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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): JULY 30, 1998
PLAINS RESOURCES INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-9808 13-2898764
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
500 DALLAS STREET, SUITE 700
HOUSTON, TEXAS 77002 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 654-1414
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ITEM 2. ACQUISITION OF ASSETS
Description of Transaction
On July 30, 1998, Plains All American Inc. ("PAAI") a wholly-owned
subsidiary of Plains Resources Inc. (the "Company"), acquired all of the
outstanding capital stock of All American Pipeline Company ("AAPL"), Celeron
Gathering Corporation ("CGC") and Celeron Trading & Transportation Company
("PT&T") (AAPL, CGC and CT&T collectively referred to as the "Celeron
Companies") from Wingfoot Ventures Seven Inc., a wholly-owned subsidiary of The
Goodyear Tire & Rubber Company. The purchase price for the acquisition was
approximately $400 million.
Financing for the acquisition was provided through (i) PAAI's $325 million,
limited recourse bank facility with ING (U.S.) Capital Corporation, BankBoston,
N.A., and other lenders under that certain Credit Agreement dated as of July 30,
1998 and (ii) an approximate $110 million capital contribution to PAAI by the
Company. Approximately $25 million of the capital contribution was made in the
first quarter of 1998 and the remaining $85 million was provided by a privately
placed issuance under that certain Stock Purchase Agreement dated as of July 30,
1998, of the Company's Series E Cumulative Convertible Preferred Stock. Kayne
Anderson Investment Management, Plains' largest shareholder, and EnCap
Investments L.C. were the lead investors in the private placement of such
preferred stock.
Description of Assets Involved
The principal assets of the entities to be acquired include the All American
Pipeline System, a 1,233-mile crude oil pipeline extending from California to
Texas, and a 45-mile crude oil gathering system in the San Joaquin Valley of
California, as well as other assets related to such operations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) - Financial Statements of Business Acquired.
Financial Statements for the Celeron Companies will be filed under
an amendment to this report as soon as practicable but not later
than sixty days after the filing of this report.
(b) - Pro Forma Financial Information.
Pro forma financial information relative to the acquisition will be
filed under an amendment to this report as soon as practicable but
not later than sixty days after the filing of this report.
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(c) Exhibits.
2.1 Stock Purchase Agreement dated as of March 15, 1998, among Plains
Resources Inc., Plains All American Inc., Wingfoot Ventures Seven
Inc. (incorporated by reference to Exhibit 2(b) to the Company's
Annual report on Form 10-K for the year ended December 31, 1997).
2.2 Credit Agreement dated as of July 30, 1998, among Plains All
American Inc. and ING (U.S.) Capital Corporation, et al.
2.3 Stock Purchase Agreement dated as of July 30, 1998 by and among
Plains Resources Inc. and the Purchasers Named Therein for the
issuance of Series E Cumulative Convertible Preferred Stock.
3.1 Certificate of Designation, Preference and Rights of Series E
Cumulative Convertible Preferred Stock.
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 hereunto duly authorized.
Dated: August 11, 1998
PLAINS RESOURCES INC.
By: /s/ Phillip D. Kramer
------------------------------
Name: Phillip D. Kramer
Title: Executive Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
Number Exhibit
- ------ -------
2.1 Stock Purchase Agreement dated as of March 15, 1998,
among Plains Resources Inc., Plains All American Inc.,
Wingfoot Ventures Seven Inc. (incorporated by reference to
Exhibit 2(b) to the Company's Annual report on Form 10-K for
the year ended December 31, 1997).
2.2 Credit Agreement dated as of July 30, 1998, among Plains All
American Inc. and ING (U.S.) Capital Corporation, et al.
2.3 Stock Purchase Agreement dated as of July 30, 1998 by and
among Plains Resources Inc. and the Purchasers Named
Therein for the issuance of Series E Cumulative Convertible
Preferred Stock.
3.1 Certificate of Designation, Preference and Rights of Series E
Cumulative Convertible Preferred Stock.
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EXHIBIT 2.2
Execution Copy
================================================================================
CREDIT AGREEMENT
_______________________________________________________
PLAINS ALL AMERICAN INC.,
as Borrower,
and
ING (U.S.) CAPITAL CORPORATION,
as Administrative Agent,
ING BARING (U.S.) CAPITAL CORPORATION,
as Syndication Agent,
BANKBOSTON, N.A.,
as Documentation Agent,
and CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
_______________________________________________________
$100,000,000 Reducing Revolving Credit Facility
$225,000,000 Term Loan
July 30, 1998
================================================================================
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TABLE OF CONTENTS
Page
----
CREDIT AGREEMENT.............................................................. 1
ARTICLE I - Definitions and References........................................ 1
Section 1.1. Defined Terms.............................................. 1
Section 1.2. Exhibits and Schedules; Additional Definitions.............18
Section 1.3. Amendment of Defined Instruments...........................18
Section 1.4. References and Titles......................................19
Section 1.5. Calculations and Determinations............................19
ARTICLE II - The Loans........................................................19
Section 2.1. Commitments to Lend; Notes.................................19
Section 2.2. Requests for Revolver Loans................................20
Section 2.3. Continuations and Conversions of Existing Loans............21
Section 2.4. Use of Proceeds............................................22
Section 2.5. Interest Rates and Fees....................................23
Section 2.6. Optional Prepayments.......................................24
Section 2.7. Mandatory Prepayments......................................24
Section 2.8. Letters of Credit..........................................25
Section 2.9. Requesting Letters of Credit...............................26
Section 2.10. Reimbursement and Participations...........................26
Section 2.11. Letter of Credit Fees......................................28
Section 2.12. No Duty to Inquire.........................................28
Section 2.13. LC Collateral..............................................29
ARTICLE III - Payments to Lenders.............................................30
Section 3.1. General Procedures.........................................30
Section 3.2. Capital Reimbursement......................................31
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit....31
Section 3.4. Notice; Change of Applicable Lending Office................32
Section 3.5. Availability...............................................32
Section 3.6. Funding Losses.............................................33
Section 3.7. Reimbursable Taxes.........................................33
ARTICLE IV - Conditions Precedent to Lending..................................36
Section 4.1. Documents to be Delivered..................................36
Section 4.2. Additional Conditions to Initial Credit....................38
Section 4.3. Additional Conditions Precedent............................38
ARTICLE V - Representations and Warranties....................................39
Section 5.1. No Default.................................................39
Section 5.2. Organization and Good Standing.............................39
Section 5.3. Authorization..............................................40
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Section 5.4. No Conflicts or Consents...................................40
Section 5.5. Enforceable Obligations....................................40
Section 5.6. Initial Financial Statements...............................40
Section 5.7. Other Obligations and Restrictions.........................40
Section 5.8. Full Disclosure............................................41
Section 5.9. Litigation.................................................41
Section 5.10. Labor Disputes and Acts of God.............................41
Section 5.11. ERISA Plans and Liabilities................................41
Section 5.12. Compliance with Laws.......................................41
Section 5.13. Environmental Laws.........................................42
Section 5.15. Borrower's Subsidiaries....................................44
Section 5.16. Title to Properties; Licenses..............................44
Section 5.17. Government Regulation......................................44
Section 5.18. Insider....................................................44
Section 5.19. Solvency...................................................44
Section 5.20. Credit Arrangements........................................44
ARTICLE VI - Affirmative Covenants of Borrower................................45
Section 6.1. Payment and Performance....................................45
Section 6.2. Books, Financial Statements and Reports....................45
Section 6.3. Other Information and Inspections..........................47
Section 6.4. Notice of Material Events and Change of Address............48
Section 6.5. Maintenance of Properties..................................48
Section 6.6. Maintenance of Existence and Qualifications................49
Section 6.7. Payment of Trade Liabilities, Taxes, etc...................49
Section 6.8. Insurance..................................................49
Section 6.9. Performance on Borrower's Behalf...........................49
Section 6.10. Interest...................................................49
Section 6.11. Compliance with Agreements and Law.........................50
Section 6.12. Environmental Matters; Environmental Reviews...............50
Section 6.13. Evidence of Compliance.....................................50
Section 6.14. Agreement to Deliver Security Documents....................50
Section 6.15. Perfection and Protection of Security Interests
and Liens..................................................51
Section 6.16. Bank Accounts; Offset......................................51
Section 6.17. Guaranties of Borrower's Subsidiaries......................51
Section 6.18. Interest Rate Hedging Agreements...........................51
ARTICLE VII - Negative Covenants of Borrower..................................52
Section 7.1. Indebtedness...............................................52
Section 7.2. Limitation on Liens........................................53
Section 7.3. Hedging Contracts..........................................54
Section 7.4. Limitation on Mergers, Issuances of Securities.............55
Section 7.5. Limitation on Sales of Property............................55
Section 7.6. Limitation on Dividends and Redemptions....................56
Section 7.7. Limitation on Investments and New Businesses...............56
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Section 7.8. Limitation on Credit Extensions...........................56
Section 7.9. Transactions with Affiliates..............................56
Section 7.10. Prohibited Contracts......................................57
Section 7.11. Limitations on Capital Expenditures.......................57
Section 7.12. Current Ratio.............................................57
Section 7.13. Net Worth.................................................57
Section 7.14. Interest Coverage Ratio...................................57
Section 7.15. Fixed Charge Coverage Ratio...............................58
Section 7.16. Debt to Capital Ratio.....................................58
Section 7.17. Consolidated General and Administrative Expenses..........58
ARTICLE VIII - Events of Default and Remedies.................................58
Section 8.1. Events of Default.........................................58
Section 8.2. Remedies..................................................61
ARTICLE IX - Administrative Agent.............................................61
Section 9.1. Appointment and Authority.................................61
Section 9.2. Exculpation, Administrative Agent's Reliance, Etc.........62
Section 9.3. Credit Decisions..........................................62
Section 9.4. Indemnification...........................................62
Section 9.5. Rights as Lender..........................................63
Section 9.6. Sharing of Set-Offs and Other Payments....................63
Section 9.7. Investments...............................................64
Section 9.8. Benefit of Article IX.....................................64
Section 9.9. Resignation...............................................64
Section 9.10. Other Agents..............................................65
ARTICLE X - Miscellaneous.....................................................65
Section 10.1. Waivers and Amendments; Acknowledgments...................65
Section 10.2. Survival of Agreements; Cumulative Nature.................67
Section 10.3. Notices...................................................67
Section 10.4. Payment of Expenses; Indemnity............................68
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments...............................................69
Section 10.6. Confidentiality...........................................72
Section 10.7. GOVERNING LAW; SUBMISSION TO PROCESS......................72
Section 10.8. Limitation on Interest....................................73
Section 10.9. Termination; Limited Survival.............................74
Section 10.10. Severability..............................................74
Section 10.11. Counterparts..............................................74
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc...............74
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Schedules and Exhibits:
Schedule 1 - Lender Schedule
Schedule 2 - Disclosure Schedule
Schedule 3 - Security Schedule
Schedule 4 - Insurance Schedule
Schedule 5 - Capital Expenditures
Exhibit A-1 - Revolver Note
Exhibit A-2 - Term Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E-1 - Opinion of In-House Counsel for Restricted Persons
Exhibit E-2 - Opinion of Counsel for Restricted Persons
Exhibit F - Environmental Compliance Certificate
Exhibit G - Letter of Credit Application and Agreement
Exhibit H - Assignment and Acceptance Agreement
Exhibit I - Officer's Certificate
Exhibit J - Service and Exchange Agreement
Exhibit K - Agreement for the Allocation of Taxes
Exhibit L - Netting Agreement
Exhibit M - Support Service Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of July 30, 1998, by and among PLAINS ALL
AMERICAN INC., a Delaware corporation ("Borrower"), ING (U.S.) CAPITAL
CORPORATION, as administrative agent (in such capacity, "Administrative Agent"),
ING BARING (U.S.) CAPITAL CORPORATION, as syndication agent (in such capacity,
"Syndication Agent") and BANKBOSTON, N.A., as documentation agent (in such
capacity, "Documentation Agent") and the Lenders referred to below. In
consideration of the mutual covenants and agreements contained herein the
parties hereto agree as follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given to such term in this Section 1.1 or in
the sections and subsections referred to below:
"Acquisition Documents" means the Stock Purchase Agreement dated as of
March 15, 1998 among Resources, Borrower and Wingfoot Ventures Seven Inc., and
all other agreements or instruments delivered in connection therewith to
consummate the acquisition contemplated thereby.
"Adjusted Eurodollar Rate" means, with respect to each particular
Eurodollar Loan and the related Interest Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) determined by Administrative
Agent to be equal to the quotient obtained by dividing (i) the rate reported, on
the date two Business Days prior to the first day of such Interest Period, on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
as the London Interbank Offered Rate for dollar deposits having a term
comparable to such Interest Period and in an amount of $1,000,000 or more (or,
if such Page shall cease to be publicly available or if the information
contained on such Page, in Administrative Agent's sole judgment, shall cease to
accurately reflect such London Interbank Offered Rate, as reported by any
publicly available source of similar market data selected by Administrative
Agent that, in Administrative Agent's sole judgment, accurately reflects such
London Interbank Offered Rate) by (ii) 1 minus the Reserve Requirement for
Eurodollar Loan for such Interest Period. The Adjusted Eurodollar Rate shall
change whenever the Reserve Requirement changes.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 5% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
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(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Affiliate Agreements" has the meaning given to such term in Section 4.2.
"Administrative Agent" means ING (U.S.) Capital Corporation, as
Administrative Agent hereunder, and its successors in such capacity.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Applicable Leverage Level" means the level set forth below that
corresponds to the ratio of (i) Consolidated Indebtedness of Borrower and its
Subsidiaries to (ii) the Consolidated EBITDA for the applicable period of four
Fiscal Quarters (the "Leverage Ratio"):
Applicable
Leverage Level Leverage Ratio
---------------------------------------------------
Level I greater than or equal to 5.0
to 1.0
---------------------------------------------------
Level II less than 5.0 to 1.0 but
greater than or equal to 3.5
to 1.0
---------------------------------------------------
Level III less than 3.5 to 1.0
The Leverage Ratio will be determined quarterly by Administrative Agent within
two (2) Business Days after Administrative Agent's receipt of Borrower's
Consolidated financial statements for the immediate preceding Fiscal Quarter
based upon: (i) Consolidated Indebtedness as of the end of such Fiscal Quarter,
and (ii) the Consolidated EBITDA for the four Fiscal Quarters ending with such
Fiscal Quarter. The Applicable Leverage Level shall become effective upon such
determination of the Leverage Ratio by Administrative Agent and shall remain
effective until the next such determination by Administrative Agent of the
Leverage Ratio. For the Fiscal Quarters ending on September 30 and December 31,
1998 and March 31 and June 30, 1999, such determination of Consolidated EBITDA,
Leverage Ratio, or Applicable Leverage Ratio shall be made by annualizing
Consolidated EBITDA for the period from the date of the Acquisition to the end
of such Fiscal Quarter.
