 -
A. Exhibits
3(c) Certificate of Designation, Preferences and Rights of Series D
Cumulative Convertible Preferred Stock.
4(d) Warrant dated November 12, 1997, to Shell Land & Energy Company
for the purchase of 150,000 shares of Common Stock
10(p) Fourth Amendment to the Third Amended and Restated Credit Agreement
dated as of August 29, 1997, among the Company and ING (U.S.)
Capital Corporation, f/k/a/ Internationale Nederlanden (U.S.)
Capital Corporation, et.al.
10(q) Fifth Amendment to the Third Amended and Restated Credit Agreement
dated as of November 3, 1997, among the Company and ING (U.S.)
Capital Corporation, f/k/a/ Internationale Nederlanden (U.S.)
Capital Corporation, et.al.
10(r) Fifth Amendment to Uncommitted Secured Demand Transactional Line of
Credit Facility between Plains Marketing & Transportation Inc. and
BankBoston, N.A. (f/k/a The First National Bank of Boston) et. al.,
dated as of August 7, 1997.
Page 20 of 22
<PAGE>
10(s) Fifth Amendment to Uncommitted Secured Demand Transactional Line of
Credit Facility between PMCT, Inc. and BankBoston, N.A. (f/k/a The
First National Bank of Boston) et. al., dated as of August 7, 1997.
10(t) Sixth Amendment to Uncommitted Secured Demand Transactional Line of
Credit Facility between Plains Marketing & Transportation Inc. and
BankBoston, N.A. (f/k/a The First National Bank of Boston) et. al.,
dated as of August 29, 1997.
11(a) Computation of per share earnings for the three months ended
September 30, 1997 and 1996
11(b) Computation of per share earnings for the nine months ended
September 30, 1997 and 1996
27. Financial Data Schedule
B. Report on Form 8-K
None
Page 21 of 22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
PLAINS RESOURCES INC.
Date: November 13, 1997 By: /s/ Cynthia A. Feeback
-------------------------------
Cynthia A. Feeback, Controller and
Principal Accounting Officer
(Principal Accounting Officer)
Page 22 of 22
<PAGE>
EXHIBIT 3(c)
PLAINS RESOURCES INC.
Certificate of Designation, Preferences and Rights of a Series of Preferred
Stock by Resolution of the Board of Directors Providing for an Issue of 46,600
Shares of Preferred Stock Designated Series D Cumulative Convertible Preferred
Stock
Plains Resources Inc., a Delaware corporation (hereinafter called the
"Company"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby state and certify that
pursuant to the authority expressly vested in the Board of Directors of the
Company by the Certificate of Incorporation, as amended, the Board of
Directors, at a meeting thereof duly called and held on October 31, 1997, at
which meeting a quorum was present and acting throughout, duly adopted the
following resolutions providing for the issue of shares of Preferred Stock
hereinafter referred to, and further providing with respect to such issue of
shares of Preferred Stock for such powers, designations, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions thereof, as are hereinafter set
forth, in addition to those set forth in said Certificate of Incorporation;
RESOLVED, that pursuant to Article FOURTH of the Certificate of
Incorporation (which authorizes 2,000,000 shares of Preferred Stock, $1.00 par
value) the Board of Directors hereby provides for the issue of a series of
46,600 shares of Preferred Stock designated "Series D Cumulative Convertible
Preferred Stock"; and
RESOLVED, that the powers, designations, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations or restrictions thereof, of the shares of the Series D Cumulative
Convertible Preferred Stock shall be as follows:
SECTION 1. Designation and Rank. The designation of the series of
Preferred Stock created by this resolution shall be "Series D Cumulative
Convertible Preferred Stock", and the number of shares constituting this Series
shall be 46,600. Shares of this Series shall have a stated value of $500.00
per share (the "Stated Value"). The number of authorized shares of this Series
may be reduced by further resolution duly adopted by the Board and by the
filing of a certificate pursuant to the provisions of the General Corporation
Law of the State of Delaware stating that such reduction has been so
authorized. The shares of this Series shall rank prior to the Junior Stock (as
defined in Section 9) as to distribution of assets and payment of dividends.
The shares of this Series shall be of equal rank as to distribution of assets
and payment of dividends with all other series of Preferred Stock, except as
provided in a certificate of designation with regard to such other series of
Preferred Stock filed pursuant to Section 151 of the General Corporation Law of
the State of Delaware with the Secretary of State of the State of Delaware.
<PAGE>
SECTION 2. Dividends.
(a) Shares of this Series shall be entitled to receive, when and as
declared by the Board of Directors, a cash dividend at the dividend rate of six
percent per annum (the "Dividend Rate") on the Stated Value per share of this
Series, and no more. No such dividends shall accrue prior to January 1, 2000.
Commencing January 1, 2000, such dividends shall be cumulative, shall accrue
(whether or not declared and whether or not there shall be funds legally
available for the payment of dividends) from such date and shall be payable in
arrears, out of assets legally available therefor, when and as declared by the
Board of Directors of the Company, on April 1, July 1, October 1, and January 1
of each year, commencing April 1, 2000 (except that if any such date is a
Saturday, Sunday or a legal holiday then such dividend shall be payable without
interest on the next day that is not a Saturday, Sunday or legal holiday) (each
three-month period expiring on a dividend payment date being referred to herein
as a "Dividend Period"). Each of such dividends shall be paid to the holders
of record of shares of this Series as they appear on the stock register of the
Company on such record dates, not exceeding 30 days preceding the payment dates
thereof, as shall be fixed by the Board. Dividends on account of arrears for
any past Dividend Periods (an "Arrearage") may be declared and paid at any
time, without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment date thereof,
as may be fixed by the Board.
(b) At any time while there is an Arrearage on shares of this Series,
such Arrearage shall be exchangeable, in full only, at the option of a majority
in interest of the record holders thereof for shares of fully paid and
nonassessable shares of Common Stock (an "Arrearage Exchange") by presentation
to the Company of a written notice executed by such majority in interest (an
"Exchange Notice") electing to make an Arrearage Exchange. The number of
shares of Common Stock to be issued and delivered to the holders of shares of
this Series upon an Arrearage Exchange shall be determined by dividing the
total amount of the Arrearage by the Per Share Market Value on the date of the
Company's receipt of the Exchange Notice. Upon the issuance and mailing of
certificates representing such shares of Common Stock to the record holders of
shares of this Series, such Arrearage shall be canceled and no holder of shares
of this Series shall be entitled to any payment on account thereof.
(c) No full dividends shall be declared or paid or set apart for payment
on Parity Stock (as defined in Section 9) or Junior Stock for any period unless
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for such
payment on this Series for all Dividend Periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are not paid
in full, as aforesaid, upon the shares of this Series and of any other series of
Parity Stock, all dividends declared upon shares of this Series and of any other
series of Parity Stock shall be declared pro rata so that the amount of
dividends declared per share on this Series and such other series of Preferred
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series and such other series of
Preferred Stock bear to each other. Holders of shares of this Series shall not
be entitled to any dividend, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on this Series. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on this Series that may be in arrears.
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(d) So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Junior Stock or other than as provided in Section
2(c) shall be declared or paid or set aside for payment or other distribution
declared or made upon the Junior Stock, nor shall any Junior Stock be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of Junior
Stock) by the Company (except by conversion into or in exchange for Junior
Stock) unless, in each case, the full cumulative dividends on all outstanding
shares of this Series then payable shall have been paid.
(e) Dividends payable on this Series for any period less than a full
Dividend Period shall be computed on the basis of the ratio of the number of
days in such partial period to the actual number of days in such full Dividend
Period.
SECTION 3. Redemption.
(a) From and after November 12, 1998, the Company, at its option, may
redeem Shares of this Series, as a whole or in part, at any time or from time to
time, at a cash redemption price per share of this Series equal to the amount of
any Arrearage plus
(i) the Conversion Price (as defined in Section 6(b) multiplied by
(ii) the number of shares of Common Stock into which a share of this
Series is convertible as of the date of such redemption multiplied by
(iii) the Agreed Percentage (as defined in Section 9).
(b) In the event that fewer than all of the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined by
lot or pro rata as may be determined by the Board or by any other method as may
be determined by the Board in its sole discretion to be equitable.
(c) At such time as the Company shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 days prior to the redemption date, to each holder of
record of the shares to be redeemed, at such holder's address as the same
appears on the stock register of the Company. Each such notice shall state:
(i) the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date. Prior to the redemption date specified in such notice, holders of shares
of this Series may exercise the right to convert shares of this Series into
shares of Common Stock pursuant to Section 6 hereof and the right to exchange
Arrearage (if any) into shares of Common Stock pursuant to Section 2(b) hereof.
(d) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Company in providing money
for the payment of the redemption price) dividends
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on the shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Company (except the right to receive from
the Company the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board shall so require and the notice shall so
state), such shares shall be redeemed by the Company at the redemption price
aforesaid. In case fewer than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(e) Any shares of this Series that shall at any time have been redeemed
or purchased by the Company shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series by the Board.
SECTION 4. Voting.
(a) Except as otherwise required by law and as specified in this Section
4, the holders of shares of this Series shall not have any right or power to
vote on any question or in any proceeding or to be represented at or to receive
notice of any meeting of holders of capital stock of the Company. Holders of
shares of this Series shall be entitled to receive all reports filed by the
Company with the Securities and Exchange Commission. On any matters on which
the holders of shares of this Series shall be entitled to vote, they shall be
entitled to one vote for each share held.
(b) So long as any shares of this Series remain outstanding, the
affirmative vote or consent of the holders of a majority of the shares of this
Series outstanding at the time, given in person or by proxy, either in writing
or at a meeting, shall be necessary to permit, effect or validate (i) the
authorization, creation or issuance, or any increase in the authorized or
issued amount, of any class or series of Senior Stock (as defined in Section 9)
and (ii) the amendment, alteration or repeal of any of the provisions of the
Certificate of Incorporation, as amended, which would materially and adversely
affect any right, preference, privilege or voting power of shares of this
Series or of the holders thereof in a manner disproportionate to the effect
thereof on the holders of any other shares of the Company's capital stock.
However, the creation and issuance of other series of Parity Stock or Junior
Stock shall not be deemed to affect materially and adversely such rights,
preferences or privileges.