"Applicable Rating Level" means, for any day, the level set forth below
that corresponds to the higher of the ratings publicly announced by Moody's or
S&P, as applicable on that day, to the Term Loans; provided that if ratings
announced by Moody's and S&P
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differ by more than two (2) levels on such day, then the Applicable Rating Level
shall be based upon the level which is one level lower than the higher.
Applicable
Rating Level Moody's S&P
--------------------------------------------------------------------------
Level A greater than or equal to Ba3 greater than or equal to BB-
--------------------------------------------------------------------------
Level B less than or equal to B1 less than or equal to B+
"greater than or equal to" means greater than or equal to and "less than or
equal to" means less than or equal to. If neither Moody's or S&P shall have in
effect a rating for the Term Loans, then the Applicable Rating Level shall be
deemed to be Level B; provided, however, if the rating system of either rating
agency shall change, or if a rating agency shall cease to be in the business of
rating corporate debt obligations, Borrower and the Term Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency, but until such an
agreement shall be reached, the Applicable Rating Level shall be based only upon
the rating by the remaining rating agency.
"Base Rate" means, for any day, the higher of (a) the Reference Rate and
(b) the Federal Funds Rate plus one-half percent (0.5%) per annum. For purposes
of this definition, "Reference Rate" means the arithmetic average of the rates
of interest publicly announced by The Chase Manhattan Bank, Citibank, N.A. and
Morgan Guaranty Trust Company of New York (or their respective successors) as
their respective prime commercial lending rates (or, as to any such bank that
does not announce such a rate, such bank's 'base' or other rate determined by
Administrative Agent to be the equivalent rate announced by such bank), except
that, if any such bank shall, for any period, cease to announce publicly its
prime commercial lending (or equivalent) rate, Administrative Agent shall,
during such period, determine the "Base Rate" based upon the prime commercial
lending (or equivalent) rates announced publicly by the other such banks.
"Base Rate Loan" means a Loan which does not bear interest based upon the
Adjusted Eurodollar Rate.
"Borrower" means Plains All American Inc., a Delaware corporation.
"Borrowing" means a borrowing of new Revolver Loans of a single Type
pursuant to Section 2.2 or a Continuation or Conversion of all or a portion of
an existing Loan (whether alone or as a combination with a new Loan) into a
single Type (and, in the case of Eurodollar Loans, with the same Interest
Period) pursuant to Section 2.3.
"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
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"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Administrative Agent, significant transactions in dollars are
carried out in the London interbank eurocurrency market.
"Capital Lease" means a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Cash Equivalents" means Investments in:
(a) marketable obligations, maturing within 12 months after acquisition
thereof, issued or unconditionally guaranteed by the United States of America or
an instrumentality or agency thereof and entitled to the full faith and credit
of the United States of America;
(b) demand deposits and time deposits (including certificates of deposit)
maturing within 12 months from the date of deposit thereof, (i) with any office
of any Lender or (ii) with a domestic office of any national or state bank or
trust company which is organized under the Laws of the United States of America
or any state therein, which has capital, surplus and undivided profits of at
least $500,000,000, and whose long term certificates of deposit are rated at
least Aa3 by Moody's or AA by S&P;
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in subsection (a) above entered
into with (i) any Lender or (ii) any other commercial bank meeting the
specifications of subsection (b) above;
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by Moody's or A-1 by S&P; and
(e) money market or other mutual funds substantially all of whose assets
comprise securities of the types described in subsections (a) through (d) above.
"Change of Control" means the occurrence of any of the following events:
(i) an event or series of events by which any Person or other entity or group of
Persons or other entities acting in concert as a partnership or other group (a
"Group of Persons") shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases, merger, consolidation or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of 40% or more of the
combined voting power of the then outstanding voting stock of Resources, (ii)
during any period of two consecutive years (A) the members of the board of
directors of Resources (the "Board") as of January 1, 1998, (B)
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any director elected thereafter in any annual meeting of the stockholders of
Resources upon the recommendation of the Board, and (C) any other member of the
Board who will be recommended or elected to succeed those Persons described in
subclauses (A) and (B) of this clause (ii) by a majority of such Persons who are
then members of the Board, cease for any reason to constitute collectively a
majority of the Board then in office, (iii) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of the assets of
Resources to any Person or Group of Persons, or (iv) any Person other than
Resources or a wholly owned Subsidiary of Resources shall own or acquire legal
or beneficial ownership of any equity securities of Borrower or any securities
which are convertible into equity securities of Borrower.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with all rules and regulations promulgated with respect thereto.
"Collateral" means all property of any kind which is subject to a Lien in
favor of Lenders (or in favor of Administrative Agent for the benefit of
Lenders) or which, under the terms of any Security Document, is purported to be
subject to such a Lien, in each case granted or created to secure all or part of
the Obligations.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"Consolidated EBITDA" means, for any four-Fiscal Quarter period, the sum of
(1) the Consolidated Net Income of Borrower and its Subsidiaries during such
period, plus (2) all interest expense which was deducted in determining such
Consolidated Net Income for such period, plus (3) all income taxes (including
any franchise taxes to the extent based upon net income) which were deducted in
determining such Consolidated Net Income, plus (4) all depreciation,
amortization (including amortization of good will and debt issue costs) and
other non-cash charges (including any provision for the reduction in the
carrying value of assets recorded in accordance with GAAP) which were deducted
in determining such Consolidated Net Income, minus (5) all non-cash items of
income which were included in determining such Consolidated Net Income.
"Consolidated Indebtedness" means all Indebtedness of Borrower and, without
duplication, all Indebtedness any of its Subsidiaries after eliminating (i) all
intercompany items between Borrower and its Subsidiaries required to be
eliminated in the course of the preparation of Consolidated financial statements
in accordance with GAAP and (ii) any Liability related to any unrealized gains
or losses from a mark to market of any Hedging Contracts.
"Consolidated Net Income" means, for any period, Borrower's and its
Subsidiaries' gross revenues for such period, including any cash dividends or
distributions actually received from any other Person during such period, minus
Borrower's and its Subsidiaries' expenses
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and other proper charges against income (including taxes on income, to the
extent imposed), determined on a Consolidated basis after eliminating earnings
or losses attributable to outstanding minority interests and excluding the net
earnings of any Person other than a Subsidiary in which Borrower or any of its
Subsidiaries has an ownership interest.
"Consolidated Net Worth" means the remainder of all Consolidated assets, as
determined in accordance with GAAP, of Borrower and its Subsidiaries minus the
sum of Borrower's Consolidated liabilities, as determined in accordance with
GAAP, and all outstanding Minority Interests. The effect of any increase or
decrease in net worth in any period as a result of (i) any unrealized gains or
losses from a mark to market of any Hedging Contracts not reflected in the
determination of net income but reflected in the determination of comprehensive
income and (ii) any Excluded Income Tax Accrual shall be excluded in determining
Consolidated Net Worth. "Minority Interests" means the book value of any shares
of stock of any of Borrower's Subsidiaries which shares are owned by Persons
other than Borrower or one of its wholly owned Subsidiaries. "Excluded Income
Tax Accrual" means accrued liabilities in respect of federal or state income
taxes (including state franchise taxes to the extent based on net income) so
long as such tax liabilities are deferred and not then paid or payable as a
result of combined income tax filings with Resources or otherwise.
"Continuation/Conversion Notice" means a written or telephonic request, or
a written confirmation, made by Borrower which meets the requirements of Section
2.3.
"Continue", "Continuation", and "Continued" shall refer to the continuation
pursuant to Section 2.3 hereof of a Eurodollar Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.3 or Article III of one Type of Loan into another Type of
Loan.
"Default" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question, (i) three and three-fourths
percent (3.75%) per annum plus the Adjusted Eurodollar Rate then in effect for
any Eurodollar Loan (up to the end of the applicable Interest Period) or (ii)
two percent (2%) per annum plus the Base Rate for each Base Rate Loan; provided,
however, the Default Rate shall never exceed the Highest Lawful Rate
"Default Rate Period" means (i) any period during which an Event of
Default, other than pursuant to Section 8.1 (a) or (b), is continuing, provided
that such period shall not begin until notice of the commencement of the Default
Rate has been given to Borrower by Administrative Agent upon the instruction by
Majority Lenders and (ii) any period during which any Event of Default pursuant
to Section 8.1 (a) or (b) is continuing unless Borrower has been notified
otherwise by Administrative Agent upon the instruction by Majority Lenders.
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"Disclosure Schedule" means Schedule 2 hereto.
"Distribution" means (a) any dividend or other distribution made by a
Restricted Person on or in respect of any stock, partnership interest, or other
equity interest in such Restricted Person (including any option or warrant to
buy such an equity interest), or (b) any payment made by a Restricted Person to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in such Restricted Person (including any such option or
warrant).
"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" in the Lender Schedule
hereto, or such other office as such Lender may from time to time specify to
Borrower and Administrative Agent; with respect to LC Issuer, the office,
branch, or agency through which it issues Letters of Credit; and, with respect
to Administrative Agent, the office, branch, or agency through which it
administers this Agreement.
"Eligible Transferee" means a Person which either (a) is a Lender, or (b)
is consented to as an Eligible Transferee by Administrative Agent and, so long
as no Default or Event of Default is continuing, by Borrower, which consents in
each case will not be unreasonably withheld (provided that no Person organized
outside the United States may be an Eligible Transferee if Borrower would be
required to pay withholding taxes on interest or principal owed to such Person).
"Environmental Laws" means any and all Laws relating to the environment or
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control that, together with Borrower, are treated as a single employer
under Section 414 of the Code.
"ERISA Plan" means any employee pension benefit plan subject to Title IV of
ERISA maintained by any ERISA Affiliate with respect to which any Restricted
Person has a fixed or contingent liability.
"Eurodollar Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" on the Lender
Schedule hereto (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to Borrower and Administrative Agent.
7
<PAGE>
"Eurodollar Loan" means a Loan that bears interest based upon the Adjusted
Eurodollar Rate.
"Event of Default" has the meaning given to such term in Section 8.1.
"Facility Usage" means, at the time in question, the aggregate amount of
outstanding Revolver Loans and LC Obligations at such time.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Administrative Agent on such day on such transactions as
determined by Administrative Agent.
"Fiscal Quarter" means a three-month period ending on March 31, June 30,
September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Borrower and its
Consolidated Subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the Initial Financial Statements. If any change in any accounting
principle or practice is required by the Financial Accounting Standards Board
(or any such successor) in order for such principle or practice to continue as a
generally accepted accounting principle or practice, all reports and financial
statements required hereunder with respect to Borrower or with respect to
Borrower and its Consolidated Subsidiaries may be prepared in accordance with
such change, but all calculations and determinations to be made hereunder may be
made in accordance with such change only after notice of such change is given to
each Lender and Majority Lenders agree to such change insofar as it affects the
accounting of Borrower or of Borrower and its Consolidated Subsidiaries.
"Guarantors" means All American Pipeline Company, a Texas corporation,
Celeron Gathering Corporation, a Delaware corporation, Celeron Trading &
Transportation Company, a Delaware corporation, and any other Person who has
guaranteed some or all of the Obligations pursuant to a guaranty listed on the
Security Schedule or any other Person who has guaranteed some or all of the
Obligations and who has been accepted by Administrative Agent as a Guarantor or
any Subsidiary of Borrower which now or hereafter executes and delivers a
guaranty to Administrative Agent pursuant to Section 6.17.
8
<PAGE>
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options, swaps,
floors, caps, collars, forward sales or forward purchases involving interest
rates, commodities or commodity prices, equities, currencies, bonds, or indexes
based on any of the foregoing, (b) any option, futures or forward contract
traded on an exchange, and (c) any other derivative agreement or other similar
agreement or arrangement.
"Highest Lawful Rate" means, with respect to each Lender Party to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. All determinations herein of the
Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, shall be made separately for each Lender Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.
"Indebtedness" of any Person means its Liabilities (without duplication) in
any of the following categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
(d) Liabilities (other than reserves for taxes and reserves for contingent
obligations) which (i) would under GAAP be shown on such Person's balance sheet
as a liability and (ii are payable more than one year from the date of creation
or incurrence thereof,
(e) Liabilities arising under Hedging Contracts (on a net basis to the
extent netting is provided for in the applicable Hedging Contact),
(f) Liabilities constituting principal under Capital Leases,
(g) Liabilities arising under conditional sales or other title retention
agreements,
(h) Liabilities owing under direct or indirect guaranties of Liabilities
of any other Person or otherwise constituting obligations to purchase or acquire
or to otherwise protect or insure a creditor against loss in respect of
Liabilities of any other Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to
9
<PAGE>
purchase Liabilities, assets, goods, securities or services), but excluding
endorsements in the ordinary course of business of negotiable instruments in the
course of collection,
(i) Liabilities consisting of an obligation to purchase or redeem
securities or other property, if such Liabilities arises out of or in connection
with the sale or issuance of the same or similar securities or property (for
example, repurchase agreements, mandatorily redeemable preferred stock and
sale/leaseback agreements),
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to banker's acceptances, or
(l) Liabilities with respect to obligations to deliver goods or services
in consideration of advance payments therefor;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred in the ordinary course of business by such Person
on ordinary trade terms to vendors, suppliers, or other Persons providing goods
and services for use by such Person in the ordinary course of its business,
unless and until such Liabilities are outstanding more than 120 days after the
date the respective goods are delivered or the respective services are rendered,
other than Liabilities contested in good faith by appropriate proceedings, if
required, and for which adequate reserves are maintained on the books of such
Person in accordance with GAAP.
"Initial Financial Statements" means (i) the audited Consolidated financial
statements of the Celeron Companies dated as of December 31, 1997, (ii) the
unaudited quarterly Consolidated financial statements of the Celeron Companies
dated as of June 30, 1998 and (iii) pro forma balance sheet of Borrower as of
June 30, 1998.
"Insurance Schedule" means Schedule 4 attached hereto.
"Interest Expense" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between Borrower and its Subsidiaries and all other items required
to be eliminated in the course of the preparation of consolidated financial
statements of Borrower and its Subsidiaries in accordance with GAAP): (a) all
interest and commitment fees in respect of Indebtedness of Borrower or any of
its Subsidiaries (including imputed interest on Capital Lease Obligations) which
are accrued during such period and whether expensed in such period or
capitalized; plus (b) all fees, expenses and charges in respect of letters of
credit issued for the account of Borrower or any of its Subsidiaries, which are
accrued during such period and whether expensed in such period or capitalized.
"Interest Payment Date" means (a) with respect to each Base Rate Loan, each
Quarterly Payment Date, and (b) with respect to each Eurodollar Loan, the last
day of the Interest Period that is applicable thereto and, if such Interest
Period is six, or twelve months in length, the
10
<PAGE>
dates specified by Administrative Agent which are approximately three, six, and
nine months (as appropriate) after such Interest Period begins; provided that
the last Business Day of each calendar month shall also be an Interest Payment
Date for each such Loan so long as any Event of Default exists under Section 8.1
(a) or (b).
"Interest Period" means, with respect to each particular Eurodollar Loan in
a Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two, three, six or twelve months
thereafter, as Borrower may elect in such notice; provided that: (a) any
Interest Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day; (b) any Interest Period which begins on the
last Business Day in a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day in a calendar month; and (c)
notwithstanding the foregoing, any Interest Period for a Revolver Loan that
would otherwise end after the Revolver Maturity Date shall end on the Revolver
Maturity Date.
"Investment" means any investment made, directly or indirectly in any
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or
otherwise, and whether made in cash, by the transfer of property or by any other
means.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LC Application" means any application for a Letter of Credit hereafter
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.13(a).
"LC Issuer" means BankBoston, N.A., in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity.
Administrative Agent may, with the consent of Borrower and the Lender in
question, appoint any Lender hereunder as an LC Issuer in place of or in
addition to BankBoston, N.A.
"LC Obligations" means, at the time in question, the sum of all Matured LC
Obligations plus the maximum amounts which LC Issuer might then or thereafter be
called upon to advance under all Letters of Credit then outstanding.
"Lease Rentals" means, with respect to any period, the sum of the rental
and other obligations required to be paid during such period by Borrower or any
Subsidiary of Borrower
11
<PAGE>
as lessee under all leases of real or personal property (other than Capital
Leases), excluding any amount required to be paid by the lessee (whether or not
therein designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments, water rates and similar charges,
provisions that, if at the date of determination, any such rental or other
obligations are contingent or not otherwise definitely determinable by terms of
the related lease, the amount of such obligations (i) shall be assumed to be
equal to the amount of such obligations for the period of 12 consecutive
calendar months immediately preceding the date of determination or (ii) if the
related lease was not in effect during such preceding 12-month period, shall be
the amount estimated by a senior financial officer of the Borrower on a
reasonable basis and in good faith.
"Lender Parties" means Administrative Agent, Syndication Agent,
Documentation Agent, LC Issuer, and all Lenders.
"Lender Schedule" means Schedule 1 hereto.
"Lenders" means each signatory hereto (other than Borrower and any
Restricted Person that is a party hereto), including ING (U.S.) Capital
Corporation in its capacity as a Lender hereunder rather than as Administrative
Agent, and the successors of each such party as holder of a Note.
"Letter of Credit" means any letter of credit issued by LC Issuer hereunder
at the application of Borrower.
"Letter of Credit Fee Rate" means, on any day, the rate per annum set forth
below based on the Applicable Leverage Level on such date.
Applicable Leverage Level Letter of Credit Fee Rate
--------------------------------------------------------
Level I 1.625%
--------------------------------------------------------
Level II 1.375%
--------------------------------------------------------
Level III 1.125%
"Liabilities" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Lien" means, with respect to any property or assets, any right or interest
therein of a creditor to secure Liabilities owed to it or any other arrangement
with such creditor which provides for the payment of such Liabilities out of
such property or assets or which allows such creditor to have such Liabilities
satisfied out of such property or assets prior to the general creditors of any
owner thereof, including any lien, mortgage, security interest, pledge, deposit,
production payment, rights of a vendor under any title retention or conditional
sale agreement or
12
<PAGE>
lease substantially equivalent thereto, tax lien, mechanic's or materialman's
lien, or any other charge or encumbrance for security purposes, whether arising
by Law or agreement or otherwise, but excluding any right of offset which arises
without agreement in the ordinary course of business. "Lien" also means any
filed financing statement, any registration of a pledge (such as with an issuer
of uncertificated securities), or any other arrangement or action which would
serve to perfect a Lien described in the preceding sentence, regardless of
whether such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"Loans" means all Revolver Loans and Term Loans.
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Letters of Credit, the LC Applications, the Hedging Contracts described in
Section 2.14, and all other agreements, certificates, documents, instruments and
writings at any time delivered in connection herewith or therewith (exclusive of
term sheets and commitment letters).
"Majority Lenders" means Lenders whose aggregate Percentage Shares equal or
exceed sixty-six and two-thirds percent (66 2/3%).
"Material Adverse Change" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Borrower's Consolidated financial
condition, (b) Borrower's Consolidated operations, properties or prospects,
considered as a whole, (c) Borrower's ability to timely pay the Obligations, or
(d) the enforceability of the material terms of any Loan Document.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts or
demands for payment drawn or made under or purported to be under any Letter of
Credit and all other amounts due and owing to LC Issuer under any LC Application
for any Letter of Credit, to the extent the same have not been repaid to LC
Issuer (with the proceeds of Loans or otherwise).
"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which LC Issuer might then or thereafter be called upon to
advance under all Letters of Credit then outstanding.
"Moody's" means Moody's Investor Service, Inc., or its successor.
"Notes" means all Revolver Notes and all Term Notes.
"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Lender Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
Obligations.
"Percentage Share" means, with respect to any Lender, the percentage
obtained by dividing (i) the sum of the unpaid principal balance of such
Lender's Term Loans at the time in question plus such Lender's Revolver
Commitment, by (ii) the sum of the aggregate unpaid principal balance of all
Term Loans at such time plus the total Revolver Commitment.
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<PAGE>
"Permitted Investments" means (a) Cash Equivalents, (b) Investments
described in the Disclosure Schedule, and (c) Investments by Borrower or any of
its Subsidiaries in any wholly owned Subsidiary of Borrower which is a Guarantor
and by any Subsidiary of Borrower in Borrower.
"Permitted Lien" has the meaning given to such term in Section 7.2.
"Person" means an individual, corporation, partnership, limited liability
company, association, joint stock company, trust or trustee thereof, estate or
executor thereof, unincorporated organization or joint venture, Tribunal, or any
other legally recognizable entity.
"Quarterly Payment Date" means the first day of each April, July, October
and January.
"Rating Agency" means either S&P or Moody's.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (a) any category of liabilities
which includes deposits by reference to which the Adjusted Eurodollar Rate is to
be determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Resources" means Plains Resources Inc., a Delaware corporation.
"Resources Credit Agreement" means that certain Fourth Amended and Restated
Credit Agreement dated as of May 22, 1998 by and among Resources, ING (U.S.)
Capital Corporation, as agent, and the lenders party thereto, as such credit
agreement may be amended, modified or restated from time to time, and each other
credit agreement to which Resources is a party replacing such credit agreement
in whole or in part.
"Restricted Person" means any of Borrower and each Subsidiary of Borrower.
"Revolver Commitment" means, (i) from the date hereof to and including
September 30, 1998, $100,000,000, and (ii) thereafter, from and including the
first day of each Fiscal Quarter to and including the last day of such Fiscal
Quarter, an amount equal to the Revolver Commitment on the last day of the
immediately preceding Fiscal Quarter minus the Revolver Reduction Amount; in
each case of the preceding clauses (i) and (ii), subject to reductions pursuant
to Section 2.7. Subject to change as provided in Section 2.7, the Revolver
Commitment shall be the following amounts for the following periods:
14
<PAGE>
Period Amount
------ ------
On or Prior to September 30, 1998 $100,000,000.00
October 1, 1998 through December 31, 1998 $ 95,833,379.41
January 1, 1999 through March 31, 1999 $ 91,666,710.74
April 1, 1999 through June 30, 1999 $ 87,500,042.07
July 1, 1999 through September 30, 1999 $ 83,333,333.40
October 1, 1999 through December 31, 1999 $ 79,166,666.73
January 1, 2000 through March 31, 2000 $ 75,000,000.06
April 1, 2000 through June 30, 2000 $ 70,833,333.39
July 1, 2000 through September 30, 2000 $ 66,666,666.72
October 1, 2000 through December 31, 2000 $ 62,500,000.05
January 1, 2001 through March 31, 2001 $ 58,333,333.38
April 1, 2001 through June 30, 2001 $ 54,166,666.71
July 1, 2001 through September 30, 2001 $ 50,000,000.04
October 1, 2001 through December 31, 2001 $ 45,833,333.37
January 1, 2002 through March 31, 2002 $ 41,666,666.67
April 1, 2002 through June 30, 2002 $ 37,500,000.03
July 1, 2002 through September 30, 2002 $ 33,333,333.36
October 1, 2002 through December 31, 2002 $ 29,166,666.69
January 1, 2003 through March 31, 2003 $ 25,000,000.02
April 1, 2003 through June 30, 2003 $ 20,833,333.35
July 1, 2003 through September 30, 2003 $ 16,666,666.68
October 1, 2003 through December 31, 2003 $ 12,500,000.01
January 1, 2004 through March 31, 2004 $ 8,333,333.34
April 1, 2004 through Revolver Maturity Date $ 4,166,666.67
Each Lender's Revolver Commitment shall initially be the amount set forth on the
Lender Schedule and thereafter such Lender's Revolver Commitment shall be
reduced concurrently with any reduction in the Revolver Commitment as provided
in this Agreement by an amount equal to the product of (i) such Lender's
Percentage Share and (ii) the amount of such reduction in the Revolver
Commitment.
"Revolver Commitment Period" means the period from and including the date
hereof until the Revolver Maturity Date (or, if earlier, the day on which the
obligation of Lenders to make Loans hereunder and the obligation of LC Issuer to
issue Letters of Credit hereunder has terminated or the day on which the
Revolver Notes first become due and payable in full).
"Revolver Eurodollar Rate Margin" means (i) on each day from the date
hereof until the date the Applicable Leverage Level is determined following the
Fiscal Quarter ending September 30, 1998, one and three-quarters percent
(1.75%), and (ii) on each day after such date the percent per annum set forth
below based on the Applicable Leverage Level in effect on such date.
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Applicable Leverage Level Revolver Eurodollar Rate Margin
-------------------------------------------------------------
Level I 1.75%
-------------------------------------------------------------
Level II 1.50%
-------------------------------------------------------------
Level III 1.25%
-------------------------------------------------------------
Changes in the applicable Revolver Eurodollar Rate Margin will occur
automatically without prior notice as changes in the Applicable Leverage Level
occur. Administrative Agent will give notice promptly to Borrower and the
Revolver Lenders of changes in the Revolver Eurodollar Rate Margin.
"Revolver Lender" means each holder of a Revolver Note.
"Revolver Loan" has the meaning given such term in Section 2.1(a).
"Revolver Maturity Date" means June 30, 2004.
"Revolver Note" has the meaning given such term in Section 2.1(a).
"Revolver Percentage Share" means, with respect to any Revolver Lender, the
Revolver Percentage Share set forth opposite such Revolver Lender's name on the
Lender Schedule.
"Revolver Reduction Amount" means $4,166,666.67 or such other amount as
provided in Section 2.7(a).
"S&P" means Standard & Poor's Ratings Group (a division of McGraw Hill,
Inc.) or its successor.
"Security Documents" means the instruments listed in the Security Schedule
and all other security agreements, deeds of trust, mortgages, chattel mortgages,
pledges, guaranties, financing statements, continuation statements, extension
agreements and other agreements or instruments now, heretofore, or hereafter
delivered by any Restricted Person to Administrative Agent in connection with
this Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Restricted
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 3 hereto.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture, or other
business or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries) controlled or owned by more than
fifty percent by such Person.
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<PAGE>
"Term Lender" means each holder of a Term Note.
"Term Loan" has the meaning given such term in Section 2.1(b).
"Term Loan Base Rate Margin" means (i) on each day from the date hereof
until the date the Applicable Leverage Level is determined following the Fiscal
Quarter ending on September 30, 1998, one and one fourth percent (1.25%) per
annum and (ii) on any date on or after such date, the percent per annum set
forth below based on the Applicable Leverage Level in effect on such date and
Applicable Rating Level in effect on such date:
Applicable Applicable Rating Level
Leverage Level Level A Level B
-------------------------------------------
Level I 1.00% 1.25%
-------------------------------------------
Level II .75% 1.00%
-------------------------------------------
Level III .50% .75%
Changes in the applicable Term Loan Base Rate Margin will occur automatically
without prior notice as changes in the Applicable Leverage Level or Applicable
Rating Level occur. Administrative Agent will give notice promptly to Borrower
and the Term Lenders of changes in the Term Loan Base Rate Margin.
"Term Loan Eurodollar Rate Margin" means, (i) on each day from the date
hereof until the date the Applicable Leverage Level is determined following the
Fiscal Quarter ending on September 30, 1998, three percent (3%) per annum, and
(ii) on any date on or after such date, the percent per annum set forth below
based on the Applicable Leverage Level in effect on such date and Applicable
Rating Level in effect on such date:
Applicable Applicable Rating Level
Leverage Level Level A Level B
-------------------------------------------
Level I 2.75% 3.00%
-------------------------------------------
Level II 2.50% 2.75%
-------------------------------------------
Level III 2.25% 2.50%
Changes in the applicable Term Loan Eurodollar Rate Margin will occur
automatically without prior notice as changes in the Applicable Leverage Level
or Applicable Rating Level occur. Administrative Agent will give notice promptly
to Borrower and the Term Lenders of changes in the Term Loan Eurodollar Rate
Margin.
"Term Note" has the meaning given such term in Section 2.1(b).
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<PAGE>
"Termination Event" means (a) the occurrence with respect to any ERISA Plan
of (i) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or
(ii) any other reportable event described in Section 4043(c) of ERISA other than
a reportable event not subject to the provision for 30-day notice to the Pension
Benefit Guaranty Corporation pursuant to a waiver by such corporation under
Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate from an
ERISA Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent
to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under
Section 4042 of ERISA, or (e) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan.
"Tribunal" means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency or instrumentality of
the United States of America or any state, province, commonwealth, nation,
territory, possession, county, parish, town, township, village or municipality,
whether now or hereafter constituted or existing.
"Type" means, with respect to any Loans, the characterization of such Loans
as either Base Rate Loans or Eurodollar Loans.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which definitions
are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement," "this instrument," "herein," "hereof," "hereby," "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
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Section 1.5. Calculations and Determinations. All calculations under the
Loan Documents of interest chargeable with respect to Eurodollar Loans and of
fees shall be made on the basis of actual days elapsed (including the first day
but excluding the last) and a year of 360 days. All other calculations of
interest made under the Loan Documents shall be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of 365 or
366 days, as appropriate. Each determination by a Lender Party of amounts to be
paid under Article III or any other matters which are to be determined hereunder
by a Lender Party (such as any Eurodollar Rate, Adjusted Eurodollar Rate,
Business Day, Interest Period, or Reserve Requirement) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Majority Lenders otherwise consent all financial statements and
reports furnished to any Lender Party hereunder shall be prepared and all
financial computations and determinations pursuant hereto shall be made in
accordance with GAAP.
ARTICLE II - The Loans and Letters of Credit
Section 2.1. Commitments to Lend; Notes.
(a) Revolver Loans. Subject to the terms and conditions hereof, each
Revolver Lender agrees to make loans to Borrower (herein called such Lender's
"Revolver Loans") upon Borrower's request from time to time during the Revolver
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Revolver Lenders are requested to make Revolver Loans of the same Type in
accordance with their respective Revolver Percentage Shares and as part of the
same Borrowing, (b) after giving effect to such Revolver Loans, the Facility
Usage does not exceed the Revolver Commitment determined as of the date on which
the requested Revolver Loans are to be made and (c) after giving effect to such
Revolver Loans the Revolver Loans by each Revolver Lender plus the existing LC
Obligations of such Revolver Lender does not exceed such Lender's Revolver
Commitment. The aggregate amount of all Revolver Loans in any Borrowing must be
greater than or equal to $2,000,000 or any higher integral multiple of $250,000
or must equal the remaining availability under the Revolver Commitment. The
obligation of Borrower to repay to each Revolver Lender the aggregate amount of
all Revolver Loans made by such Revolver Lender, together with interest accruing
in connection therewith, shall be evidenced by a single promissory note (herein
called such Lender's "Revolver Note") made by Borrower payable to the order of
such Revolver Lender in the form of Exhibit A-1 with appropriate insertions.