(c) So long as at least 2,000 shares of this Series remain outstanding,
the holders of shares of this Series outstanding at the time shall be entitled
to vote to permit, effect or validate the authorization of a merger or
consolidation of the Company or any compulsory share exchange pursuant to which
the Common Stock is converted into other securities, cash or property. The
holders of shares of this Series shall be entitled to that number of votes equal
to the aggregate of (i) the number of whole shares of Common Stock into which
all shares of this Series held by such holders could be converted pursuant to
the provisions of Section 6 hereof, plus (ii) the number of shares for which
outstanding Arrearage (if any) may be exchanged pursuant to Section 2(b), at the
record date for the determination of the stockholders entitled to vote on such
matters or, if no record date is established, at the day prior to the date such
vote is taken or any written consent of
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stockholders is first executed, such votes to be counted together with all other
shares of capital stock having general voting powers and not separately as a
class.
SECTION 5. Liquidation. In the event of any complete liquidation,
dissolution or winding-up of the Company, whether voluntary or involuntary, the
holders of shares of this Series shall each be entitled to receive out of the
assets of the Company, whether such assets are capital or surplus, for each
share of this Series a sum equal to the Stated Value plus the amount of any
accrued and unpaid dividends on such share before any distribution shall be
made to the holders of Junior Stock of the Company, and if the assets of the
Company shall be insufficient to pay in full such amounts, then such assets
shall be distributed among such holders and the holders of any Parity Stock
ratably in accordance with the respective amounts that would be payable on such
shares if all amounts payable thereon were paid in full. In the event of any
complete liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, the holders of shares of this Series shall not be
entitled to receive the liquidation price of such shares held by them until the
liquidation price of all Senior Stock shall have been paid in full.
SECTION 6. Conversion.
(a) Each share of this Series shall be convertible at the option of the
record holder thereof at any time by presentation of the certificate
representing such share by the record holder in person or by registered mail,
return receipt requested with postage prepaid thereon, at the principal office
of the Company, and at such other offices, if any, as the Board of Directors may
determine, into the number of fully paid and nonassessable shares of Common
Stock determined by dividing the Stated Value by the Conversion Price in effect
on the Conversion Date.
(b) The conversion price initially shall be $25.00 (the "Conversion
Price") and shall be subject to adjustment from time to time as follows:
(i) If the Company, at any time while any shares of this Series
are outstanding, shall (A) pay a stock dividend or stock dividends or otherwise
make a distribution or distributions on shares of its capital stock payable in
shares of Common Stock (or in securities convertible into shares of Common
Stock), (B) except as set forth in clause (A) above, pay a stock dividend or
make a distribution on shares of its capital stock payable in shares of its
capital stock of any class other than Common Stock or a class convertible into
Common Stock, (C) subdivide outstanding shares of Common Stock into a larger
number of shares, (D) combine outstanding shares of Common Stock into a smaller
number of shares, or (E) issue by reclassification of shares of Common Stock any
shares of capital stock of the Company of any class or classes, the Conversion
Price in effect immediately prior to such action shall be adjusted so that the
holder of any shares of this Series thereafter surrendered for conversion shall
be entitled to receive the number and class or classes of shares of the capital
stock of the Company which he would have owned or have been entitled to receive
immediately after the happening of any of the events described above, had such
shares of this Series been converted on or immediately prior to the record date
for such dividend or distribution or the effective date of such subdivision,
combination or reclassification, as the case may be. An adjustment made pursuant
to this subsection 6(b)(i) shall become effective immediately after the record
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date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(ii) If the Company, at any time while any shares of this Series
are outstanding, shall issue rights or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a price
per share less than the then Per Share Market Value of Common Stock at the
record date mentioned below, the Conversion Price at which each share of this
Series shall thereafter be convertible shall be reduced by multiplying the
Conversion Price in effect immediately prior to such record date by a fraction,
of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Per Share Market Value. Such adjustment shall be made whenever such
rights or warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants. However, upon the expiration of any right or warrant to
purchase Common Stock the issuance of which resulted in an adjustment in the
Conversion Price of the shares of this Series pursuant to this subsection
6(b)(ii), if any such right or warrant shall expire and shall not have been
fully exercised, the Conversion Price per share of Common Stock at which each
share of this Series shall thereafter be convertible shall immediately upon such
expiration be recomputed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Conversion Price made pursuant to the provisions of this
Section 6 after the issuance of such rights or warrants) had the adjustment of
the Conversion Price made upon the issuance of such rights or warrants been made
on the basis of offering for subscription or purchase only that number of shares
of Common Stock actually purchased upon the exercise of such rights or warrants
which were actually exercised.
(iii) If the Company, at any time while shares of this Series
are outstanding, shall distribute to all holders of Common Stock evidences of
its indebtedness or assets (excluding cash dividends or cash distributions paid
out of earned surplus) or rights or warrants to subscribe for or purchase any
security (excluding those referred to in subsection 6(b)(ii) above) then in each
such case the Conversion Price per share of Common Stock at which each share of
this Series shall thereafter be convertible shall be determined by multiplying
the Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction, of which the denominator shall be the Per Share Market Value of Common
Stock determined as of the record date mentioned above, and of which the
numerator shall be such Per Share Market Value of the Common Stock, less the
then fair market value (as determined by the Board of Directors of the Company
(the "Board") in good faith, whose determination shall be conclusive if made in
good faith; provided, however that in the event of a distribution or series of
related distributions exceeding 10% of the net assets of the Company, then such
fair market value shall be determined by a nationally recognized or major
regional investment banking firm or
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firm of independent certified public accountants of recognized standing (which
may be the firm that regularly examines the financial statements of the Company)
selected in good faith by the Board, and in either case shall be described in a
statement provided to all registered holders of this Series) of the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
(iv) If the Company, at any time while any shares of this Series
are outstanding, shall issue or sell shares of Common Stock (excluding stock
issuances referred to in other provisions of this Section 6(b)) for a
consideration per share which is less than the Per Share Market Value of Common
Stock on the date of such issuance or sale, the Conversion Price at which each
share of this Series shall thereafter be convertible shall be reduced by
multiplying the Conversion Price in effect immediately prior to the date of such
issuance or sale by a fraction, of which the denominator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of such issuance or sale plus the number of additional shares of Common
Stock issued or sold, and of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding on the date of
such issuance or sale plus the number of shares which the aggregate
consideration received or receivable by the Company for the total number of
shares so issued or sold would purchase at such Per Share Market Value. Such
adjustment shall be made whenever such shares are issued, and shall become
effective immediately after such issuance. If the consideration received or
receivable by the Company for such issuance or sale of shares of Common Stock is
not cash, the fair market value of such consideration shall be determined by the
Board, an investment banking firm, or certified public accountants in the manner
specified in subsection 6(b)(iii).
(v) If the Company, at any time while any shares of this Series
are outstanding, shall issue rights, options, or warrants (excluding those
referred to in other provisions of this Section 6(b)) which entitle the holders
thereof to purchase shares of Common Stock (such rights, options, or warrants
collectively referred to as "Purchase Rights") at a price per share less than
the then Per Share Market Value of Common Stock on the date of the issuance of
such Purchase Rights, the Conversion Price at which each share of this Series
shall thereafter be convertible shall be reduced by multiplying the Conversion
Price in effect immediately prior to the date of issuance of such Purchase
Rights by a fraction, of which the denominator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding on the date of
issuance of such Purchase Rights plus the number of additional shares of Common
Stock offered for purchase, and of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such Purchase Rights plus the number of shares which the
aggregate consideration received or receivable by the Company in connection with
the grant as well as the exercise of such Purchase Rights would purchase at such
Per Share Market Value. Such adjustment shall be made whenever such Purchase
Rights are issued, and shall become effective immediately after the issuance of
such Purchase Rights. However, upon the expiration of any such Purchase Right
the issuance of which resulted in an adjustment in the Conversion Price of the
shares of this Series pursuant to this subsection 6(b)(v), if any such Purchase
Right shall expire and
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shall not have been fully exercised, the Conversion Price per share of Common
Stock at which each share of this Series shall thereafter be convertible shall
immediately upon such expiration be recomputed and effective immediately upon
such expiration be increased to the price which it would have been (but
reflecting any other adjustments in the Conversion Price made pursuant to the
provisions of this Section 6 after the issuance of such Purchase Rights) had the
adjustment of the Conversion Price made upon the issuance of such Purchase Right
been made on the basis of offering for purchase only that number of shares of
Common Stock actually purchased upon the exercise of such Purchase Rights which
were actually exercised. If the consideration for the Purchase Rights received
or receivable by the Company for the grant or exercise of such Purchase Rights
is not cash, the fair market value of such consideration shall be determined by
the Board, an investment banking firm, or certified public accountants in the
manner specified in subsection 6(b)(iii).
(vi) Notwithstanding any other provision of this Section 6(b) to
the contrary, no adjustment to the Conversion Price shall be made with respect
to the issuance of shares of Common Stock or the grant of options to purchase
shares of Common Stock (or the exercise of such options) which are issued or
granted to directors, officers, or employees of the Company, or to the Company's
401(k) Plan while shares of this Series are outstanding, unless and until the
aggregate number of such shares issued or issuable upon the exercise of such
options exceeds 750,000 shares of Common Stock.
(vii) No notification to the holders of any adjustment in the
Conversion Price otherwise required by this Section 6 shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustment which by reason of this subsection
6(b)(vii) is not required to be made shall be carried forward and taken into
account in any subsequent adjustments, and that upon presentment of shares of
this Series for conversion, all adjustment shall be made calculating the
conversion rights of such holder. All calculations under this Section 6 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
(viii) Whenever the Conversion Price is adjusted, as herein
provided, the Company shall promptly mail to each registered holder of shares of
this Series a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment. Such
notice prepared in good faith shall be conclusive evidence of the correctness of
such adjustment absent manifest error.
(ix) In case:
(A) the Company shall declare a dividend (or any other
distribution) on the Common Stock payable otherwise than in cash
out of its earned surplus; or
(B) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common Stock; or
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(C) the Company shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock of
the Company (other than a subdivision or combination of the outstanding shares
of Common Stock), any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company,
or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or
(E) of the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of this series, and shall cause to be
mailed to the holders of record of the shares of this Series at their last
addresses as they shall appear upon the stock books of the Company, at least 10
days prior to the applicable record date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, redemption, rights or warrants are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(c) In case of any reclassification of the Common Stock, then the
holders of the shares of this Series then outstanding shall have the right
thereafter to convert such shares only into the kind and amount of shares of
stock and other securities and property receivable upon or deemed to be held
following such reclassification by a holder of a number of shares of the Common
Stock of the Company into which such shares of this Series could have been
converted immediately prior to such reclassification. This provision shall
similarly apply to successive reclassifications.