The amount of principal owing on any Revolver Lender's Revolver Note at any
given time shall be the aggregate amount of all Revolver Loans theretofore made
by such Revolver Lender minus all payments of principal theretofore received by
such Revolver Lender on such Revolver Note. Interest on each Revolver Note
shall accrue and be due and payable as provided herein and therein. Each
Revolver Note shall be due and payable as provided herein and therein, and shall
be due and payable in full on the Revolver Maturity Date. Subject to the terms
and conditions of this Agreement, Borrower may borrow, repay, and reborrow under
this Section 2.1(a). Borrower may have no more than seven Borrowings of
Eurodollar Loans outstanding at any time.
(b) Term Loans. Subject to the terms and conditions hereof, each Term
Lender agrees to make a single advance to Borrower (herein called such Lender's
"Term Loan") upon
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Borrower's request on or before September 30, 1998, provided that (a) such Term
Loan does not exceed such Term Lender's Term Loan amount set forth on the Lender
Schedule and (b) the aggregate amount of all Term Loans does not exceed
$225,000,000. Portions of each Lender's Term Loan may from time to time be
designated as a Base Rate Loan or Eurodollar Loan as provided herein. The
obligation of Borrower to repay to each Term Lender the amount of the Term Loan
made by such Term Lender, together with interest accruing in connection
therewith, shall be evidenced by a single promissory note (herein called such
Term Lender's "Term Note") made by Borrower payable to the order of such Term
Lender in the form of Exhibit A-2 with appropriate insertions. The amount of
principal owing on any Term Lender's Term Note at any given time shall be the
amount of such Term Lender's Term Loan minus all payments of principal
theretofore received by such Term Lender on such Term Note. Interest on each
Term Note shall accrue and be due and payable as provided herein and therein.
Each Term Note shall be due and payable as provided herein and therein, and
shall be due and payable in full on June 30, 2005. No portion of any Term Loan
which has been repaid may be reborrowed.
Section 2.2. Requests for Revolver Loans. Borrower must give to
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of any requested Borrowing of Revolver Loans to be funded by Revolver
Lenders. Each such notice constitutes a "Borrowing Notice" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of new Base
Rate Loans and the date on which such Base Rate Loans are to be advanced,
or (ii) the aggregate amount of any such Borrowing of new Eurodollar Loans,
the date on which such Eurodollar Loans are to be advanced (which shall be
the first day of the Interest Period which is to apply thereto), and the
length of the applicable Interest Period; and
(b) be received by Administrative Agent not later than 11:00 a.m., New
York, New York time, on (i) the day on which any such Base Rate Loans are
to be made, or (ii) the third Business Day preceding the day on which any
such Eurodollar Loans are to be made.
Each such written request or confirmation must be made in the form and substance
of the "Borrowing Notice" attached hereto as Exhibit B, duly completed. Each
such telephonic request shall be deemed a representation, warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in such written confirmation. Upon receipt of any such Borrowing
Notice, Administrative Agent shall give each Revolver Lender prompt notice of
the terms thereof. If all conditions precedent to such new Revolver Loans have
been met, each Revolver Lender will on the date requested promptly remit to
Administrative Agent at Administrative Agent's office in New York, New York the
amount of such Revolver Lender's new Revolver Loan in immediately available
funds, and upon receipt of such funds, unless to its actual knowledge any
conditions precedent to such Revolver Loans have been neither met nor waived as
provided herein, Administrative Agent shall promptly make such Revolver Loans
available to Borrower. Unless Administrative Agent shall have received prompt
notice from a Revolver Lender that such Revolver Lender will not make available
to Administrative Agent such Revolver Lender's new Revolver Loan, Administrative
Agent may in its discretion assume that such Revolver Lender has made such
Revolver Loan available to Administrative Agent in
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accordance with this section, and Administrative Agent may if it chooses, in
reliance upon such assumption, make such Revolver Loan available to Borrower. If
and to the extent such Revolver Lender shall not so make its new Revolver Loan
available to Administrative Agent, such Lender and Borrower severally agree to
pay or repay to Administrative Agent within three days after demand the amount
of such Revolver Loan together with interest thereon, for each day from the date
such amount was made available to Borrower until the date such amount is paid or
repaid to Administrative Agent, with interest at (i) the Federal Funds Rate, if
such Lender is making such payment and (ii) the interest rate applicable at the
time to the other new Revolver Loans made on such date, if Borrower is making
such repayment. If neither such Revolver Lender nor Borrower pays or repays to
Administrative Agent such amount within such three-day period, Administrative
Agent shall, be entitled to recover from Borrower, on demand in lieu of the
interest provided for in the preceding sentence, interest thereon at the Default
Rate, calculated from the date such amount was made available to Borrower. The
failure of any Revolver Lender to make any new Revolver Loan to be made by it
hereunder shall not relieve any other Revolver Lender of its obligation
hereunder, if any, to make its new Revolver Loan, but no Revolver Lender shall
be responsible for the failure of any other Revolver Lender to make any new
Revolver Loan to be made by such other Revolver Lender.
Section 2.3. Continuations and Conversions of Existing Loans. Borrower
may make the following elections with respect to Revolver Loans or Term Loans
already outstanding: to Convert, in whole or in part, Base Rate Loans to
Eurodollar Loans, to Convert, in whole or in part, Eurodollar Loans to Base Rate
Loans on the last day of the Interest Period applicable thereto, and to
Continue, in whole or in part, Eurodollar Loans beyond the expiration of such
Interest Period by designating a new Interest Period to take effect at the time
of such expiration. In making such elections, Borrower may combine existing
Loans made pursuant to separate Borrowings into one new Borrowing or divide
existing Loans made pursuant to one Borrowing into separate new Borrowings,
provided that (i) Borrower may have no more than seven Borrowings of Eurodollar
Loans outstanding at any time and (ii) no combinations may be made between
Borrowings constituting Revolver Loans on the one hand and Borrowings
constituting Term Loans on the other hand. To make any such election, Borrower
must give to Administrative Agent written notice (or telephonic notice promptly
confirmed in writing) of any such Conversion or Continuation of existing Loans,
with a separate notice given for each new Borrowing. Each such notice
constitutes a "Continuation/Conversion Notice" hereunder and must:
(a) specify the existing Loans which are to be Continued or
Converted;
(b) specify (i) the aggregate amount of any Borrowing of Base Rate
Loans into which such existing Loans are to be Continued or Converted and
the date on which such Continuation or Conversion is to occur, or (ii) the
aggregate amount of any Borrowing of Eurodollar Loans into which such
existing Loans are to be Continued or Converted, the date on which such
Continuation or Conversion is to occur (which shall be the first day of the
Interest Period which is to apply to such Eurodollar Loans), and the length
of the applicable Interest Period; and
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(c) be received by Administrative Agent not later than 11:00 a.m.,
New York, New York time, on (i) the day on which any such Continuation or
Conversion to Base Rate Loans is to occur, or (ii) the third Business Day
preceding the day on which any such Continuation or Conversion to
Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and substance
of the "Continuation/Conversion Notice" attached hereto as Exhibit C, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Continuation/Conversion Notice, Administrative Agent shall give each Lender
prompt notice of the terms thereof. Each Continuation/Conversion Notice shall
be irrevocable and binding on Borrower. During the continuance of any Default,
Borrower may not make any election to Convert existing Loans into Eurodollar
Loans or Continue existing Loans as Eurodollar Loans beyond the expiration of
their respective and corresponding Interest Period then in effect. If (due to
the existence of a Default or for any other reason) Borrower fails to timely and
properly give any Continuation/Conversion Notice with respect to a Borrowing of
existing Eurodollar Loans at least three days prior to the end of the Interest
Period applicable thereto, such Eurodollar Loans, to the extent not prepaid at
the end of such Interest Period, shall automatically be Converted into Base Rate
Loans at the end of such Interest Period. No new funds shall be repaid by
Borrower or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose; such
Continuations and Conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
Section 2.4. Use of Proceeds. Borrower shall use (i) all Term Loans to
fund the transactions under the Acquisition Documents and (ii) all Revolver
Loans fund the transactions under the Acquisition Documents, to finance capital
expenditures, to pay reimbursement obligations of Letters of Credit, to provide
working capital for operations and for other general business purposes.
Borrower shall use all Letters of Credit for its and its Subsidiaries' general
corporate purposes. In no event shall the funds from any Loan or any Letter of
Credit be used directly or indirectly by any Person for personal, family,
household or agricultural purposes or for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any "margin stock"
(as such term is defined in Regulation U promulgated by the Board of Governors
of the Federal Reserve System) or to extend credit to others directly or
indirectly for the purpose of purchasing or carrying any such margin stock.
Borrower represents and warrants that Borrower is not engaged principally, or as
one of Borrower's important activities, in the business of extending credit to
others for the purpose of purchasing or carrying such margin stock.
Section 2.5. Interest Rates and Fees.
(a) Revolver Interest Rates. Each Revolver Loan shall bear interest as
follows: (i) unless the Default Rate shall apply, (A) each Base Rate Loan shall
bear interest on each day outstanding at the Base Rate in effect on such day,
and (B) each Eurodollar Loan shall bear interest on each day during the related
Interest Period at the related Adjusted Eurodollar Rate plus the Revolver
Eurodollar Rate Margin in effect on such day, and (ii) during a Default Rate
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Period, all Revolver Loans shall bear interest on each day outstanding at the
Default Rate. If an Event of Default based upon Section 8.1(a), Section 8.1(b)
or, with respect to Borrower, based upon Section 8.1(i)(i), (i)(ii) or (i)(iii)
exists and the Revolver Loans are not bearing interest at the Default Rate, the
past due principal and past due interest shall bear interest on each day
outstanding at the Default Rate. The interest rate shall change whenever the
applicable Base Rate, the Adjusted Eurodollar Rate or the Revolver Eurodollar
Rate Margin changes. In no event shall the interest rate on any Revolver Loan
exceed the Highest Lawful Rate.
(b) Term Loan Interest Rates. Each Term Loan shall bear interest as
follows: (i) unless the Default Rate shall apply, (A) each Base Rate Loan
shall bear interest on each day outstanding at the Base Rate plus the Term Loan
Base Rate Margin in effect on such day, and (B) each Eurodollar Loan shall bear
interest on each day during the related Interest Period at the related Adjusted
Eurodollar Rate plus the Term Loan Eurodollar Rate Margin in effect on such day
and (ii) during a Default Rate Period, all Term Loans shall bear interest on
each day outstanding at the Default Rate. If an Event of Default based upon
Section 8.1(a) or Section 8.1(b) or, with respect to Borrower, based upon
Section 8.1(i)(i), (i)(ii) or (i)(iii) exists and the Term Loans are not bearing
interest at the Default Rate, the past due principal and past due interest shall
bear interest on each day outstanding at the Default Rate. The interest rate
shall change whenever the applicable Base Rate, Term Loan Base Rate Margin,
Adjusted Eurodollar Rate, or Term Loan Eurodollar Rate Margin changes. In no
event shall the interest rate on any Term Loan exceed the Highest Lawful Rate.
(c) Revolver Commitment Fees. In consideration of each Revolver Lender's
commitment to make Revolver Loans, Borrower will pay to Administrative Agent for
the account of each Revolver Lender a commitment fee determined on a daily basis
by applying a rate of one-half of one percent (.50%) per annum to such Revolver
Lender's Revolver Percentage Share of the unused portion of the Revolver
Commitment on each day during the Revolver Commitment Period, determined for
each such day by deducting from the amount of the Revolver Commitment at the end
of such day the Facility Usage. This commitment fee shall be due and payable in
arrears on each Quarterly Payment Date and at the end of the Revolver Commitment
Period. Borrower shall have the right from time to time to permanently reduce
the Revolver Commitment, provided that (i) notice of such reduction is given not
less than 2 Business Days prior to such reduction, (ii) the resulting Revolver
Commitment is not less than the Facility Usage and (iii) each partial reduction
shall be in an amount at least equal to $500,000 and in multiples of $100,000 in
excess thereof.
(d) Administrative Agent's Fees. In addition to all other amounts due to
Administrative Agent under the Loan Documents, Borrower will pay fees to
Administrative Agent as described in a letter agreement dated June 2, 1998,
between Administrative Agent and Borrower.
Section 2.6. Optional Prepayments.
(a) Revolver Loans. Borrower may, upon five Business Days' notice to
Administrative Agent (and Administrative Agent will promptly give notice to the
other Lenders) from time to time and without premium or penalty prepay the
Revolver Loans, in whole or in part, so long as the aggregate amounts of all
partial prepayments of principal on the Revolver Loans equals $2,000,000 or any
higher integral multiple of $250,000, and so long as Borrower does not
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make any prepayments which would reduce the unpaid principal balance of the
Revolver Loans to less than $100,000 without first either (i) terminating this
Agreement or (ii) providing assurance satisfactory to Administrative Agent in
its discretion that Revolver Lenders' legal rights under the Loan Documents are
in no way affected by such reduction. Upon receipt of any such notice,
Administrative Agent shall give each Revolver Lender prompt notice of the terms
thereof.
(b) Term Loans. Borrower may, upon five Business Days' notice to each
Term Lender and, if applicable, with the payment of the prepayment premium set
forth below, prepay the Term Loans, in whole or in part, so long as the
aggregate of amounts of all partial prepayments of principal on the Term Loans
equals $5,000,000 or any higher integral multiple of $1,000,000. Borrower shall
pay to Administrative Agent, for the account of each Term Lender, a prepayment
premium equal to (x) if such prepayment is made prior to December 31, 1998, one
percent (1%) of the amount of principal so prepaid by Borrower; or (y) if such
prepayment is made on or after December 31, 1998 and prior to June 30, 1999,
one-half of one percent (.50%) of the amount of principal prepaid by Borrower.
Any prepayment on the Term Loans made by Borrower in accordance with this
Section 2.6(b) on or after June 30, 1999 shall not be subject to any prepayment
premium.
(c) Interest on Prepayment. Each prepayment of principal under Section
2.6(a) or 2.6(b) shall be accompanied by all interest then accrued and unpaid on
the principal so prepaid. Any principal or interest prepaid pursuant to Section
2.6(a) or 2.6(b) shall be in addition to, and not in lieu of, all payments
otherwise required to be paid under the Loan Documents at the time of such
prepayment.
Section 2.7. Mandatory Prepayments.