(d) In case of any consolidation or merger of the Company with or into
another Person in which the Company is not the surviving entity or any
compulsory share exchange pursuant to any of which the Common Stock is
converted into other securities, cash or property (any such event being
hereinafter referred to as a "Reorganization"), then the terms of such
Reorganization shall provide that the holder of a share of this Series then
outstanding shall have the right to receive in exchange therefor, at the option
of the Company, either of the following or such combination of the following as
the Company shall elect:
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(i) the kind and amount of shares of stock and other securities and
property receivable upon such Reorganization ("Reorganization Consideration") by
a holder of the number of shares of the Common Stock of the Company into which
(x) a share of this Series could have been converted as of the effective date of
the Reorganization multiplied by the Agreed Percentage in effect at the
effective date of the Reorganization, plus (y) the Arrearage (if any) on a share
of this Series could have been exchanged as of the effective date of the
Reorganization; or
(ii) an amount in cash equal to (x) the Agreed Percentage multiplied by
the Stated Value, plus (y) the Arrearage (if any) on a share of this Series as
of the effective date of the Reorganization.
(e) In case at any time conditions shall arise by reason of action taken
by the Company, which, in the opinion of the Board of Directors of the Company,
are not adequately covered by the other provisions hereof and which might
materially and adversely affect the rights of the holders of shares of this
Series, or in case at any time any such conditions are expected to arise by
reason of any action contemplated by the Company, the Board of Directors of the
Company shall appoint a firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company), who shall give their opinion as to the adjustment,
if any (not inconsistent with the standards established in this Section 6, of
the Conversion Price (including, if necessary, any adjustment as to the
securities into which shares of this Series may thereafter be convertible) which
is or would be required to preserve without dilution the rights of the holders
of shares of this Series. The Board of Directors of the Company shall make the
adjustment recommended forthwith upon the receipt of such opinion or the taking
of any such action contemplated, as the case may be; provided, however, that no
such adjustment of the Conversion Price shall be made which in the opinion of
the investment banking firm or firm of accountants giving the aforesaid opinion
would result in an increase of the Conversion Price to more than the Conversion
Price then in effect.
Section 7. Matters Relating to Issuance of Common Stock. The following
provisions shall be applicable to issuances of Common Stock upon conversion of
shares of this Series or upon an Arrearage Exchange.
(a) The Company covenants that it will at all times reserve and
keep available, out of its authorized and unissued Common Stock solely for the
purpose of issuance upon conversion of this Series or upon an Arrearage Exchange
as herein provided, free from preemptive rights or any other actual or
contingent purchase rights of Persons other than the holders of shares of this
Series, such number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of this Series or the exchange of any
Arrearage on shares of this Series. The Company covenants that all shares of
Common Stock that shall be so issuable shall upon issue be duly and validly
issued and fully paid and nonassessable.
(b) The Company shall not be required to issue stock
certificates representing fractions of shares of Common Stock, but may, if
otherwise permitted, make a cash payment in respect of any final fraction of a
share based on the Per Share Market Value at such time.
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If the Company elects not, or is unable, to make such a cash payment, the holder
of a share of this Series shall be entitled to receive, in lieu of the final
fraction of a share, one whole share of Common Stock.
(c) The issuance of certificates for shares of Common Stock on
conversion of this Series or on an Arrearage Exchange shall be made without
charge to the holders thereof for any documentary stamp or similar taxes that
may be payable in respect of the issue or delivery of such certificate,
provided, that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificate in a name other than that of the holder of the shares of this
Series converted or upon which an Arrearage Exchange was made and the Company
shall not be required to issue or deliver such certificates unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
(d) The exercise by a holder of shares of this Series of the
conversion or Arrearage Exchange rights granted herein is subject in all
respects to and conditioned upon compliance by the parties with the HSR Act, and
rules and regulations promulgated pursuant thereto, to the extent that said act,
rules and regulations are applicable to such exercise. The Company and such
holder agree to make such filings with and provide such information to the
Federal Trade Commission and the Department of Justice with respect to such
exercise as are required in connection with the HSR Act in a timely manner and
to join each others request for early termination. The Company and such holder
will use such reasonable efforts to obtain all governmental approval required to
permit such exercise and to cause early termination of the waiting period under
the HSR Act.
SECTION 8. Maturity Date. If any or all shares of this Series have not
been redeemed or converted prior to September 1, 2012, (i) such shares shall
automatically be converted into the number of shares of Common Stock determined
by dividing the Stated Value by the Conversion Price in effect at the time of
conversion, and (ii) the Arrearage (if any) on such shares of this Series shall
automatically be exchanged for the number of shares of Common Stock determined
by dividing the Arrearage by the Per Share Market Value on such date.
SECTION 9. Definitions. For the purposes hereof, the following terms
shall have the following respective meanings:
"Arrearage" has the meaning specified in Section 2(a).
"Arrearage Exchange" has the meaning specified in Section 2(b).
"Common Stock" means shares now or hereafter authorized of the
class of Common Stock, $.10 par value, of the Company presently authorized and
stock of any other class into which such shares may hereafter have been
reclassified or changed.
"Conversion Date" means the date the stock certificate is
received by the Company for conversion in accordance with Section 6(a).
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"Conversion Price" has the meaning specified in Section 6(b).
"Dividend Period" has the meaning specified in Section 2(a).
"Dividend Rate" has the meaning specified in Section 2(a).
"Exchange Notice" has the meaning specified in Section 2(b).
"Redemption Threshold" means the date on which the Per Share
Market Value first exceeds 140% of the Conversion Price per share of Common
Stock for any 20 out of any 30 consecutive Trading Days.
"Junior Stock" means the Common Stock of the Company and any
other stock of the Company over which shares of this Series has a preference as
to distribution of assets and payment of dividends.
"Agreed Percentage" means 140%, provided that if the Redemption
Threshold has occurred at any time prior to the date of determination, then
"Agreed Percentage" means 100%.
"Parity Stock" means any stock of the Company ranking as to
distribution of assets and payment of dividends on a parity with this Series.
"Per Share Market Value" means on any particular date (a) the
last sale price per share of the Common Stock on such date on the principal
stock exchange on which the Common Stock has been listed or, if there is no such
price on such date, then the last price on such exchange on the date nearest
preceding such date, or (b) if the Common Stock is not listed on any stock
exchange, the final bid price for a share of Common Stock in the over-the-
counter market, as reported by the Nasdaq National Market at the close of
business on such date, or the last sales price if such price is reported and
final bid prices are not available, or (c) if the Common Stock is not quoted on
the Nasdaq National Market, the bid price for a share of Common Stock in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices), or (d) if the Common Stock is no longer publicly traded,
as determined by a nationally recognized or major regional investment banking
firm or firm of independent certified public accountants of recognized standing
(which may be the firm that regularly examines the financial statements of the
Company) selected in good faith by the Board of Directors of the Company,
provided, that none of the transactions related to the foregoing shall include
purchases by any "affiliate" (as such term is defined in the General Rules and
Regulations under the Securities Act of 1933) of the Company.
"Person" means a corporation an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Preferred Stock" means the Company's Preferred Stock, $1.00 par
value.
12
<PAGE>
"Reorganization" has the meaning specified in Section 6(d).
"Reorganization Consideration" has the meaning specified in
Section 6(d).
"Senior Stock" means any shares or class of the Company that are
by their terms expressly given priority over this Series as to payment of
dividends or distribution of assets on any liquidation of the Company.
"Stated Value" has the meaning specified in Section 1.
"Trading Day" means (a) a day on which the Common Stock is
traded on the principal stock exchange on which the Common Stock has been
listed, or (b) if the Common Stock is not listed on any stock exchange, a day on
which the Common Stock is quoted in the over-the-counter market, as reported by
the Nasdaq Stock Market, or (c) if the Common Stock is not quoted on the Nasdaq
Stock Market, a day on which the Common Stock is quoted in the over-the-counter
market as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices).
IN WITNESS WHEREOF, said Plains Resources Inc. has caused this
Certificate to be signed by a duly authorized officer, this 11th day of
November, 1997.
PLAINS RESOURCES INC.
By: /s/
---------------------------
Name: Phillip D. Kramer
Title: Senior Vice President
ATTEST:
By: /s/
-------------------------------
Name: Michael R. Patterson
Title: Secretary
13
<PAGE>
EXHIBIT 4(d)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
PLAINS RESOURCES INC.
Warrant 1
Warrant for the Purchase of Shares of Common Stock
150,000 shares
FOR VALUE RECEIVED, PLAINS RESOURCES INC., a Delaware corporation (the
"Company"), hereby certifies that SHELL LAND & ENERGY COMPANY, or its permitted
assigns (the "Holder"), is entitled to purchase from the Company, at any time
or from time to time commencing on the date hereof and prior to 5:00 P.M.,
Houston time then current, on November 12, 2002, 150,000 fully paid and
non-assessable shares of the common stock, $.10 par value per share, of the
Company for a purchase price per share of $25.00 (the "Per Share Warrant
Price"). (Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder are referred to as the "Warrant Shares,"
(iii) the aggregate purchase price payable hereunder for the Warrant Shares is
referred to as the "Aggregate Warrant Price," and (iv) this Warrant and all
warrants hereafter issued in exchange or substitution for this Warrant are
referred to as the "Warrant".) The Aggregate Warrant Price is not subject to
adjustment. The number of Warrant Shares and the Per Share Warrant Price is
subject to adjustment as hereinafter provided.