(a) Without limiting the requirements of Section 7.5 hereof regarding the
consent of Majority Lenders to sales of property by Restricted Persons which are
not permitted by Section 7.5, the proceeds of any sale of property (net of all
reasonable costs and expenses, but excluding proceeds consisting of tangible
property to be used in the business of Restricted Persons) by any Restricted
Person (other than a sale of property permitted under Section 7.5 hereof) shall
be placed in a collateral account under the control of Administrative Agent in a
manner satisfactory to Administrative Agent immediately upon such Restricted
Person's receipt of such proceeds and maintained therein for a period of ninety
(90) days following the date of receipt thereof in cash (in this Section 2.7(a)
referred to as the "Collateral Period"). If any consideration consists of an
instrument or security, the Collateral Period shall, with respect to each amount
of cash received in respect thereof, continue until ninety (90) days following
such Restricted Person's receipt of such cash unless, pursuant to the following
sentence, an approved investment included such cash; any cash in a collateral
account may be invested in Cash Equivalents designated by Borrower. During each
Collateral Period, Borrower may propose to invest such proceeds in other
property subject to the approval of Majority Lenders, and shall thereafter
invest such proceeds in such property so approved by Majority Lenders. At the
end of each Collateral Period or, if an investment is so proposed and approved
during such Collateral Period, within one hundred-eighty (180) days after such
proposed investment has been so approved by Majority Lenders, any such proceeds
which have not been so invested by Borrower shall be applied pro rata to the
reduction of the outstanding principal balance of
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the Term Loans and the Revolver Loans at such time, and the Revolver Commitment
shall be reduced by an amount equal to the prepayment applied to the Revolver
Loans. Thereafter, the Revolver Reduction Amount shall equal the quotient of (i)
the Revolver Commitment at the time of such application minus the amount of such
application allocated to the Revolver Loan divided by (ii) the number of Fiscal
Quarters remaining until the Revolver Maturity Date.
(b) If at any time the Facility Usage exceeds the Revolver Commitment
(whether due to a reduction in the Revolver Commitment in accordance with this
Agreement, or otherwise), Borrower shall immediately upon demand prepay the
principal of the Revolver Loans in an amount at least equal to such excess. Each
prepayment of principal under this section shall be accompanied by all interest
then accrued and unpaid on the principal so prepaid. Any principal or interest
prepaid pursuant to this section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time
of such prepayment.
Section 2.8. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may during the Revolver Commitment Period request LC Issuer to
issue, amend, or extend the expiration date of, one or more Letters of Credit,
provided that, after taking such Letter of Credit into account:
(a) the Facility Usage does not exceed the Revolver Commitment at such
time;
(b) the aggregate amount of LC Obligations at such time does not
exceed $30,000,000;
(c) the expiration date of such Letter of Credit is prior to the
earlier of (i) one (1) year after the date of issuance of such Letter of
Credit or (ii) the end of the Revolver Commitment Period;
(d) such Letter of Credit is to be used for general corporate purposes
of Borrower or any of its Subsidiaries and is not directly or indirectly
used to assure payment of or otherwise support any Indebtedness of any
Person, except Indebtedness of a Restricted Person;
(e) the issuance of such Letter of Credit will be in compliance with
all applicable governmental restrictions, policies, and guidelines and will
not subject LC Issuer to any cost which is not reimbursable under Article
III;
(f) the form and terms of such Letter of Credit are acceptable to LC
Issuer in its sole and absolute discretion; and
(g) all other conditions in this Agreement to the issuance of such
Letter of Credit have been satisfied.
LC Issuer will honor any such request if the foregoing conditions (a) through
(g) (in the following Section 2.9 called the "LC Conditions") have been met as
of the date of issuance, amendment, or extension of the expiration, of such
Letter of Credit.
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Section 2.9. Requesting Letters of Credit. Borrower must make written
application for any Letter of Credit at least two Business Days before the date
on which Borrower desires for LC Issuer to issue such Letter of Credit. By
making any such written application, unless otherwise expressly stated therein,
Borrower shall be deemed to have represented and warranted that the LC
Conditions described in Section 2.8 will be met as of the date of issuance of
such Letter of Credit. Each such written application for a Letter of Credit
must be made in writing in the form and substance of Exhibit G, the terms and
provisions of which are hereby incorporated herein by reference (or in such
other form as may mutually be agreed upon by LC Issuer and Borrower). If all LC
Conditions are met as described in Section 2.8 on any Business Day before 11:00
a.m, New York, New York time, LC Issuer will issue such Letter of Credit on the
same Business Day at LC Issuer's office in Boston, Massachusetts. If the LC
Conditions are met as described in Section 2.8 on any Business Day on or after
11:00 a.m., New York, New York time, LC Issuer will issue such Letter of Credit
on the next succeeding Business Day at LC Issuer's office in Boston,
Massachusetts. If any provisions of any LC Application conflict with any
provisions of this Agreement, the provisions of this Agreement shall govern and
control.
Section 2.10. Reimbursement and Participations.
(a) Reimbursement by Borrower. Each Matured LC Obligation shall
constitute a loan by LC Issuer to Borrower. Borrower promises to pay to LC
Issuer, or to LC Issuer's order, on demand, the full amount of each Matured LC
Obligation, together with interest thereon (i) at the Base Rate to and
including the second Business Day after the Matured LC Obligation is incurred
and (ii) at the Default Rate on each day thereafter.
(b) Letter of Credit Advances. If the beneficiary of any Letter of Credit
makes a draft or other demand for payment thereunder then Borrower may, during
the interval between the making thereof and the honoring thereof by LC Issuer,
request Revolver Lenders to make Revolver Loans to Borrower in the amount of
such draft or demand, which Revolver Loans shall be made concurrently with LC
Issuer's payment of such draft or demand and shall be immediately used by LC
Issuer to repay the amount of the resulting Matured LC Obligation. Such a
request by Borrower shall be made in compliance with all of the provisions
hereof, provided that for the purposes of the first sentence of Section 2.1(a),
the amount of such Revolver Loans shall be considered, but the amount of the
Matured LC Obligation to be concurrently paid by such Revolver Loans shall not
be considered.
(c) Participation by Revolver Lenders. LC Issuer irrevocably agrees to
grant and hereby grants to each Revolver Lender, and -- to induce LC Issuer to
issue Letters of Credit hereunder -- each Revolver Lender irrevocably agrees to
accept and purchase and hereby accepts and purchases from LC Issuer, on the
terms and conditions hereinafter stated and for such Revolver Lender's own
account and risk an undivided interest equal to such Revolver Lender's Revolver
Percentage Share of LC Issuer's obligations and rights under each Letter of
Credit issued hereunder and the amount of each Matured LC Obligation paid by LC
Issuer thereunder. Each Revolver Lender unconditionally and irrevocably agrees
with LC Issuer that, if a Matured LC Obligation is paid under any Letter of
Credit for which LC Issuer is not reimbursed in full by Borrower in accordance
with the terms of this Agreement and the related LC Application (including any
reimbursement by means of concurrent Loans or by the application of LC
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Collateral), such Revolver Lender shall (in all circumstances and without set-
off or counterclaim) pay to LC Issuer on demand, in immediately available funds
at LC Issuer's address for notices hereunder, such Lender's Revolver Percentage
Share of such Matured LC Obligation (or any portion thereof which has not been
reimbursed by Borrower). Each Revolver Lender's obligation to pay LC Issuer
pursuant to the terms of this subsection is irrevocable and unconditional. If
any amount required to be paid by any Revolver Lender to LC Issuer pursuant to
this subsection is paid by such Revolver Lender to LC Issuer within three
Business Days after the date such payment is due, LC Issuer shall in addition to
such amount be entitled to recover from such Revolver Lender, on demand,
interest thereon calculated from such due date at the Federal Funds Rate. If
any amount required to be paid by any Revolver Lender to LC Issuer pursuant to
this subsection is not paid by such Revolver Lender to LC Issuer within three
Business Days after the date such payment is due, LC Issuer shall in addition to
such amount be entitled to recover from such Revolver Lender, on demand,
interest thereon calculated from such due date at the Base Rate.
(d) Distributions to Participants. Whenever LC Issuer has in accordance
with this section received from any Revolver Lender payment of such Lender's
Revolver Percentage Share of any Matured LC Obligation, if LC Issuer thereafter
receives any payment of such Matured LC Obligation or any payment of interest
thereon (whether directly from Borrower or by application of LC Collateral or
otherwise, and excluding only interest for any period prior to LC Issuer's
demand that such Revolver Lender make such payment of its Revolver Percentage
Share), LC Issuer will distribute to such Lender its Revolver Percentage Share
of the amounts so received by LC Issuer; provided, however, that if any such
payment received by LC Issuer must thereafter be returned by LC Issuer, such
Revolver Lender shall return to LC Issuer the portion thereof which LC Issuer
has previously distributed to it.
(e) Calculations. A written advice setting forth in reasonable detail the
amounts owing under this section, submitted by LC Issuer to Borrower or any
Revolver Lender from time to time, shall be conclusive, absent manifest error,
as to the amounts thereof.
Section 2.11. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay (i) to Administrative
Agent for the account of each Revolver Lender in proportion to its Revolver
Percentage Share, a letter of credit fee equal to the Letter of Credit Fee Rate
applicable each day times the face amount of such Letter of Credit and (ii) to
such LC Issuer for its own account, a letter of credit fronting fee at a rate
equal to one-eighth percent (.125%) per annum times the face amount of such
Letter of Credit. Each such fee will be calculated on the face amount of each
Letter of Credit outstanding on each day at the above applicable rates and will
be payable quarterly in arrears. In addition, Borrower will pay to LC Issuer a
minimum administrative issuance fee of $100 for each Letter of Credit and such
other fees and charges customarily charged by the LC Issuer in respect of any
amendment or negotiation of any Letter of Credit in accordance with the LC
Issuer's published schedule of such charges effective as of the date of such
amendment or negotiation.
Section 2.12. No Duty to Inquire.
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(a) Drafts and Demands. LC Issuer is authorized and instructed to accept
and pay drafts and demands for payment under any Letter of Credit without
requiring, and without responsibility for, any determination as to the existence
of any event giving rise to said draft, either at the time of acceptance or
payment or thereafter. LC Issuer is under no duty to determine the proper
identity of anyone presenting such a draft or making such a demand (whether by
tested telex or otherwise) as the officer, representative or agent of any
beneficiary under any Letter of Credit, and payment by LC Issuer to any such
beneficiary when requested by any such purported officer, representative or
agent is hereby authorized and approved. Borrower releases each Lender Party
from, and agrees to hold each Lender Party harmless and indemnified against, any
liability or claim in connection with or arising out of the subject matter of
this section, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR
CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY, provided only that no
Lender Party shall be entitled to indemnification for that portion, if any, of
any liability or claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final judgment.
(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of Borrower, or if the
amount of any Letter of Credit is increased at the request of Borrower, this
Agreement shall be binding upon all Restricted Persons with respect to such
Letter of Credit as so extended, increased or otherwise modified, with respect
to drafts and property covered thereby, and with respect to any action taken by
LC Issuer, LC Issuer's correspondents, or any Lender Party in accordance with
such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and Borrower releases each Lender Party from,
and agrees to hold each Lender Party harmless and indemnified against, any
liability or claim in connection with or arising out of the foregoing, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY LENDER PARTY, provided only that no Lender Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
Section 2.13. LC Collateral.
(a) LC Obligations in Excess of Revolver Commitment. If, after the making
of all mandatory prepayments required under Section 2.7, the outstanding LC
Obligations will exceed
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the Revolver Commitment, then in addition to prepayment of the entire principal
balance of the Revolver Loans Borrower will immediately pay to LC Issuer an
amount equal to such excess. LC Issuer will hold such amount as collateral
security for the remaining LC Obligations (all such amounts held as collateral
security for LC Obligations being herein collectively called "LC Collateral")
and the Revolver Loans, and such collateral may be applied from time to time to
pay Matured LC Obligations. Neither this subsection nor the following subsection
shall, however, limit or impair any rights which LC Issuer may have under any
other document or agreement relating to any Letter of Credit, LC Collateral or
LC Obligation, including any LC Application, or any rights which any Lender
Party may have to otherwise apply any payments by Borrower and any LC Collateral
under Section 3.1.
(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
all Revolver Lenders otherwise specifically elect to the contrary (which
election may thereafter be retracted by any Revolver Lender at any time), all LC
Obligations shall become immediately due and payable without regard to whether
or not actual drawings or payments on the Letters of Credit have occurred, and
Borrower shall be obligated to pay to LC Issuer immediately an amount equal to
the aggregate LC Obligations which are then outstanding to be held as LC
Collateral.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such Investments as LC Issuer may
choose in its sole discretion. All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or the
Revolver Loans which are due and payable. When all Obligations have been
satisfied in full, including all LC Obligations, all Letters of Credit have
expired or been terminated, and all of Borrower's reimbursement obligations in
connection therewith have been satisfied in full, LC Issuer shall release any
remaining LC Collateral. Borrower hereby assigns and grants to LC Issuer for
the benefit of Revolver Lenders a continuing security interest in all LC
Collateral paid by it to LC Issuer, all Investments purchased with such LC
Collateral, and all proceeds thereof to secure its Matured LC Obligations and
its Obligations under this Agreement, each Note, and the other Loan Documents,
and Borrower agrees that such LC Collateral, Investments and proceeds shall be
subject to all of the terms and conditions of the Security Documents. Borrower
further agrees that LC Issuer shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as adopted in the State of New
York with respect to such security interest and that an Event of Default under
this Agreement shall constitute a default for purposes of such security
interest.
(d) Payment of LC Collateral. When Borrower is required to provide LC
Collateral for any reason and fails to do so on the day when required, LC Issuer
may without notice to Borrower or any other Restricted Person provide such LC
Collateral (whether by application of proceeds of other Collateral, by transfers
from other accounts maintained with LC Issuer, or otherwise) using any available
funds of Borrower or any other Person also liable to make such payments. Any
such amounts which are required to be provided as LC Collateral and which are
not provided on the date required shall, for purposes of each Security Document,
be considered past due Obligations owing hereunder, and LC Issuer is hereby
authorized to exercise its respective rights under each Security Document to
obtain such amounts.
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Section 2.14. Hedging Contracts. All Hedging Contracts permitted
hereunder entered into with any one or more Lenders or their Affiliates shall be
deemed to be Obligations and be secured by all Collateral; subject, however, to
the provisions of Section 3.9 hereof.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Borrower will make each payment which
it owes under the Loan Documents to Administrative Agent for the account of the
Lender Party to whom such payment is owed in lawful money of the United States
of America, without set-off, deduction or counterclaim, and in immediately
available funds. Each such payment must be received by Administrative Agent not
later than noon, New York, New York time, on the date such payment becomes due
and payable. Any payment received by Administrative Agent after such time will
be deemed to have been made on the next following Business Day. Should any such
payment become due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day, and, in
the case of a payment of principal or past due interest, interest shall accrue
and be payable thereon for the period of such extension as provided in the Loan
Document under which such payment is due. Each payment under a Loan Document
shall be due and payable at the place provided therein and, if no specific place
of payment is provided, shall be due and payable at the place of payment of
Administrative Agent's Note. When Administrative Agent collects or receives
money on account of the Obligations, other than as provided in Section 3.9,
Administrative Agent shall distribute all money so collected or received, and
each Lender Party shall apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Administrative Agent under Section 6.9 or 10.4 and then
to the partial payment of all other Obligations then due in proportion to
the amounts thereof, or as Lender Parties shall otherwise agree);
(b) then for the prepayment of amounts owing under the Loan Documents
(other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with Sections
2.6 and 2.7. All distributions of amounts described in any of subsections (b),
(c) or (d) above shall be made by Administrative Agent pro rata to each Lender
Party then owed Obligations described in such subsection in proportion to all
amounts owed to all Lender Parties which are described in such subsection;
provided that if any Lender then owes payments to LC Issuer for the purchase of
a participation under Section 2.13(c) or to Administrative Agent under Section
9.4, any amounts otherwise distributable under this section to such Lender shall
be deemed to belong to LC Issuer, or Administrative Agent, respectively, to the
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extent of such unpaid payments, and Administrative Agent shall apply such
amounts to make such unpaid payments rather than distribute such amounts to such
Lender.
Section 3.2. Capital Reimbursement. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects or
would affect the amount of capital required or expected to be maintained by any
Lender Party or any corporation controlling any Lender Party, then, within five
Business Days after demand by such Lender Party, Borrower will pay to
Administrative Agent for the benefit of such Lender Party, from time to time as
specified by such Lender Party, such additional amount or amounts which such
Lender Party shall determine to be appropriate to compensate such Lender Party
or any corporation controlling such Lender Party in light of such circumstances,
to the extent that such Lender Party reasonably determines that the amount of
any such capital would be increased or the rate of return on any such capital
would be reduced by or in whole or in part based on the existence of the face
amount of such Lender Party's Loans, Letters of Credit, participations in
Letters of Credit or commitments under this Agreement.
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit. If
any applicable Law (whether now in effect or hereinafter enacted or promulgated,
including Regulation D) or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of Law):
(a) shall change the basis of taxation of payments to any Lender
Party of any principal, interest, or other amounts attributable to any
Eurodollar Loan or Letter of Credit or otherwise due under this Agreement
in respect of any Eurodollar Loan or Letter of Credit (other than taxes
imposed on, or measured by, the overall net income of such Lender Party or
any Applicable Lending Office of such Lender Party by any jurisdiction in
which such Lender Party or any such Applicable Lending Office is located);
or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any
Eurodollar Loan or any Letter of Credit (excluding those for which such
Lender Party is fully compensated pursuant to adjustments made in the
definition of Eurodollar Rate) or against assets of, deposits with or for
the account of, or credit extended by, such Lender Party; or
(c) shall impose on any Lender Party or the interbank eurocurrency
deposit market any other condition affecting any Eurodollar Loan or Letter
of Credit, the result of which is to increase the cost to any Lender Party
of funding or maintaining any Eurodollar Loan or of issuing any Letter of
Credit or to reduce the amount of any sum receivable by any Lender Party in
respect of any Eurodollar Loan or Letter of Credit by an amount deemed by
such Lender Party to be material,
then such Lender Party shall promptly notify Administrative Agent and Borrower
in writing of the happening of such event and of the amount required to
compensate such Lender Party for such event (on an after-tax basis, taking into
account any taxes on such compensation), whereupon (i)
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Borrower shall, within five Business Days after demand therefor by such Lender
Party, pay such amount to Administrative Agent for the account of such Lender
Party and (ii Borrower may elect, by giving to Administrative Agent and such
Lender Party not less than three Business Days' notice, to Convert all (but not
less than all) of any such Eurodollar Loans into Base Rate Loans.
Section 3.4. Notice; Change of Applicable Lending Office. A Lender Party
shall notify Borrower of any event occurring after the date of this Agreement
that will entitle such Lender Party to compensation under Section 3.2, 3.3, or
3.5 hereof as promptly as practicable, but in any event within 90 days, after
such Lender Party obtains actual knowledge thereof; provided, that (i) if such
Lender Party fails to give such notice within 90 days after it obtains actual
knowledge of such an event, such Lender Party shall, with respect to
compensation payable pursuant to Section 3.2, 3.3, or 3.5 in respect of any
costs resulting from such event, only be entitled to payment under Section 3.2,
3.3, or 3.5 hereof for costs incurred from and after the date 90 days prior to
the date that such Lender Party does give such notice and (ii) such Lender Party
will designate a different Applicable Lending Office for the Loans affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender Party, be
disadvantageous to such Lender Party, except that such Lender Party shall have
no obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender Party will furnish to Borrower a certificate
setting forth the basis and amount of each request by such Lender Party for
compensation under Section 3.2, 3.3, or 3.5 hereof.
Section 3.5. Availability. If (a) any change in applicable Laws, or in
the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for any
Lender Party to fund or maintain Eurodollar Loans or to issue or participate in
Letters of Credit, or shall materially restrict the authority of any Lender
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"), or
(b) any Lender Party determines that matching deposits appropriate to fund or
maintain any Eurodollar Loan are not available to it, or (c) any Lender Party
determines that the formula for calculating the Eurodollar Rate does not fairly
reflect the cost to such Lender Party of making or maintaining loans based on
such rate, then, upon notice by such Lender Party to Borrower and Administrative
Agent, Borrower's right to elect Eurodollar Loans from such Lender Party (or, if
applicable, to obtain Letters of Credit) shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Eurodollar Loans of such Lender Party which are then outstanding or are then the
subject of any Borrowing Notice and which cannot lawfully or practicably be
maintained or funded shall immediately become or remain, or shall be funded as,
Base Rate Loans of such Lender Party. Borrower agrees to indemnify each Lender
Party and hold it harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in Law,
interpretation or administration. Such indemnification shall be on an after-tax
basis, taking into account any taxes imposed on the amounts paid as indemnity.
Section 3.6. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Lender Party against, and reimburse each
Lender Party on demand for, any loss or expense incurred or sustained by such
Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
Party to fund or maintain Eurodollar Loans), as a result of (a) any payment or
prepayment
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(whether or not authorized or required hereunder) of all or a portion of a
Eurodollar Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether or not required hereunder,
of a Loan made after the delivery, but before the effective date, of a
Continuation/Conversion Notice, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the failure of
any Loan to be made or of any Continuation/Conversion Notice to become effective
due to any condition precedent not being satisfied or due to any other action or
inaction of any Restricted Person, or (d) any Conversion (whether or not
authorized or required hereunder) of all or any portion of any Eurodollar Loan
into a Base Rate Loan or into a different Eurodollar Loan on a day other than
the day on which the applicable Interest Period ends. Such indemnification shall
be on an after-tax basis, taking into account any taxes imposed on the amounts
paid as indemnity.
Section 3.7. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify each Lender Party against and reimburse
each Lender Party for all present and future income, stamp and other taxes,
levies, costs and charges whatsoever imposed, assessed, levied or collected
on or in respect of this Agreement or any Eurodollar Loans or Letters of
Credit (whether or not legally or correctly imposed, assessed, levied or
collected), excluding, however, any taxes imposed on or measured by the
overall net income of Administrative Agent or such Lender Party or any
Applicable Lending Office of such Lender Party by any jurisdiction in which
such Lender Party or any such Applicable Lending Office is located (all
such non-excluded taxes, levies, costs and charges being collectively
called "Reimbursable Taxes" in this section). Such indemnification shall
be on an after-tax basis, taking into account any taxes imposed on the
amounts paid as indemnity.
(b) All payments on account of the principal of, and interest on,
each Lender Party's Loans and Note, and all other amounts payable by
Borrower to any Lender Party hereunder, shall be made in full without set-
off or counterclaim and shall be made free and clear of and without
deductions or withholdings of any nature by reason of any Reimbursable
Taxes, all of which will be for the account of Borrower. In the event of
Borrower being compelled by Law to make any such deduction or withholding
from any payment to any Lender Party, Borrower shall pay on the due date of
such payment, by way of additional interest, such additional amounts as are
needed to cause the amount receivable by such Lender Party after such
deduction or withholding to equal the amount which would have been
receivable in the absence of such deduction or withholding. If Borrower
should make any deduction or withholding as aforesaid, Borrower shall
within 60 days thereafter forward to such Lender Party an official receipt
or other official document evidencing payment of such deduction or
withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any Eurodollar Loan, Borrower may elect, by giving to
Administrative Agent and such Lender Party not less than three Business
Days' notice, to Convert all (but not less than all) of any such Eurodollar
Loan into a Base Rate Loan, but such election shall not diminish Borrower's
obligation to pay all Reimbursable Taxes.
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(d) Notwithstanding the foregoing provisions of this section,
Borrower shall be entitled, to the extent it is required to do so by Law,
to deduct or withhold (and not to make any indemnification or reimbursement
for) income or other similar taxes imposed by the United States of America
(other than any portion thereof attributable to a change in federal income
tax Laws effected after the date hereof) from interest, fees or other
amounts payable hereunder for the account of any Lender Party, other than a
Lender Party (i) who is a U.S. person for Federal income tax purposes or
(ii) who has the Prescribed Forms on file with Administrative Agent (with
copies provided to Borrower) for the applicable year to the extent
deduction or withholding of such taxes is not required as a result of the
filing of such Prescribed Forms, provided that if Borrower shall so deduct
or withhold any such taxes, it shall provide a statement to Administrative
Agent and such Lender Party, setting forth the amount of such taxes so
deducted or withheld, the applicable rate and any other information or
documentation which such Lender Party may reasonably request for assisting
such Lender Party to obtain any allowable credits or deductions for the
taxes so deducted or withheld in the jurisdiction or jurisdictions in which
such Lender Party is subject to tax. As used in this section, "Prescribed
Forms" means such duly executed forms or statements, and in such number of
copies, which may, from time to time, be prescribed by Law and which,
pursuant to applicable provisions of (x) an income tax treaty between the
United States and the country of residence of the Lender Party providing
the forms or statements, (y) the Code, or (z) any applicable rules or
regulations thereunder, permit Borrower to make payments hereunder for the
account of such Lender Party free of such deduction or withholding of
income or similar taxes.
Section 3.8 Replacement of Lenders. If any Lender Party seeks
reimbursement for increased costs under Sections 3.2 through 3.7, then within
ninety days thereafter -- provided no Event of Default then exists -- Borrower
shall have the right (unless such Lender Party withdraws its request for
additional compensation) to replace such Lender Party by requiring such Lender
Party to assign its Loans and Notes and its commitments hereunder to an Eligible
Transferee reasonably acceptable to Administrative Agent and to Borrower,
provided that: (i) all Obligations of Borrower owing to such Lender Party being
replaced (including such increased costs, but excluding principal and accrued
interest on the Notes being assigned) shall be paid in full to such Lender Party
concurrently with such assignment, and (ii) the replacement Eligible Transferee
shall purchase the Note being assigned by paying to such Lender Party a price
equal to the principal amount thereof plus accrued and unpaid interest and
accrued and unpaid commitment fees thereon. In connection with any such
assignment Borrower, Administrative Agent, such Lender Party and the replacement
Eligible Transferee shall otherwise comply with Section 10.5. Notwithstanding
the foregoing rights of Borrower under this section, however, Borrower may not
replace any Lender Party which seeks reimbursement for increased costs under
Section 3.2 through 3.7 unless Borrower is at the same time replacing all Lender
Parties which are then seeking such compensation.
Section 3.9. Application of Proceeds After Acceleration. If any Event of
Default shall have occurred and be continuing, and if the Obligations have
become due and payable, all cash collateral held by Administrative Agent under
this Agreement and the proceeds of any sale, disposition, or other realization
by Administrative Agent upon the Collateral (or any portion thereof) pursuant to
the Security Documents, shall be distributed in whole or in part by
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Administrative Agent in the following order of priority, unless otherwise
directed by all of the Lenders:
First, to the Administrative Agent, in an amount equal to all
reimbursements to Administrative Agent due and payable as of the date of such
distribution;
Second, to the Lenders, ratably, in an amount equal to all accrued and
unpaid interest and fees owing to the Lenders under this Agreement due and
payable as of the date of such distribution; provided, however, that in case
such proceeds shall be insufficient to pay in full all such Obligations, then to
the payment thereof to the Lenders, ratably, in proportion to its percentage of
the sum of the aggregate amounts of all such Obligations;
Third, to the Lenders, ratably, in an amount equal to all Loans plus LC
Obligations; provided, however, that in the case such proceeds shall be
insufficient to pay in full all such Obligations, then to the payment thereof to
the Lenders, ratably, in proportion to its percentage of the sum of the
aggregate amounts of all such Obligations;
Fourth, to the Lenders, ratably, in an amount equal to all amounts owing to
the Lenders under all Obligations with respect to Hedging Contracts between any
Restricted Person and any Lender or an Affiliate; provided, however, that in
case such proceeds shall be insufficient to pay in full all such Obligations,
then to the payment thereof to the Lenders, ratably, in proportion to its
percentage of the sum of the aggregate amounts of all such Obligations;
Fifth, to the Lenders in an amount equal to all other Obligations;
provided, however, that in the case such proceeds shall be insufficient to pay
in full such Obligations, then to the payment thereof to the Lenders, ratably,
in proportion to its percentage of the sum of the aggregate amounts of all such
Obligations; and
Sixth, to the extent of any surplus, to the Restricted Persons as their
respective interests may appear, except as may be provided otherwise by law;
it being understood that the Restricted Persons shall remain liable to the
extent of any deficiency between the amount of proceeds of the Collateral and
the aggregate sums referred to in clauses First through Fifth above.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Documents to be Delivered. No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit unless Administrative Agent shall have received all of the following,
at Administrative Agent's office in New York, New York, duly executed and
delivered and in form, substance and date satisfactory to Administrative Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
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(b) Each Note.
(c) Each Security Document listed in the Security Schedule.
(d) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the secretary and of the
president of each Restricted Person, which shall contain the names and
signatures of the officers of such Restricted Person authorized to
execute Loan Documents and which shall certify to the truth,
correctness and completeness of the following exhibits attached
thereto: (1) a copy of resolutions duly adopted by the Board of
Directors of such Restricted Person and in full force and effect at
the time this Agreement is entered into, authorizing the execution of
this Agreement and the other Loan Documents delivered or to be
delivered in connection herewith and the consummation of the
transactions contemplated herein and therein, (2) a copy of the
charter documents of such Restricted Person and all amendments
thereto, certified by the appropriate official of such Restricted
Person's state of organization, and (3) a copy of any bylaws of such
Restricted Person; and
(ii) A certificate of the president and of the chief financial
officer of Borrower, regarding satisfaction of subsections (a) and (b)
of Section 4.2 and subsections (a), (b), (c), and (d) of Section 4.3,
in the form of Exhibit I hereto.
(e) A certificate (or certificates) of the due formation, valid
existence and good standing of each Restricted Person in its respective
state of organization, issued by the appropriate authorities of such
jurisdiction, and certificates of each Restricted Person's good standing
and due qualification to do business, issued by appropriate officials in
any states in which such Restricted Person owns property subject to
Security Documents.
(f) Documents similar to those specified in subsections (d)(i) and
(e) of this section with respect to each Guarantor and the execution by it
of its guaranty of Borrower's Obligations.