1. Exercise of Warrant. This Warrant may be exercised, in whole at any
time or in part from time to time, commencing on the date hereof, and prior to
5:00 P.M., Houston time then current, on November 12, 2002, by the Holder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the Company's offices in Houston, Texas, together with proper
payment of the Aggregate Warrant Price, or the proportionate part thereof if
this Warrant is exercised in part. Payment for Warrant Shares shall be made by
certified or cashier's bank check payable to the order of the Company. If this
Warrant is exercised in part, this Warrant must be exercised for a number of
whole shares of the Common Stock, and the Holder is entitled to receive a new
Warrant covering the Warrant Shares which have not been exercised. Upon such
surrender of this Warrant, the Company will (a) issue a certificate or
certificates in the name of the Holder for the largest number of whole shares of
the Common Stock to which the Holder shall be entitled (no fractional shares
being issuable upon exercise of this Warrant), and deliver the other securities
and properties receivable upon the exercise of this Warrant, or the
proportionate part thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant. The Company shall pay all taxes and other expenses
payable in connection the preparation, execution and delivery of stock
certificates pursuant to this Section 1. Unless and until the Warrant Shares are
registered under the Securities Act of 1933, as amended (the "Act") as provided
for in Exhibit A-3 to the Exchange Agreement pursuant to which this Warrant has
been issued, certificates evidencing the Warrant Shares issued upon exercise of
this Warrant shall bear a restrictive legend regarding limitations on
transferability of such shares.
1
<PAGE>
2. Reservation of Warrant Shares; Listing. The Company agrees that,
prior to the expiration of this Warrant, the Company will at all times (a) have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, and (b) keep the shares of the Common Stock
receivable upon the exercise of this Warrant listed upon notice of issuance on
the American Stock Exchange or such other national securities exchange as the
Common Stock of the Company may be listed from time to time.
3. Protection Against Dilution.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock other securities of the
Company, the kind and amount of Common Stock and other securities shall be
adjusted so that the Holder of this Warrant upon the exercise hereof shall be
entitled to receive the number of shares of Common Stock or other securities of
the Company which he would have owned immediately following such action had this
Warrant been exercised immediately prior thereto. An adjustment made pursuant to
this Subsection 3(a) shall become effective immediately after the record date in
the case of a stock dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
Subsection 3(a), the Holder of this Warrant thereafter surren-dered for exercise
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other securities of the Company, the Board of
Directors (whose determination shall be made in its reasonable judgment) shall
determine the allocation of the adjusted Per Share Warrant Price between or
among shares of such classes or capital stock or shares of Common Stock and
other securities.
(b) In case of any capital reorganization or reclassification, or any
consolidation or merger to which the Company is a party other than a merger or
consolidation in which the Company is a continuing corporation, or in case of
any sale or conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), the Holder
of this Warrant shall have the right thereafter to convert this Warrant into the
kind and amount of securities, cash or other property which he would have owned
or have been entitled to receive immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
had this Warrant been converted immediately prior to the effective date of such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance and in any such case, if necessary, appropriate adjustment
shall be made in the application of the provisions set forth in this Section 3
with respect to the rights and interests thereafter of the Holder of this
Warrant to the end that the provisions set forth in this Section 3 shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant. The above provisions of this
Subsection 3(b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, statutory exchanges, sales or
conveyances. In the event of a statutory merger, the issuer of any shares of
stock or other securities or property
2
<PAGE>
thereafter deliverable on the exercise of this Warrant shall be responsible for
all of the agreements and obligations of the Company hereunder. Notice of any
such reorganization, reclassification, consolidation, merger, statutory
exchange, sale or conveyance and of said provisions so proposed to be made,
shall be mailed to the Holder of this Warrant not less than 20 days prior to
such event.
(c) Whenever the number of Warrant Shares purchasable upon the exercise
of this Warrant is adjusted, as herein provided, the Per Share Warrant Price
shall be adjusted by multiplying such Per Share Warrant Price immediately prior
to such adjustment by a fraction, of which the numerator shall be the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Warrant
Shares so purchasable immediately thereafter.
(d) Whenever the number of Warrant Shares purchasable upon the exercise
of this Warrant or the Per Share Warrant Price is adjusted, as herein provided,
the Company shall promptly mail by first class mail, postage prepaid to the
Holder notice of such adjustment setting forth a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was made.
(e) In the event that the Company issues securities, makes a
distribution to its stockholders or undertakes some other capital change or
transaction that the Company's Board of Directors in its reasonable judgment
determines is an issuance, distribution, change or transaction that warrants an
adjustment similar to those provided in this Section 3 based upon the intent
hereof but with respect to which the provisions hereof are not specifically
applicable, adjustments to the number of shares or other securities purchasable
and the price of shares or other securities comparable to those provided in this
Section 3 shall be made as a result of such issuance, distribution, change or
transaction.
4. Fully Paid Stock. The Company agrees that the shares of the Common
Stock represented by each and every certificate for Warrant Shares delivered on
the exercise of this Warrant shall, at the time of such delivery, be validly
issued and outstanding, fully paid and non-assessable, and not subject to
preemptive rights.
5. Limited Transferability. This Warrant is transferable or assignable
by the Holder and is so transferable only upon the books of the Company which it
shall cause to be maintained for the purpose. The Company may treat the
registered Holder of this Warrant as he or it appears on the Company's books at
any time as the Holder for all purposes. Any Warrant issued upon the transfer or
assignment of this Warrant will be dated the same date as this Warrant.
Provided, however, this Warrant may not be transferred unless it is registered
under the Act, or an exemption from such registration is available.
6. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
3
<PAGE>
7. Warrant Holder Not Shareholder. Except as otherwise provided herein,
this Warrant does not confer upon the Holder any right to vote or to consent to
or receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
8. Headings. The headings of this Warrant have been inserted as a matter
of convenience and shall not affect the construction hereof.
9. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
IN WITNESS WHEREOF, PLAINS RESOURCES INC. has caused this Warrant to be
signed by its President or Vice President this 12th day of November, 1997.
PLAINS RESOURCES INC.
By: /s/
Name: Phillip D. Kramer
Title: Senior Vice President
4
<PAGE>
SUBSCRIPTION
The undersigned, ___________________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe for and purchase ______________
shares of the Common Stock of PLAINS RESOURCES INC. covered by said Warrant,
and makes payment therefor in full at the price per share provided by said
Warrant.
Dated: ______________
Signature: ____________________________
Address:
_______________________________________
_______________________________________
_______________________________________
ASSIGNMENT
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto _________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
__________________, attorney, to transfer said Warrant on the books of PLAINS
RESOURCES INC.
Dated: _______________
Signature:______________________________
Address:
_______________________________________
_______________________________________
_______________________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby assigns and
transfers unto ________________________ the right to purchase _________ shares
of the Common Stock of PLAINS RESOURCES INC. by the foregoing Warrant, and a
proportionate part of said Warrant and the rights evidenced hereby, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of said Warrant on the books of PLAINS RESOURCES INC.
Dated: ______________
Signature: _____________________________
Address:
_______________________________________
_______________________________________
_______________________________________
5
<PAGE>
EXHIBIT 10(p)
FOURTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of the 29th day of August, 1997, by and among PLAINS
RESOURCES INC., a Delaware corporation (the "Company"), ING (U.S.) CAPITAL
CORPORATION, f/k/a Internationale Nederlanden (U.S.) Capital Corporation, as
Agent ("Agent"), and the Lenders under the Original Agreement (as defined
herein).
W I T N E S S E T H:
WHEREAS, the Company, Agent and Lenders entered into that certain Third
Amended and Restated Credit Agreement dated as of April 11, 1996, as amended by
that certain First Amendment to Third Amended and Restated Credit Agreement
dated December 16, 1996, that certain Second Amendment to Third Amended and
Restated Credit Agreement dated March 7, 1997 and that certain Third Amendment
to Third Amended and Restated Credit Agreement July 18, 1997 (as amended, the
"Original Agreement") for the purposes and consideration therein expressed,
pursuant to which Lenders became obligated to make and made loans to the Company
as therein provided; and
WHEREAS, the Company, Agent and Lenders desire to amend the Original
Agreement for the purposes described herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- Definitions and References
(S) 1.1. Terms Defined in the Original Agreement. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
(S) 1.2. Other Defined Terms. Unless the context otherwise requires, the
following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.
"Amendment" means this Fourth Amendment to Third Amended and Restated
Credit Agreement.
"Amendment Documents" means this Amendment.
"Credit Agreement" means the Original Agreement as amended hereby.
-1-
<PAGE>
ARTICLE II. -- Amendments
(S) 2.1. Investments. Section 8.10(c) of the Original Agreement is hereby
amended in its entirety to read as follows:
(c) loans, advances and other extensions of credit made after the
date hereof by the Company and its Subsidiaries to Subsidiaries of the
Company in the ordinary course of business, provided that (i) the aggregate
amount of such loans, advances and other extensions of credit by the
Company to any one of its Subsidiaries shall not exceed $5,000,000 at any
one time outstanding and (ii) the aggregate amount of such loans, advances
and other extensions of credit by the Company to its Subsidiaries taken as
a whole shall not exceed $5,000,000 at any one time outstanding; in
addition to the foregoing (1) the Company may make loans, advances or other
extensions of credit or capital contributions of up to $5,000,000 in the
aggregate to Plains Marketing and/or its Subsidiaries in connection with
acquisitions and other capital investments, (2) the Company may make
additional loans, advances or other extensions of credit of up to
$15,000,000 in the aggregate to Plains Marketing and/or its Subsidiaries,
the proceeds of which are used to finance purchases and physical storage of
crude oil that is fully hedged on the NYMEX and located in the Cushing,
Oklahoma storage facility or which is in transit in specified pipelines
approved by Majority Lenders and listed on Schedule 8.10(c) hereto, (3) the
Company (or Plains Marketing) may make capital contributions to PMCT as
provided in, and subject to the limitations contained in, Section 8.34, and
(4) so long as no Default shall have occurred and be continuing or would
exist after giving effect thereto, the Company may make Investments without
limitation in Stocker Resources, Inc., Stocker Resources, L.P., Calumet
Florida Inc. and Plains Illinois Inc.
(S) 2.2. Waiver and Consent - Investments. Prior to the date hereof the
Company made loans, advances or other extensions of credit or capital
contributions to Plains Marketing and/or its Subsidiaries in excess of
$5,000,000, in violation of Section 8.10(c)(1) of the Original Agreement.
Lenders hereby waive any Default or Event of Default occurring prior to the date
hereof as a result of the above-described violation of Section 8.10(c) of the
Original Agreement.