(g) A favorable opinion of Michael Patterson, Esq., General Counsel
for Restricted Persons, substantially in the form set forth in Exhibit E-1,
and Fulbright & Jaworski L.L.P., special Texas and New York counsel to
Restricted Persons, substantially in the form set forth in Exhibit E-2.
(h) The Initial Financial Statements.
(i) Certificates or binders evidencing Restricted Persons' insurance
in effect on the date hereof.
(j) A favorable report of Administrative Agent's professional
insurance consultants regarding their assessment of the insurance
maintained by Restricted Persons, in scope and results acceptable to
Administrative Agent.
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(k) A favorable report of Pilko & Associates, Inc. regarding their
environmental assessment of the material properties of Restricted Persons
and any other properties constituting Collateral, in scope and results
acceptable to Administrative Agent.
(l) Copies of such permits and approvals regarding the property and
business of Restricted Persons as Agent may request.
(m) A certificate signed by the chief executive officer of Borrower
in form and detail acceptable to Administrative Agent confirming the
insurance that is in effect as of the date hereof and certifying that such
insurance is customary for the businesses conducted by Restricted Persons
and is in compliance with the requirements of this Agreement.
(n) Payment of all commitment, facility, agency and other fees
required to be paid to any Lender pursuant to any Loan Documents or any
commitment agreement heretofore entered into.
(o) A copy of each Acquisition Document, duly executed and delivered
by each party thereto.
(p) Evidence that all notice requirements and the expiration of
applicable time periods or the receipt of all applicable approvals required
pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, have been satisfied.
(q) Evidence acceptable to Administrative Agent in its sole and
absolute discretion that Resources has made a net cash equity contribution
to Borrower of at least $110,000,000 in exchange for common stock of
Borrower or as additional paid in capital contributions in respect of
common stock.
Section 4.2. Additional Conditions to Initial Credit. No Lender has any
obligation to make its first Loan, and LC Issuer has no obligation to issue the
first Letter of Credit unless, prior to or contemporaneously with the initial
Loan or initial Letter of Credit issuance hereunder, the following conditions
precedent have been satisfied:
(a) Borrower shall have consummated all of the transactions
contemplated under the Acquisition Documents, in compliance with the terms
and conditions thereof, in form and substance satisfactory to each Lender,
and all representations and warranties made by any party to the Acquisition
Documents are true and correct.
(b) After giving effect to each of the transactions under the
Acquisition Documents, all representations and warranties made by any
Restricted Person in any Loan Document shall be true on and as of the date
of such Loan or the date of issuance of such Letter of Credit as if such
representations and warranties had been made as of the date of such Loan or
the date of issuance of such Letter of Credit.
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(c) Restricted Persons shall have entered into (i) the Service and
Exchange Agreement with PMTI in the form of Exhibit J, (ii) the Agreement
for the Allocation of Taxes and Agreement for Deferral among the Plains
Resources Inc. Affiliate Group in the form of Exhibit K, and (iii) the
Netting Agreement between Restricted Persons and certain Affiliates in the
form of Exhibit L and Support Services Agreement between Resources and each
of the Restricted Persons in the form of Exhibit M (collectively the
"Affiliate Agreements").
Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied:
(a) All representations and warranties made by any Restricted Person
in any Loan Document shall be true on and as of the date of such Loan or
the date of issuance of such Letter of Credit as if such representations
and warranties had been made as of the date of such Loan or the date of
issuance of such Letter of Credit except to the extent that such
representation or warranty was made as of a specific date or updated,
modified or supplemented as of a subsequent date with the consent of
Majority Lenders.
(b) No Default shall exist at the date of such Loan or the date of
issuance of such Letter of Credit.
(c) No Material Adverse Change shall have occurred to, and no event
or circumstance shall have occurred that could cause a Material Adverse
Change to, Borrower's Consolidated financial condition or businesses since
the date of the Initial Financial Statements.
(d) Each Restricted Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or prior to the date of such Loan or the date of
issuance of such Letter of Credit.
(e) The making of such Loan or the issuance of such Letter of Credit
shall not be prohibited by any Law and shall not subject any Lender or any
LC Issuer to any penalty or other onerous condition under or pursuant to
any such Law.
(f) Administrative Agent shall have received all documents and
instruments which Administrative Agent has then requested, in addition to
those described in Section 4.1 (including opinions of legal counsel for
Restricted Persons and Administrative Agent; corporate documents and
records; documents evidencing governmental authorizations, consents,
approvals, licenses and exemptions; and certificates of public officials
and of officers and representatives of Borrower and other Persons), as to
(i) the accuracy and validity of or compliance with all representations,
warranties and covenants made by any Restricted Person in this Agreement
and the other Loan Documents, (ii the satisfaction of all conditions
contained herein or therein, and (ii all other matters pertaining hereto
and thereto. All such additional documents and instruments shall be
satisfactory to Administrative Agent in form, substance and date.
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ARTICLE V - Representations and Warranties
To confirm each Lender's understanding concerning Restricted Persons and
Restricted Persons' businesses, properties and obligations and to induce each
Lender to enter into this Agreement and to extend credit hereunder, Borrower
represents and warrants to each Lender that:
Section 5.1. No Default. No Restricted Person is in default in the
performance of any of the covenants and agreements contained in any Loan
Document. No event has occurred and is continuing which constitutes a Default.
Section 5.2. Organization and Good Standing. Each Restricted Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
Each Restricted Person is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary except where the failure to
so qualify would not cause a Material Adverse Change. Each Restricted Person
has taken all actions and procedures customarily taken in order to enter, for
the purpose of conducting business or owning property, each jurisdiction outside
the United States wherein the character of the properties owned or held by it or
the nature of the business transacted by it makes such actions and procedures
necessary except where the failure to so qualify would not cause a Material
Adverse Change.
Section 5.3. Authorization. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. No Conflicts or Consents. The execution and delivery by the
various Restricted Persons of the Loan Documents and the Acquisition Documents
to which each is a party, the performance by each of its obligations under such
Loan Documents and such Acquisition Documents, and the consummation of the
transactions contemplated by the various Loan Documents and the various
Acquisition Documents, do not and will not (i) conflict with any provision of
(1) any Law, (2) the organizational documents of any Restricted Person or any of
its Affiliates, or (3) any agreement, judgment, license, order or permit
applicable to or binding upon any Restricted Person or any of its Affiliates,
(ii result in the acceleration of any Indebtedness owed by any Restricted Person
or any of its Affiliates, or (ii result in or require the creation of any Lien
upon any assets or properties of any Restricted Person or any of its Affiliates
except as expressly contemplated in the Loan Documents. Except as expressly
contemplated in the Loan Documents or the Acquisition Documents no consent,
approval, authorization or order of, and no notice to or filing with, any
Tribunal or third party is required in connection with the execution, delivery
or performance by any Restricted Person of any Loan Document or any Acquisition
Document or to consummate any transactions contemplated by the Loan Documents or
the Acquisition Documents.
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Section 5.5. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Initial Financial Statements. Borrower has heretofore
delivered to each Lender true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements fairly present
Borrower's Consolidated financial position at the respective dates thereof and
the Consolidated results of Borrower's operations and Borrower's Consolidated
cash flows for the respective periods thereof. Since the date of the annual
Initial Financial Statements no Material Adverse Change has occurred, except as
reflected in the quarterly Initial Financial Statements or in the Disclosure
Schedule. All Initial Financial Statements were prepared in accordance with
GAAP.
Section 5.7. Other Obligations and Restrictions. No Restricted Person
has any outstanding Liabilities of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to Borrower or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule, no
Restricted Person is subject to or restricted by any franchise, contract, deed,
charter restriction, or other instrument or restriction which could cause a
Material Adverse Change.
Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Lender in connection with the negotiation of this Agreement or in connection
with any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading as of the date made or deemed made. All
written information furnished after the date hereof by or on behalf of any
Restricted Person to Administrative Agent or any Lender Party in connection with
this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material respect
or based on reasonable estimates on the date as of which such information is
stated or certified. There is no fact known to any Restricted Person that has
not been disclosed to each Lender in writing which could cause a Material
Adverse Change.
Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of any Restricted Person threatened, against any Restricted Person
before any Tribunal which could cause a Material Adverse Change, and (ii) there
are no outstanding judgments, injunctions, writs, rulings or orders by any such
Tribunal against any Restricted Person or any Restricted Person's stockholders,
partners, directors or officers which could cause a Material Adverse Change.
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Section 5.10. Labor Disputes and Acts of God. Except as disclosed in the
Disclosure Schedule, neither the business nor the properties of any Restricted
Person has been affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty (whether or not covered by insurance), which
could cause a Material Adverse Change.
Section 5.11. ERISA Plans and Liabilities. All currently existing ERISA
Plans are listed in the Disclosure Schedule. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule, no Termination Event has
occurred with respect to any ERISA Plan and all ERISA Affiliates are in
compliance with ERISA in all material respects. No ERISA Affiliate is required
to contribute to, or has any other absolute or contingent liability in respect
of, any "multiemployer plan" as defined in Section 4001 of ERISA. Except as set
forth in the Disclosure Schedule: (i) no "accumulated funding deficiency" (as
defined in Section 412(a) of the Code) exists with respect to any ERISA Plan,
whether or not waived by the Secretary of the Treasury or his delegate, and (ii)
the current value of each ERISA Plan's benefits does not exceed the current
value of such ERISA Plan's assets available for the payment of such benefits by
more than $500,000.
Section 5.12. Compliance with Laws. Except as set forth in the
Disclosure Schedule, each Restricted Person is conducting its businesses in
compliance with all applicable Laws, including Environmental Laws, and has all
permits, licenses and authorizations required in connection with the conduct of
its businesses, except to the extent failure to have any such permit, license or
authorization could not cause a Material Adverse Change. Each Restricted Person
is in compliance with the terms and conditions of all such permits, licenses and
authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Law, including applicable
Environmental Law, or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply could not cause a Material
Adverse Change. Without limiting the foregoing, each Restricted Person (i) has
filed and maintained all tariffs applicable to its business with each applicable
commission, (ii) and all such tariffs are in compliance with all Laws
administered or promulgated by each applicable commission, and (iii) has imposed
charges on its customers in compliance with such tariffs, all contracts
applicable to its business and all applicable Laws. As used herein,
"commission" includes the Federal Energy Regulatory Commission, the Public
Utility Commission of the State of California and each other federal, state or
local governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any Restricted Person or its
properties.
Section 5.13. Environmental Laws. As used in this section: "CERCLA"
means the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, "CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System List of the Environmental
Protection Agency, and "Release" has the meaning given such term in 42 U.S.C.
(S)9601(22). Without limiting the provisions of Section 5.12, and except as
set forth in the Disclosure Schedule:
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(a) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed, and no investigation or review is pending or threatened by any
Tribunal or any other Person with respect to any of the following which in the
aggregate could cause a Material Adverse Change: (i) any alleged generation,
treatment, storage, recycling, transportation, disposal, or Release of any
Hazardous Materials, either by any Restricted Person or on any property owned by
any Restricted Person, (ii) any remedial action which might be needed to respond
to any such alleged generation, treatment, storage, recycling, transportation,
disposal, or Release, or (iii) any alleged failure by any Restricted Person to
have any permit, license or authorization required in connection with the
conduct of its business or with respect to any such generation, treatment,
storage, recycling, transportation, disposal, or Release.
(b) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.
(c) No Restricted Person has handled any Hazardous Materials, other than
as a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could cause, a
Material Adverse Change.
(d) Except to the extent that the following in the aggregate has not
caused and could not cause a Material Adverse Change:
(i) no PCBs are or have been present at any properties now or previously
owned or leased by any Restricted Person;
(ii) no asbestos is or has been present at any properties now or
previously owned or leased by any Restricted Person;
(iii) there are no underground storage tanks for Hazardous Materials,
active or abandoned, at any properties now or previously owned or
leased by any Restricted Person; and
(iv) no Hazardous Materials have been Released at, on or under any
properties now or previously owned or leased by any Restricted
Person.
(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, any location listed for possible
inclusion on the National Priorities List by the Environmental Protection Agency
in CERCLIS, nor, except to the extent that has not caused and could not cause a
Material Adverse Change, any location listed on any similar state list or which
is the subject of federal, state or local enforcement actions or other
investigations which may lead to claims against any Restricted Person for clean-
up costs, remedial work, damages to natural resources or for personal injury
claims, including, but not limited to, claims under CERCLA.
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(f) No property now or previously owned or leased by any Restricted Person
is listed or proposed for listing on the National Priority list promulgated
pursuant to CERCLA, in CERCLIS, nor, except to the extent that has not caused
and could not cause a Material Adverse Change, on any similar state list of
sites requiring investigation or clean-up.
(g) There are no Liens arising under or pursuant to any Environmental Laws
on any of the real properties or properties owned or leased by any Restricted
Person, and no government actions of which Borrower is aware have been taken or
are in process which could subject any of such properties to such Liens; nor
would any Restricted Person be required to place any notice or restriction
relating to the presence of Hazardous Materials at any properties owned by it in
any deed to such properties.
(h) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses for ground water or soil contamination relating
to the Release of Hazardous Materials conducted by or which are in the
possession of any Restricted Person in relation to any properties or facility
now or previously owned or leased by any Restricted Person which have not been
made available to Administrative Agent.
Section 5.14. Names and Places of Business. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade or
fictitious name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule, the chief executive office and
principal place of business of each Restricted Person are (and for the preceding
five years have been) located at the address of Borrower set out in Section
10.3. Except as indicated in the Disclosure Schedule, no Restricted Person has
any other office or place of business.
Section 5.15. Borrower's Subsidiaries. Borrower does not presently have
any Subsidiary or own any stock in any other corporation or association except
those listed in the Disclosure Schedule. Neither Borrower nor any Restricted
Person is a member of any general or limited partnership, joint venture or
association of any type whatsoever except those listed in the Disclosure
Schedule. Borrower owns, directly or indirectly, the equity interest in each of
its Subsidiaries which is indicated in the Disclosure Schedule.
Section 5.16. Title to Properties; Licenses. Each Restricted Person has
good and defensible title to all of its material properties and assets, free and
clear of all Liens other than Permitted Liens and of all impediments to the use
of such properties and assets in such Restricted Person's business. Each
Restricted Person possesses all licenses, permits, franchises, patents,
copyrights, trademarks and trade names, and other intellectual property (or
otherwise possesses the right to use such intellectual property without
violation of the rights of any other Person) which are necessary to carry out
its business as presently conducted and as presently proposed to be conducted
hereafter, and no Restricted Person is in violation in any material respect of
the terms under which it possesses such intellectual property or the right to
use such intellectual property.
Section 5.17. Government Regulation. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act
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of 1935, the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or any other Law which regulates the incurring by such Person of
Indebtedness, including Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services. Neither
Borrower nor any other Restricted Person is subject to regulation under the
Federal Power Act which would violate, result in a default of, or prohibit the
effectiveness or the performance of any of the provisions of the Loan Documents.