ARTICLE III. -- Conditions of Effectiveness
(S) 3.1. Effective Date. This Amendment shall become effective as of the
date first above written when and only when (i) Agent shall have received, at
Agent's office, a counterpart of this Amendment executed and delivered by the
Company and each Lender, and (ii) Agent shall have additionally received all of
the following documents, each document (unless otherwise indicated) being dated
the date of receipt thereof by Agent, duly authorized, executed and delivered,
and in form and substance satisfactory to Agent:
(A) Officer's Certificate. A certificate of a duly authorized
officer of the Company to the effect that all of the
representations and warranties set forth in Article IV hereof are
true and correct at and as of the date thereof.
-2-
<PAGE>
(B) Supporting Documents. Such supporting documents as Agent may
reasonably request.
ARTICLE IV. -- Representations and Warranties
(S) 4.1. Representations and Warranties of the Company. In order to
induce Agent and Lenders to enter into this Amendment, the Company represents
and warrants to Agent and Lenders that:
(a) The representations and warranties contained in Section 7 of
the Original Agreement, are true and correct at and as of the time of the
effectiveness hereof, subject to the amendment of certain of the Schedules
to the Credit Agreement as attached hereto.
(b) The Company and the Subsidiaries are duly authorized to
execute and deliver this Amendment and the other Amendment Documents to the
extent a party thereto, and the Company is and will continue to be duly
authorized to borrow and perform its obligations under the Credit
Agreement. The Company and the Subsidiaries have duly taken all corporate
action necessary to authorize the execution and delivery of this Amendment
and the other Amendment Documents, to the extent a party thereto, and to
authorize the performance of their respective obligations thereunder.
(c) The execution and delivery by the Company and the
Subsidiaries of this Amendment and the other Amendment Documents, to the
extent a party thereto, the performance by the Company and the Subsidiaries
of their respective obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby and thereby, do not
and will not conflict with any provision of law, statute, rule or
regulation or of the certificate or articles of incorporation and bylaws of
the Company or any Subsidiary, or of any material agreement, judgment,
license, order or permit applicable to or binding upon the Company or any
Subsidiary, or result in the creation of any lien, charge or encumbrance
upon any assets or properties of the Company or any Subsidiary, except in
favor of Agent for the benefit of Lenders. Except for those which have been
duly obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by the Company or any Subsidiary of this Amendment
or any other Amendment Document, to the extent a party thereto, or to
consummate the transactions contemplated hereby and thereby.
-3-
<PAGE>
(d) When this Amendment and the other Amendment Documents have been
duly executed and delivered, each of the Basic Documents, as amended by
this Amendment and the other Amendment Documents, will be a legal and
binding instrument and agreement of the Company and the Subsidiaries, to
the extent a party thereto, enforceable in accordance with its terms,
(subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency and similar laws applicable to creditors' rights generally and
to general principles of equity).
ARTICLE V. -- Miscellaneous
(S) 5.1. Ratification of Agreements. The Original Agreement, as hereby
amended, is hereby ratified and confirmed in all respects. The Basic Documents,
as they may be amended or affected by this Amendment and/or the other Amendment
Documents, are hereby ratified and confirmed in all respects. Any reference to
the Credit Agreement in any Basic Document shall be deemed to refer to this
Amendment also. The execution, delivery and effectiveness of this Amendment and
the other Amendment Documents shall not, except as expressly provided herein or
therein, operate as a waiver of any right, power or remedy of Agent or any
Lender under the Credit Agreement or any other Basic Document nor constitute a
waiver of any provision of the Credit Agreement or any other Basic Document.
(S) 5.2. Ratification of Security Documents. The Company, Agent and
Lenders each acknowledge and agree that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and is
secured indebtedness under, and is secured by, each and every Security Document
to which the Company is a party. The Company hereby re-pledges, re-grants and
re-assigns a security interest in and lien on every asset of the Company
described as collateral in any Security Document.
(S) 5.3. Survival of Agreements. All representations, warranties,
covenants and agreements of the Company herein and in the other Amendment
Documents shall survive the execution and delivery of this Amendment and the
other Amendment Documents and the performance hereof and thereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations are paid in full. All statements and
agreements contained in any certificate or instrument delivered by the Company
or any Subsidiary hereunder, under the other Amendment Documents or under the
Credit Agreement to Agent or any Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, the Company
under this Amendment and under the Credit Agreement.
(S) 5.4. Basic Documents. This Amendment and each of the other Amendment
Documents is a Basic Document, and all provisions in the Credit Agreement
pertaining to Basic Documents apply hereto and thereto.
-4-
<PAGE>
(S) 5.5. GOVERNING LAW. THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL
RESPECTS, INCLUDING CONSTRUCTION, VALIDITY AND PERFORMANCE.
(S) 5.6. Counterparts. This Amendment and each of the other Amendment
Documents may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same Amendment or Amendment Document, as the
case may be.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
PLAINS RESOURCES INC.
By: /s/ PHILLIP D. KRAMER
------------------------------------
Phillip D. Kramer
Vice President and Chief Financial Officer
ING (U.S.) CAPITAL CORPORATION,
f/k/a Internationale Nederlanden (U.S.) Capital
Corporation, individually as a Lender and as
Agent
By: /s/ CHRISTOPHER R. WAGNER
------------------------------------
Christopher R. Wagner, Vice President
BANKBOSTON, N.A., Lender
By: /s/ TERRENCE RONAN
------------------------------------
Name: Terrence Ronan
Title: Vice President
-5-
<PAGE>
DEN NORSKE BANK ASA, Lender
By: /s/ MORTEN BJORNSEN
------------------------------------
Name: Morten Bjornsen
Title: Senior Vice President
By: /s/ CHARLES E. HALL
------------------------------------
Name: Charles E. Hall
Title: Senior Vice President
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
(f/k/a First Interstate Bank of Texas, N.A.),
Lender
By: /s/ ANN M. RHOADS
------------------------------------
Ann M. Rhoads, Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Lender
By: /s/ RUSSELL A. JOHNSON
------------------------------------
Name: Russell A. Johnson
Title: Vice President
COMERICA BANK-TEXAS, Lender
By: /s/ JAMES KIMBLE
------------------------------------
Name: James Kimble
Title: Assistant Vice President
-6-
<PAGE>
CONSENT AND AGREEMENT
---------------------
Each of the undersigned Subsidiary Guarantors hereby consents to the
provisions of this Amendment and the transactions contemplated herein and hereby
(i) acknowledges and agrees that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and
are secured indebtedness under, and are secured by, each and every Security
Document to which it is a party, (ii) re-pledges, re-grants and re-assigns a
security interest in and lien on all of its assets described as collateral in
any Security Document, (iii) ratifies and confirms its Amended and Restated
Guaranty dated April 11, 1996 made by it for the benefit of Agent and Lenders,
and (iv) expressly acknowledges and agrees that such Subsidiary Guarantor
guarantees all indebtedness, liabilities and obligations arising under or in
connection with the Notes pursuant to the terms of such Amended and Restated
Guaranty, and agrees that its obligations and covenants thereunder are
unimpaired hereby and shall remain in full force and effect.
PLAINS MARKETING & TRANSPORTATION INC.
PLAINS RESOURCES INTERNATIONAL INC.
PLAINS TERMINAL & TRANSFER CORPORATION
PLX CRUDE LINES INC.
STOCKER RESOURCES, INC.
PLX INGLESIDE INC.
CALUMET FLORIDA, INC.
PLAINS ILLINOIS INC.
By: /s/ PHILLIP D. KRAMER
----------------------------------------
Phillip D. Kramer
Vice President and Chief Financial Officer
STOCKER RESOURCES, L.P.
By: Stocker Resources, Inc.,
its General Partner
By: /s/ PHILLIP D. KRAMER
----------------------------------------
Phillip D. Kramer
Vice President and Chief Financial Officer
-7-
<PAGE>
EXHIBIT 10(q)
FIFTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of the 3rd day of November, 1997, by and among PLAINS
RESOURCES INC., a Delaware corporation (the "Company"), ING (U.S.) CAPITAL
CORPORATION, f/k/a Internationale Nederlanden (U.S.) Capital Corporation, as
Agent ("Agent"), and the Lenders under the Original Agreement (as defined
herein).
W I T N E S S E T H:
WHEREAS, the Company, Agent and Lenders entered into that certain Third
Amended and Restated Credit Agreement dated as of April 11, 1996, as amended by
that certain First Amendment to Third Amended and Restated Credit Agreement
dated December 16, 1996, that certain Second Amendment to Third Amended and
Restated Credit Agreement dated March 7, 1997, that certain Third Amendment to
Third Amended and Restated Credit Agreement dated July 18, 1997 and that certain
Fourth Amendment to Third Amended and Restated Credit Agreement dated August 29,
1997 (as amended, the "Original Agreement") for the purposes and consideration
therein expressed, pursuant to which Lenders became obligated to make and made
loans to the Company as therein provided; and
WHEREAS, the Company, Agent and Lenders desire to amend the Original
Agreement for the purposes described herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- Definitions and References
(S) 1.1. Terms Defined in the Original Agreement. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
(S) 1.2. Other Defined Terms. Unless the context otherwise requires, the
following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.
"Amendment" means this Fifth Amendment to Third Amended and
Restated Credit Agreement.
"Amendment Documents" means this Amendment.
-1-
<PAGE>
"Credit Agreement" means the Original Agreement as amended
hereby.
ARTICLE II. -- Amendments
(S) 2.
1. Loans. The proviso in the last sentence of Section 2.01(a) of the Original
Agreement is hereby amended in its entirety to read as follows:
provided, that no more than six separate Interest Periods in respect of
Eurodollar Loans may be outstanding at any one time.
The proviso in the last sentence of Section 2.01(b) of the Original
Agreement is hereby amended in its entirety to read as follows:
provided, that no more than six separate Interest Periods in respect of
Eurodollar Loans may be outstanding at any one time.
(S) 2.2. Dividend Payments. Section 8.11 of the Original Agreement is
hereby amended in its entirety to read as follows:
Section 8.11 Dividend Payments The Company will not, and will not
permit any of its Subsidiaries to, declare or make any Dividend Payment at
any time; provided, however, the Company may make regularly scheduled
Dividend Payments in cash in respect of the Company's Series D Cumulative
Convertible Preferred Stock, par value $500 per share (a) the aggregate
amount of all such Dividend Payments not to exceed (i) 6% ($30 per share),
or (ii) in the event the purchaser thereof shall desire to sell such stock
in a secondary offering, and the investment bankers representing such
purchaser shall issue a written opinion to the Company that the gross
proceeds of such secondary offering shall not exceed $23,300,000, such
percentage as is necessary to enable such Purchaser to receive $23,300,000
of gross proceeds from such secondary offering, but in no event exceeding
7.5% ($37.50 per share)) in any one fiscal year , and (b) the aggregate
stated value of such outstanding Convertible Preferred Stock at issuance
not to exceed $23,300,000.
ARTICLE III. -- Conditions of Effectiveness
(S) 3.1. Effective Date. This Amendment shall become effective as of the
date first above written when and only when Agent shall have received, at
Agent's office, a counterpart of this Amendment executed and delivered by the
Company and Majority Lenders.
ARTICLE IV. -- Representations and Warranties
(S) 4.1. Representations and Warranties of the Company. In order to
induce Agent and Lenders to enter into this Amendment, the Company represents
and warrants to Agent and Lenders that:
-2-
<PAGE>
(a) The representations and warranties contained in Section 7 of
the Original Agreement, are true and correct at and as of the time of the
effectiveness hereof, subject to the amendment of certain of the Schedules
to the Credit Agreement as attached hereto.
(b) The Company and the Subsidiaries are duly authorized to
execute and deliver this Amendment and the other Amendment Documents to the
extent a party thereto, and the Company is and will continue to be duly
authorized to borrow and perform its obligations under the Credit
Agreement. The Company and the Subsidiaries have duly taken all corporate
action necessary to authorize the execution and delivery of this Amendment
and the other Amendment Documents, to the extent a party thereto, and to
authorize the performance of their respective obligations thereunder.
(c) The execution and delivery by the Company and the
Subsidiaries of this Amendment and the other Amendment Documents, to the
extent a party thereto, the performance by the Company and the Subsidiaries
of their respective obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby and thereby, do not
and will not conflict with any provision of law, statute, rule or
regulation or of the certificate or articles of incorporation and bylaws of
the Company or any Subsidiary, or of any material agreement, judgment,
license, order or permit applicable to or binding upon the Company or any
Subsidiary, or result in the creation of any lien, charge or encumbrance
upon any assets or properties of the Company or any Subsidiary, except in
favor of Agent for the benefit of Lenders. Except for those which have been
duly obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by the Company or any Subsidiary of this Amendment
or any other Amendment Document, to the extent a party thereto, or to
consummate the transactions contemplated hereby and thereby.
(d) When this Amendment and the other Amendment Documents have
been duly executed and delivered, each of the Basic Documents, as amended
by this Amendment and the other Amendment Documents, will be a legal and
binding instrument and agreement of the Company and the Subsidiaries, to
the extent a party thereto, enforceable in accordance with its terms,
(subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency and similar laws applicable to creditors' rights generally and
to general principles of equity).
ARTICLE V. -- Miscellaneous
(S) 5.1. Ratification of Agreements. The Original Agreement, as hereby
amended, is hereby ratified and confirmed in all respects. The Basic Documents,
as they may be amended or affected by this Amendment and/or the other Amendment
Documents, are hereby ratified and confirmed in all respects. Any reference to
the Credit Agreement in any Basic Document shall be deemed to refer to this
Amendment also. The execution, delivery and effectiveness of this Amendment and
the other Amendment Documents shall not, except as expressly provided herein or
therein, operate as a waiver of any right, power or remedy of Agent or any
Lender under the
-3-
<PAGE>
Credit Agreement or any other Basic Document nor constitute a waiver of any
provision of the Credit Agreement or any other Basic Document.
(S) 5.2. Ratification of Security Documents. The Company, Agent and
Lenders each acknowledge and agree that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and is
secured indebtedness under, and is secured by, each and every Security Document
to which the Company is a party. The Company hereby re-pledges, re-grants and
re-assigns a security interest in and lien on every asset of the Company
described as collateral in any Security Document.
(S) 5.3. Survival of Agreements. All representations, warranties,
covenants and agreements of the Company herein and in the other Amendment
Documents shall survive the execution and delivery of this Amendment and the
other Amendment Documents and the performance hereof and thereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations are paid in full. All statements and
agreements contained in any certificate or instrument delivered by the Company
or any Subsidiary hereunder, under the other Amendment Documents or under the
Credit Agreement to Agent or any Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, the Company
under this Amendment and under the Credit Agreement.
(S) 5.4. Basic Documents. This Amendment and each of the other Amendment
Documents is a Basic Document, and all provisions in the Credit Agreement
pertaining to Basic Documents apply hereto and thereto.
(S) 5.5. GOVERNING LAW. THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL
RESPECTS, INCLUDING CONSTRUCTION, VALIDITY AND PERFORMANCE.
(S) 5.6. Counterparts. This Amendment and each of the other Amendment
Documents may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same Amendment or Amendment Document, as the
case may be.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
PLAINS RESOURCES INC.
By: /s/ PHILLIP D. KRAMER
---------------------------------
Phillip D. Kramer
Vice President and Chief Financial Officer
-4-
<PAGE>
ING (U.S.) CAPITAL CORPORATION,
f/k/a Internationale Nederlanden (U.S.)
Capital Corporation, individually as a
Lender and as Agent
By: /s/ CHRISTOPHER R. WAGNER
---------------------------------
Christopher R. Wagner, Vice President
BANKBOSTON, N.A., Lender
By: /s/ TERRENCE RONAN
---------------------------------
Name: Terrence Ronan
Title: Vice President
DEN NORSKE BANK ASA, Lender
By: /s/ J. MORTEN KREUTZ
---------------------------------
Name: J. Morten Kreutz
Title: Vice President
By: /s/ WILLIAM V. MOYER
---------------------------------
Name: William V. Moyer
Title: First Vice President
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
(f/k/a First Interstate Bank of
Texas, N.A.), Lender
By: /s/ ANN M. RHOADS
---------------------------------
Ann M. Rhoads, Vice President
-5-
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Lender
By: /s/ RUSSELL A. JOHNSON
----------------------------------
Name: Russell A. Johnson
Title: Vice President
COMERICA BANK-TEXAS, Lender
By: /s/ DANIEL G. STEELE
----------------------------------
Name: Daniel G. Steele
Title: Senior Vice President
-6-
<PAGE>
CONSENT AND AGREEMENT
---------------------
Each of the undersigned Subsidiary Guarantors hereby consents to the
provisions of this Amendment and the transactions contemplated herein and hereby
(i) acknowledges and agrees that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and
are secured indebtedness under, and are secured by, each and every Security
Document to which it is a party, (ii) re-pledges, re-grants and re-assigns a
security interest in and lien on all of its assets described as collateral in
any Security Document, (iii) ratifies and confirms its Amended and Restated
Guaranty dated April 11, 1996 made by it for the benefit of Agent and Lenders,
and (iv) expressly acknowledges and agrees that such Subsidiary Guarantor
guarantees all indebtedness, liabilities and obligations arising under or in
connection with the Notes pursuant to the terms of such Amended and Restated
Guaranty, and agrees that its obligations and covenants thereunder are
unimpaired hereby and shall remain in full force and effect.
PLAINS MARKETING & TRANSPORTATION INC.
PLAINS RESOURCES INTERNATIONAL INC.
PLAINS TERMINAL & TRANSFER CORPORATION
PLX CRUDE LINES INC.
STOCKER RESOURCES, INC.
PLX INGLESIDE INC.
CALUMET FLORIDA, INC.
PLAINS ILLINOIS INC.
By: /s/ PHILLIP D. KRAMER
------------------------------------
Phillip D. Kramer
Vice President and Chief Financial Officer
STOCKER RESOURCES, L.P.
By: Stocker Resources, Inc.,
its General Partner
By: /s/ PHILLIP D. KRAMER
------------------------------------
Phillip D. Kramer
Vice President and Chief Financial Officer
-7-
<PAGE>
EXHIBIT 10(r)
Dated as of August 7, 1997
Plains Marketing & Transportation Inc.
1600 Smith Street
Houston, TX 77002
Re: Amendment No. 5 to Uncommitted Secured
Demand Transactional Line of Credit Facility
--------------------------------------------
Gentlemen:
Reference is made to that certain letter agreement outlining the parameters
of an uncommitted secured demand transactional line of credit facility dated
August 23, 1995 (as further amended to date and including all exhibits,
schedules and annexes thereto, the "Marketing Letter Agreement") among
BankBoston, N.A. (f/k/a The First National Bank of Boston) ("BKB"),
Internationale Nederlanden (U.S.) Capital Corporation ("ING"), Den Norske Bank
ASA, Comerica Bank-Texas, Wells Fargo Bank (Texas), National Association and
such other banks as may from time to time become parties thereto, (collectively,
the "Lenders") and BKB, as agent for the Lenders (in such capacity, the "Agent")
and Plains Marketing & Transportation Inc. (the "Borrower"). All capitalized
terms used herein without definition which are defined in the Marketing Letter
Agreement shall have the same meaning herein as therein.
The Borrower, the Lenders and the Agent wish to amend certain terms of the
Marketing Letter Agreement as follows:
1. DEMAND LOAN SUBLIMIT. Section 1(d)(ii) of the Marketing Letter
Agreement is hereby amended by (1) deleting the amount "$20,000,000" from the
first sentence thereof and substituting the amount "$25,000,000" therefor and
(2) deleting the phrase "ninety (90%)" from clause (y) of the first sentence
thereof and substituting the phrase "eighty percent (80%)" therefor.
2. PRICING.
(a) Clause (i) of the first sentence of Section 1(f)(i) of the Marketing
Letter Agreement is hereby amended by deleting the phrase "plus five-eighths of
one percent (5/8%) per annum".
<PAGE>
-2-
(b) Clause (ii) of the first sentence of Section 1(f)(i) of the Marketing
Letter Agreement is hereby amended by deleting the phrase "two percent (2%)"
therefrom and substituting the phrase "one and one-half of one percent (1-1/2%)"
therefor.
(c) Section 1(f)(ii)(x) of the Marketing Letter Agreement is hereby
amended by deleting the percentage "1-1/2%" from clause (A) thereof and
substituting "1-1/8%" therefor and by deleting the percentage "1/4%" from clause
(B) thereof and substituting "0.1875%" therefor.
3. FINANCIAL AND OTHER GUIDELINES. Schedule 4 to the Marketing Letter
Agreement is hereby amended as follows:
(a) paragraph (v)(C) of Schedule 4 is amended by deleting the text
thereof in its entirety and substituting the following therefor:
"(C) The aggregate of (a) crude oil pipeline inventory and (b) crude oil
inventory in the Cushing Terminal shall not exceed, in the aggregate
for both PMCT Inc. and Marketing, a maximum of 300,000 barrels.
Notwithstanding the above, inventories in crude oil pipelines shall
be limited to 225,000 barrels."
(b) paragraph (v)(D) of Schedule 4 is amended by deleting the text
thereof in its entirety and substituting the following therefor:
"(D) Inventory positions (other than fully hedged cash-and-carry positions
which qualify under subsection (E) below) and positions which do not
otherwise qualify under subsection (E) below shall be limited to
fixed price time spreads for periods up to a maximum of twenty-four
months for up to a maximum of 500,000 barrels, in the aggregate for
both PMCT Inc. and Marketing, of crude oil hedged on the NYMEX."
(c) the following new paragraph (E) is inserted immediately following
paragraph (v)(D) of Schedule 4:
"(E) Cash-and-carry barrels shall be hedged on the NYMEX for delivery
within the next 12 months."
(d) the first sentence of paragraph (xi) of Schedule 4 is amended by
inserting, immediately following the phrase "that certain Indenture dated as of
March 15, 1996 among Resources, certain subsidiaries of Resources and Texas
Commerce Bank National Association as
<PAGE>
-3-
Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes
due 2006, Series A and Series B, in the aggregate principal amount of
$150,000,000" and before the period at the end thereof, the phrase "and that
certain Indenture dated as of July 21, 1997 among Resources, certain
subsidiaries of Resources and Texas Commerce Bank National Association as
Trustee, pursuant to which Resources issued 10 1/4% Senior Subordinated Notes
due 2006, Series C and Series D, in the aggregate principal amount of
$50,000,000".
4. SECURITY. The Borrower hereby confirms that the reference to
"Marketing Letter Agreement" in the term "Marketing Obligations" as used in that
certain Security Agreement dated as of August 23, 1995 between Marketing and the
Agent includes the Marketing Letter Agreement as amended hereby and that
references to the Demand Loans and L/C's issued pursuant to the Marketing Letter
Agreement refers to all Demand Loans and L/C's issued pursuant to the Marketing
Letter Agreement, as amended hereby.
5. CONDITIONS PRECEDENT. This Amendment shall become effective upon
receipt by the Agent of the following:
(a) a counterpart of this Amendment duly signed where indicated below by
each Lender, the Agent, the Borrower and Plains Resources Inc.;
(b) a counterpart of Amendment No. 5 to the PMCT Agreement duly signed
where indicated by PMCT, each Lender and the Agent;
<PAGE>
-4-
If you agree to and accept the foregoing amendment, please so indicate by
signing a counterpart of this letter and returning it to the Agent. Upon
satisfaction of the conditions set forth in Section 5 hereof, this Amendment
shall take effect as a binding agreement among us, to be construed and
enforceable in accordance with the laws of The Commonwealth of Massachusetts.
PLAINS MARKETING &
TRANSPORTATION INC.
By: /s/ MICHAEL R. PATTERSON
Name: Michael R. Patterson
Title: Vice President
BANKBOSTON, N.A.,
Individually and as Agent
By: /s/ CHRISTOPHER C. HOLMGREEN
Name: Christopher C. Holmgreen
Title: Director
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION
By: /s/ CHRISTOPHER R. WAGNER
Name: Christopher R. Wagner
Title: Vice President
DEN NORSKE BANK ASA DEN NORSKE BANK ASA
By: /s/ WILLIAM V. MOYER By: /s/ BYRON L. COOLEY
Name: William V. Moyer Name: Byron L. Cooley
Title: First Vice President Title: Senior Vice President
<PAGE>
-5-
COMERICA BANK-TEXAS
By: /s/ DANIEL G. STEELE
Name: Daniel G. Steele
Title: Senior Vice President
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ ANN M. RHOADS
Name: Ann M. Rhoads
Title: Vice President
<PAGE>
-6-
RATIFICATION OF GUARANTY
The undersigned Guarantor acknowledges and accepts the foregoing Amendment
and ratifies and confirms in all respects such Guarantor's obligations under the
Guaranty dated as of August 23, 1995 (the "Guaranty") executed and delivered by
the Guarantor to the Agent and the Lenders. The undersigned Guarantor further
agrees that references in the Guaranty to the Resources Credit Agreement shall
be references to the Third Amended and Restated Credit Agreement dated as of
April 11, 1996 among the undersigned Guarantor, ING as agent and the lenders
named therein.
PLAINS RESOURCES INC.
/s/
By: Michael R. Patterson
Title: Vice President
<PAGE>
EXHIBIT 10(s)
Dated as of August 7, 1997
PMCT Inc.
1600 Smith Street
Houston, TX 77002
Re: Amendment No. 5 to Uncommitted Secured
Demand Transactional Line of Credit Facility
--------------------------------------------
Gentlemen:
Reference is made to that certain letter agreement outlining the parameters
of an uncommitted secured demand transactional line of credit facility dated
August 23, 1995 (as further amended to date and including all exhibits,
schedules and annexes thereto, the "PMCT Letter Agreement") among BankBoston,
N.A. (f/k/a The First National Bank of Boston) ("BKB"), Internationale
Nederlanden (U.S.) Capital Corporation ("ING"), Den Norske Bank ASA, Comerica
Bank-Texas, Wells Fargo Bank (Texas), National Association and such other banks
as may from time to time become parties thereto, (collectively, the "Lenders")
and BKB, as agent for the Lenders (in such capacity, the "Agent") and PMCT Inc.
(the "Borrower"). All capitalized terms used herein without definition which
are defined in the PMCT Letter Agreement shall have the same meaning herein as
therein.
The Borrower, the Lenders and the Agent wish to amend certain terms of the
PMCT Letter Agreement as follows:
1. DEMAND LOAN SUBLIMIT. Section 1(d)(ii) of the PMCT Letter Agreement
is hereby amended by (1) deleting the amount "$20,000,000" from the first
sentence thereof and substituting the amount "$25,000,000" therefor and (2)
deleting the phrase "ninety (90%)" from clause (y) of the first sentence and
substituting the phrase "eighty percent (80%)" therefor.
2. PMCT SUBLIMIT. Section 1(d)(iii) of the PMCT Letter Agreement is
hereby amended by deleting the amount "$20,000,000" from the first sentence
thereof and substituting the amount "$25,000,000" therefor.
<PAGE>
-2-
3. PRICING.
(a) Clause (i) of the first sentence of Section 1(f)(i) of the PMCT Letter
Agreement is hereby amended by deleting the phrase "plus five-eighths of one
percent (5/8%) per annum".
(b) Clause (ii) of the first sentence of Section 1(f)(i) of the PMCT
Letter Agreement is hereby amended by deleting the phrase "two percent (2%)"
therefrom and substituting the phrase "one and one-half of one percent (1-1/2%)"
therefor.
(c) Section 1(f)(ii)(x) of the PMCT Letter Agreement is hereby amended by
deleting the percentage "1-1/2%" from clause (A) thereof and substituting "1-
1/8%" therefor and by deleting the percentage "1/4%" from clause (B) thereof and
substituting "0.1875%" therefor.
4. FINANCIAL AND OTHER GUIDELINES. Schedule 4 to the PMCT Letter
Agreement is hereby amended as follows:
(a) paragraph (v)(C) of Schedule 4 is amended by deleting the text thereof
in its entirety and substituting the following therefor:
"(C) The aggregate of (a) crude oil pipeline inventory and (b) crude oil
inventory in the Cushing Terminal shall not exceed, in the aggregate
for both PMCT Inc. and Marketing, a maximum of 300,000 barrels.
Notwithstanding the above, inventories in crude oil pipelines shall be
limited to 225,000 barrels."
(b) paragraph (v)(D) of Schedule 4 is amended by deleting the text thereof
in its entirety and substituting the following therefor:
"(D) Inventory positions (other than fully hedged cash-and-carry positions
which qualify under subsection (E) below) and positions which do not
otherwise qualify under subsection (E) below shall be limited to fixed
price time spreads for periods up to a maximum of twenty-four months
for up to a maximum of 500,000 barrels, in the aggregate for both PMCT
Inc. and Marketing, of crude oil hedged on the NYMEX."
(c) the following new paragraph (E) is inserted immediately following
paragraph (v)(D) of Schedule 4:
<PAGE>
-3-
"(E) Cash-and-carry barrels shall be hedged on the NYMEX for delivery
within the next 12 months."
(d) the first sentence of paragraph (xi) of Schedule 4 is amended by
inserting, immediately following the phrase "that certain Indenture dated as of
March 15, 1996 among Resources, certain subsidiaries of Resources and Texas
Commerce Bank National Association as Trustee, pursuant to which Resources
issued 10 1/4% Senior Subordinated Notes due 2006, Series A and Series B, in the
aggregate principal amount of $150,000,000" and before the period at the end
thereof, the phrase "and that certain Indenture dated as of July 21, 1997 among
Resources, certain subsidiaries of Resources and Texas Commerce Bank National
Association as Trustee, pursuant to which Resources issued 10 1/4% Senior
Subordinated Notes due 2006, Series C and Series D, in the aggregate principal
amount of $50,000,000".
5. SECURITY. The Borrower hereby confirms that the reference to "PMCT
Letter Agreement" in the term "PMCT Obligations" as used in that certain
Security Agreement dated as of August 23, 1995 between PMCT and the Agent
includes the PMCT Letter Agreement as amended hereby and that references to the
Demand Loans and L/C's issued pursuant to the PMCT Letter Agreement refers to
all Demand Loans and L/C's issued pursuant to the PMCT Letter Agreement, as
amended hereby.
6. CONDITIONS PRECEDENT. This Amendment shall become effective upon
receipt by the Agent of the following:
(a) a counterpart of this Amendment duly signed where indicated below by
each Lender, the Agent and the Borrower;
(b) a counterpart of Amendment No. 5 to the Marketing Agreement duly
signed where indicated by Marketing, each Lender, the Agent and Resources;
<PAGE>
-4-
If you agree to and accept the foregoing amendment, please so indicate by
signing a counterpart of this letter and returning it to the Agent. Upon
satisfaction of the conditions set forth in Section 6 hereof, this Amendment
shall take effect as a binding agreement among us, to be construed and
enforceable in accordance with the laws of The Commonwealth of Massachusetts.
PMCT INC.
By: /s/ MICHAEL R. PATTERSON
Name: Michael R. Patterson
Title: Vice President
BANKBOSTON, N.A.,
Individually and as Agent
By: /s/ CHRISTOPHER C. HOLMGREEN
Name: Christopher C. Holmgreen
Title: Director
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION
By: /s/ CHRISTOPHER R. WAGNER
Name: Christopher R. Wagner
Title: Vice President
DEN NORSKE BANK ASA DEN NORSKE BANK ASA
By: /s/ WILLIAM C. MOYER By: /s/ BYRON L. COOLEY
Name: Willliam C. Moyer Name: Byron L. Cooley
Title: First Vice President Title: Senior Vice President
<PAGE>
-5-
COMERICA BANK-TEXAS
By: /s/ DANIEL G. STEELE
Name: Daniel G. Steele
Title: Senior Vice President
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ ANN M. RHOADS
Name: Ann M. Rhoads
Title: Vice President
<PAGE>
EXHIBIT 10(t)
Dated as of August 29, 1997
Plains Marketing & Transportation Inc.
1600 Smith Street
Houston, TX 77002
Re: Amendment No. 6 to Uncommitted Secured
Demand Transactional Line of Credit Facility
--------------------------------------------
Gentlemen:
Reference is made to that certain letter agreement outlining the parameters of
an uncommitted secured demand transactional line of credit facility dated August
23, 1995 (as further amended to date and including all exhibits, schedules and
annexes thereto, the "Marketing Letter Agreement") among BankBoston, N.A. (f/k/a
The First National Bank of Boston) ("BKB"), Internationale Nederlanden (U.S.)
Capital Corporation ("ING"), Den Norske Bank ASA, Comerica Bank-Texas, Wells
Fargo Bank (Texas), National Association and such other banks as may from time
to time become parties thereto, (collectively, the "Lenders") and BKB, as agent
for the Lenders (in such capacity, the "Agent") and Plains Marketing &
Transportation Inc. (the "Borrower"). All capitalized terms used herein without
definition which are defined in the Marketing Letter Agreement shall have the
same meaning herein as therein.
The Borrower, the Lenders and the Agent wish to amend certain terms of the
Marketing Letter Agreement as follows:
1. FINANCIAL AND OTHER GUIDELINES. Schedule 4 to the Marketing Letter
Agreement is hereby amended as follows:
(a) paragraph (xi) of Schedule 4 is amended and restated in its entirety to
read as follows:
"(xi) Borrower shall not create, assume, suffer to exist or incur any
Indebtedness other than Indebtedness incurred in connection with the
Accommodations and Indebtedness as a guarantor of obligations of Resources
arising under the Resource Credit Agreement and that certain Indenture dated as
of March 15, 1996 among Resources, certain subsidiaries of Resources and Texas
Commerce Bank National Association as Trustee, pursuant to which Resources
issued 10 1/4% Senior Subordinated Notes due 2006, Series A and Series B, in the
aggregate principle amount of $150,000,000 and that certain Indenture dated as
of July 21, 1997 among Resources, certain subsidiaries of Resources and Texas
Commerce Bank National Association as Trustee,
<PAGE>
-2-
pursuant to which Resources issued 10 1/4% Senior Subordinated Notes due 2006,
Series C and Series D, in the aggregate principal amount of $50,000,000 and an
unsecured inter-company line of credit provided by Resources to the Borrower in
the amount of $15,000,000, the proceeds of which are to be used to finance the
purchase and physical storage of crude oil which is fully hedged on the NYMEX
and located in the Cushing Terminal or which is in transit in specified
pipelines approved by the Lenders and listed on Schedule 5 hereto.
"INDEBTEDNESS" means all obligations contingent or otherwise incurred in
connection with the borrowing of money or the extension of credit (other than
trade debt incurred on an open account basis customarily extended in the
ordinary course of business in connection with normal purchases of goods and
services) including without limitation capitalized lease obligations (except
such obligations respecting leases of office computers and similar general
purpose supplies and equipment leases in an amount not to exceed $50,000 and
obligations respecting truck leases) and guaranties or other contingent
obligations relating to obligations of others which would be classified as
Indebtedness".
2. SECURITY. The Borrower hereby confirms that the reference to
"Marketing Letter Agreement" in the term "Marketing Obligations" as used in that
certain Security Agreement dated as of August 23, 1995 between the Borrower and
the Agent includes the Marketing Letter Agreement as amended hereby and that
references to the Demand Loans and L/C's issued pursuant to the Marketing Letter
Agreement refers to all Demand Loans and L/C's issued pursuant to the Marketing
Letter Agreement, as amended hereby.
3. CONDITIONS PRECEDENT. This Amendment shall become effective upon
receipt by the Agent of a counterpart of this Amendment duly signed where
indicated below by each Lender, the Agent, the Borrower and the Plains Resources
Inc.
<PAGE>
-3-
If you agree to and accept the foregoing amendment, please so indicate by
signing a counterpart of this letter and returning it to the Agent. Upon
satisfaction of the conditions set forth in Section 3 hereof, this Amendment
shall take effect as a binding agreement among us, to be construed and
enforceable in accordance with the laws of The Commonwealth of Massachusetts.
PLAINS MARKETING &
TRANSPORTATION INC.
By: /s/MICHAEL R. PATTERSON
Name: Michael R. Patterson
Title: Vice President
BANKBOSTON, N.A.,
Individually and as Agent
By: /s/ TERRANCE RONAN
Name: Terrence Ronan
Title: Vice President
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By: /s/ CHRISTOPHER R. WAGNER
Name: Christopher R. Wagner
Title: Vice President
DEN NORSKE BANK ASA DEN NORSKE BANK ASA
By: /s/ BYRON L. COOLEY By: /s/ WILLIAM V. MOYER
Name: Byron L. Cooley Name: William V. Moyer
Title: Senior Vice President Title: First Vice President
<PAGE>
-4-
COMERICA BANK-TEXAS
By: /s/ JAMESKIMBLE
Name: James Kimble
Title: Assistant Vice President
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ ANN RHOADS
Name: Ann Rhoads
Title: Vice President
<PAGE>
-5-
RATIFICATION OF GUARANTY
The undersigned Guarantor acknowledges and accepts the foregoing Amendment and
ratifies and confirms in all respects such Guarantor's obligations under the
Guaranty dated as of August 23, 1995 (the "Guaranty") executed and delivered by
the Guarantor to the Agent and the Lenders. The undersigned Guarantor further
agrees that references in the Guaranty to the Resources Credit Agreement shall
be references to the Third Amended and Restated Credit Agreement dated as of
April 11, 1996 among the undersigned Guarantor, ING as agent and the lenders
named therein.
PLAINS RESOURCES INC.
/s/ MICHAEL R. PATTERSON
By: Michael R. Patterson
Title: Vice President
<PAGE>
EXHIBIT 11a.-COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS EXCEPT PER SHARE
DATA) (UNAUDITED)
<TABLE>
<CAPTION> THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------
1997 1996
-------------------- --------------------
COMMON AND COMMON AND
COMMON COMMON
EQUIVALENT FULL EQUIVALENT FULL
SHARES DILUTION SHARES DILUTION
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding 16,627 16,627 16,342 16,342
Incremental shares assumed to be issued 1,745 1,839 1,479 1,521
------- ------- ------- -------
Total shares outstanding for calculation 18,372 18,466 17,821 17,863
======= ======= ======= =======
Net income available to common shareholders before extraordinary item $ 2,759 $ 2,759 $ 3,486 $ 3,486
Extraordinary item -- -- 1,515 1,515
------- ------- ------- -------
Net income for calculation $ 2,759 $ 2,759 $ 5,001 $ 5,001
======= ======= ======= =======
Net income per share:
Before extraordinary item $ 0.15 $ 0.15 $ 0.20 $ 0.20
Extraordinary item -- -- 0.08 0.08
------- ------- ------- -------
$ 0.15 $ 0.15 $ 0.28 $ 0.28
======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 11b.-COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS EXCEPT PER SHARE
DATA) (UNAUDITED)
<TABLE>
<CAPTION> NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------
1997 1996
-------------------- --------------------
COMMON AND COMMON AND
COMMON COMMON
EQUIVALENT FULL EQUIVALENT FULL
SHARES DILUTION SHARES DILUTION
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding 16,572 16,572 16,253 16,253
Incremental shares assumed to be issued 1,586 1,868 1,325 1,610
------- ------- ------- -------
Total shares outstanding for calculation 18,158 18,440 17,578 17,863
======= ======= ======= =======
Net income available to common shareholders before extraordinary item $ 9,902 $ 9,902 $17,316 $17,316
Extraordinary item -- -- (5,104) (5,104)
------- ------- ------- -------
Net income for calculation $ 9,902 $ 9,902 $12,212 $12,212
======= ======= ======= =======
Net income (loss) per share:
Before extraordinary item $ 0.55 $ 0.54 $ 0.98 $ 0.97
Extraordinary item -- -- (0.29) (0.29)
------- ------- ------- -------
$ 0.55 $ 0.54 $ 0.69 $ 0.68
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PLAINS
RESOURCES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF
SEPTEMBER 30, 1997, AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,085
<SECURITIES> 0
<RECEIVABLES> 91,412
<ALLOWANCES> 0
<INVENTORY> 33,245
<CURRENT-ASSETS> 128,957
<PP&E> 553,870
<DEPRECIATION> 174,125
<TOTAL-ASSETS> 525,063
<CURRENT-LIABILITIES> 130,249
<BONDS> 282,484
0
0
<COMMON> 1,667
<OTHER-SE> 105,544
<TOTAL-LIABILITY-AND-EQUITY> 525,063
<SALES> 616,161
<TOTAL-REVENUES> 616,384
<CGS> 560,542
<TOTAL-COSTS> 577,799
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,877
<INCOME-PRETAX> 16,503
<INCOME-TAX> 6,601
<INCOME-CONTINUING> 9,902
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,902
<EPS-PRIMARY> .55
<EPS-DILUTED> .54
</TABLE>