Section 5.18. Insider. No Restricted Person, nor any Person having
"control" (as that term is defined in 12 U.S.C. (S) 375b(9) or in regulations
promulgated pursuant thereto) of any Restricted Person, is a "director" or an
"executive officer" or "principal shareholder" (as those terms are defined in 12
U.S.C. (S) 375b(8) or (9) or in regulations promulgated pursuant thereto) of any
Lender, of a bank holding company of which any Lender is a Subsidiary or of any
Subsidiary of a bank holding company of which any Lender is a Subsidiary.
Section 5.19. Solvency. Upon giving effect to the issuance of the Notes,
the execution of the Loan Documents by Borrower and each Guarantor and the
consummation of the transactions contemplated hereby, Borrower and each
Guarantor will be solvent (as such term is used in applicable bankruptcy,
liquidation, receivership, insolvency or similar Laws).
Section 5.20. Credit Arrangements. The Disclosure Schedule contains a
complete and correct list, as of the date of this Agreement, of each credit
agreement, loan agreement, indenture, purchase agreement, guaranty or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guaranty
by, any Restricted Person, or to which any Restricted Person is subject, other
than the Loan Documents, and the aggregate principal or face amount outstanding
or which may become outstanding under each such arrangement is correctly
described in the Disclosure Schedule. No Restricted Person is subject to any
restriction under any credit agreement, loan agreement, indenture, purchase
agreement, guaranty or other arrangement providing for or otherwise relating to
any Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guaranty by, any Affiliate.
ARTICLE VI - Affirmative Covenants of Borrower
To conform with the terms and conditions under which each Lender is willing
to have credit outstanding to Borrower, and to induce each Lender to enter into
this Agreement and extend credit hereunder, Borrower covenants and agrees that
until the full and final payment of the Obligations and the termination of this
Agreement, unless Majority Lenders, or all Lenders as required under Section
10.1, have previously agreed otherwise:
Section 6.1. Payment and Performance. Each Restricted Person will pay
all amounts due under the Loan Documents, to which it is a party, in accordance
with the terms thereof and will observe, perform and comply with every covenant,
term and condition expressed in the Loan Documents to which it is a party.
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Section 6.2. Books, Financial Statements and Reports. Each Restricted
Person will at all times maintain full and accurate books of account and
records. Borrower will maintain and will cause its Subsidiaries to maintain a
standard system of accounting, will maintain its Fiscal Year, and will furnish
the following statements and reports to Administrative Agent, in such number of
counterparts as Administrative Agent may request, at Borrower's expense:
(a) As soon as available, and in any event within one hundred five
(105) days after the end of each Fiscal Year (i) complete Consolidated
financial statements of Borrower together with all notes thereto, prepared
in reasonable detail in accordance with GAAP, together with an unqualified
opinion, based on an audit using generally accepted auditing standards, by
PriceWaterhouse Coopers, or other independent certified public accountants
selected by Borrower and acceptable to Majority Lenders, stating that such
Consolidated financial statements have been so prepared and (ii) supporting
unaudited consolidating balance sheets and statements of income of
Borrower. These financial statements shall contain a Consolidated and
consolidating balance sheet as of the end of such Fiscal Year and
Consolidated and consolidating statements of earnings for such Fiscal Year,
each setting forth in comparative form the corresponding figures for the
preceding Fiscal Year. In addition, within one hundred five (105) days
after the end of each Fiscal Year Borrower will furnish a certificate
signed by such accountants (i) stating that they have read this Agreement,
(ii) containing calculations showing compliance (or non-compliance) at the
end of such Fiscal Year with the requirements of Sections 7.11 through
7.17, inclusive, and (iii) further stating that in making their examination
and reporting on the Consolidated financial statements described above they
obtained no knowledge of any Default existing at the end of such Fiscal
Year, or, if they did so conclude that a Default existed, specifying its
nature and period of existence.
(b) As soon as available, and in any event within forty-five (45)
days after the end of each of the first three Fiscal Quarters of each
Fiscal Year, (i) Borrower's Consolidated balance sheet as of the end of
such Fiscal Quarter and Consolidated statements of Borrower's earnings and
cash flows for such Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Quarter, and (ii)
supporting consolidating balance sheets and statements of income of
Borrower, all in reasonable detail and prepared in accordance with GAAP,
subject to changes resulting from normal year-end adjustments; and as soon
as available, and in any event within forty-five (45) days after the end of
the last Fiscal Quarter of each Fiscal Year, Borrower's unaudited
Consolidated balance sheet as of the end of such Fiscal Quarter and income
statement for such Fiscal Quarter and for the period from the beginning of
the current Fiscal Year to the end of such Fiscal Quarter. In addition
Borrower will, together with each such set of financial statements and each
set of financial statements furnished under subsection (a) of this section,
furnish a certificate in the form of Exhibit D signed by the chief
financial officer of Borrower stating that such financial statements are
accurate and complete in all material respects (subject to normal year-end
adjustments), stating that he has reviewed the Loan Documents, containing
calculations showing compliance (or non-compliance) at the end of such
Fiscal Quarter with the requirements of Sections 7.11-7.17, inclusive and
stating that no Default exists at the end of such Fiscal Quarter or at the
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time of such certificate or specifying the nature and period of existence
of any such Default.
(c) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by Resources to its
stockholders and all registration statements, periodic reports and other
statements and schedules filed by Resources with any securities exchange,
the Securities and Exchange Commission or any similar governmental
authority.
(d) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, a five-year business and financial plan
for Borrower (in form reasonably satisfactory to Administrative Agent),
prepared by a senior financial officer thereof, setting forth for the first
year thereof, quarterly financial projections and budgets for Borrower, and
thereafter yearly financial projections and budgets for the next four
Fiscal Years.
(e) As soon as available, and in any event within forty-five (45)
days after the end of each month, throughput volume reports setting forth
in detail pipeline volumes of crude oil delivered by Restricted Persons for
such month in connection with, and transportation fees charged and margins
realized by the Restricted Persons for such month delivered through all
pipeline facilities of Borrower and its Restricted Subsidiaries.
(f) As soon as available, and in any event within forty-five (45)
days after the end of each Fiscal Quarter, a report setting forth volumes
and margins for all marketing activities of Borrower and its Subsidiaries.
(g) As soon as available, and in any event within thirty (30) days
after the end of each Fiscal Year, Borrower shall at its own cost and
expense deliver to Administrative Agent an environmental compliance
certificate signed by the president or chief executive officer of Borrower
in the form attached hereto as Exhibit F. Further, if requested by
Administrative Agent, Borrower shall permit and cooperate with an
environmental and safety review made in connection with the operations of
Borrower's properties one time during each Fiscal Year beginning with the
Fiscal Year 1999, by Pilko & Associates, Inc. or other consultants selected
by Administrative Agent which review shall, if requested by Administrative
Agent, be arranged and supervised by environmental legal counsel for
Administrative Agent, all at Borrower's cost and expense. The consultant
shall render a verbal or written report, as specified by Administrative
Agent, based upon such review at Borrower's cost and expense and a copy
thereof will be provided to Borrower.
(h) Concurrently with the annual renewal of Borrower's insurance
policies, Borrower shall at its own cost and expense, if requested by
Administrative Agent in writing, cause a certificate or report to be issued
by Administrative Agent's professional insurance consultants or other
insurance consultants satisfactory to Administrative Agent certifying that
Borrower's insurance for the next succeeding year after such renewal (or
for such longer period for which such insurance is in effect) complies with
the provisions of this Agreement and the Security Documents.
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Section 6.3. Other Information and Inspections. In each case subject to
the last sentence of this Section 6.3, each Restricted Person will furnish to
each Lender any information which Administrative Agent or any Lender may from
time to time request concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with Restricted Persons' businesses and
operations. In each case subject to the last sentence of this Section 6.3, each
Restricted Person will permit representatives appointed by Administrative Agent
(including independent accountants, auditors, agents, attorneys, appraisers and
any other Persons) to visit and inspect during normal business hours any of such
Restricted Person's property, including its books of account, other books and
records, and any facilities or other business assets, and to make extra copies
therefrom and photocopies and photographs thereof, and to write down and record
any information such representatives obtain, and each Restricted Person shall
permit Administrative Agent or its representatives to investigate and verify the
accuracy of the information furnished to Administrative Agent or any Lender in
connection with the Loan Documents and to discuss all such matters with its
officers, employees and, upon prior notice to Borrower, its representatives.
Each of the foregoing inspections shall be made subject to compliance with
applicable safety standards and the same conditions applicable to any Restricted
Person in respect of property of that Restricted Person on the premises of
Persons other than a Restricted Person or an Affiliate of a Restricted Person,
and all information, books and records furnished or requested to be furnished,
or of which copies, photocopies or photographs are made or requested to be made,
all information to be investigated or verified and all discussions conducted
with any officer, employee or representative of any Restricted Person shall be
subject to any applicable attorney-client privilege exceptions which the
Restricted Person determines is reasonably necessary and compliance with
conditions to disclosures under non-disclosure agreements between any Restricted
Person and Persons other than a Restricted Person or an Affiliate of a
Restricted Person and the express undertaking of each Person acting at the
direction of or on behalf of any Lender Party to be bound by the confidentiality
provisions of Section 10.6 of this Agreement.
Section 6.4. Notice of Material Events and Change of Address. Borrower
will notify each Lender Party, not later than five (5) Business Days after any
executive officer of Borrower has knowledge thereof, stating that such notice
is being given pursuant to this Agreement, of:
(a) the occurrence of any Material Adverse Change,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed by any
Restricted Person or of any default by any Restricted Person under any
indenture, mortgage, agreement, contract or other instrument to which any
of them is a party or by which any of them or any of their properties is
bound, if such acceleration or default could cause a Material Adverse
Change,
(d) the occurrence of any Termination Event,
(e) any claim of $1,000,000 or more, any notice of potential
liability under any Environmental Laws which might be reasonably likely to
exceed such amount, or any
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other material adverse claim asserted against any Restricted Person or with
respect to any Restricted Person's properties taken as a whole, and
(f) the filing of any suit or proceeding against any Restricted
Person in which an adverse decision could cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, default or Termination Event, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. Borrower will also notify
Administrative Agent and Administrative Agent's counsel in writing at least
twenty Business Days prior to the date that any Restricted Person changes its
name or the location of its chief executive office or principal place of
business or the place where it keeps its books and records concerning the
Collateral, furnishing with such notice any necessary financing statement
amendments or requesting Administrative Agent and its counsel to prepare the
same.
Section 6.5. Maintenance of Properties. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition (ordinary wear and
tear excepted) and in compliance with all applicable Laws, and will from time to
time make all repairs, renewals and replacements needed to enable the business
and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.
Section 6.6. Maintenance of Existence and Qualifications. Each
Restricted Person will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by applicable Law, except where the
failure so to qualify will not cause a Material Adverse Change.
Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each Restricted
Person will (a) timely file all required tax returns (including any extensions);
(b) timely pay all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income, profits or property; (c) within one hundred
twenty (120) days after the date such goods are delivered or such services are
rendered, pay all Liabilities owed by it on ordinary trade terms to vendors,
suppliers and other Persons providing goods and services used by it in the
ordinary course of its business; (d) pay and discharge when due all other
Liabilities now or hereafter owed by it; and (e) maintain appropriate accruals
and reserves for all of the foregoing in accordance with GAAP. Each Restricted
Person may, however, delay paying or discharging any of the foregoing so long as
it is in good faith contesting the validity thereof by appropriate proceedings,
if necessary, and has set aside on its books adequate reserves therefor which
are required by GAAP.
Section 6.8. Insurance. Each Restricted Person shall at all times
maintain insurance for its property in accordance with the Insurance Schedule,
which insurance shall be by financially sound and reputable insurers. Borrower
will maintain any additional insurance coverage as described in the respective
Security Documents. Upon demand by Administrative Agent any insurance policies
covering Collateral shall be endorsed (a) to provide for payment of losses to
Administrative Agent as its interests may appear, (b) to provide that such
policies may not be
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canceled or reduced or affected in any material manner for any reason without
fifteen days prior notice to Administrative Agent, and (c) to provide for any
other matters specified in any applicable Security Document or which
Administrative Agent may reasonably require. Each Restricted Person shall at all
times maintain insurance against its liability for injury to persons or property
in accordance with the Insurance Schedule, which insurance shall be by
financially sound and reputable insurers. Without limiting the foregoing, each
Restricted Person shall at all time maintain liability insurance in accordance
with the Insurance Schedule.
Section 6.9. Performance on Borrower's Behalf. If any Restricted Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Administrative Agent may
pay the same after notice of such payment by Administrative Agent is given to
Borrower. Borrower shall immediately reimburse Administrative Agent for any
such payments and each amount paid by Administrative Agent shall constitute an
Obligation owed hereunder which is due and payable on the date such amount is
paid by Administrative Agent.
Section 6.10. Interest. Borrower hereby promises to each Lender to pay
interest at the Default Rate on all Obligations (including Obligations to pay
fees or to reimburse or indemnify any Lender) which Borrower has in this
Agreement promised to pay to such Lender and which are not paid when due. Such
interest shall accrue from the date such Obligations become due until they are
paid.
Section 6.11. Compliance with Agreements and Law. Each Restricted Person
will perform all material obligations it is required to perform under the terms
of each indenture, mortgage, deed of trust, security agreement, lease, and
franchise, and each material agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound. Each Restricted Person will conduct its business and affairs in
compliance with all Laws applicable thereto.
Section 6.12. Environmental Matters; Environmental Reviews.
(a) Each Restricted Person will comply in all material respects with all
Environmental Laws now or hereafter applicable to such Restricted Person as well
as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters, and shall obtain, at or prior to the
time required by applicable Environmental Laws, all environmental, health and
safety permits, licenses and other authorizations necessary for its operations
and will maintain such authorizations in full force and effect.
(b) Borrower will promptly furnish to Administrative Agent all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by Borrower, or of which it has
notice, pending or threatened against Borrower, the potential liability of which
exceeds $1,000,000 or would cause a Material Adverse Change if resolved
adversely against Borrower, by any governmental authority with respect to any
alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.
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(c) Borrower will promptly furnish to Administrative Agent all requests
for information, notices of claim, demand letters, and other notifications,
received by Borrower in connection with its ownership or use of its properties
or the conduct of its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material at any location,
the potential liability of which exceeds $1,000,000 or would cause a Material
Adverse Change if resolved adversely against Borrower.
Section 6.13. Evidence of Compliance. Subject to the last sentence of
Section 6.3, each Restricted Person will furnish to each Lender at such
Restricted Person's or Borrower's expense all evidence which Administrative
Agent from time to time reasonably requests in writing as to the accuracy and
validity of or compliance with all representations, warranties and covenants
made by any Restricted Person in the Loan Documents, the satisfaction of all
conditions contained therein, and all other matters pertaining thereto.
Section 6.14. Agreement to Deliver Security Documents. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Administrative Agent in its sole
and absolute discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other Security Documents in form and
substance satisfactory to Administrative Agent for the purpose of granting,
confirming, and perfecting first and prior liens or security interests in any
real or personal property now owned or hereafter acquired by any Restricted
Person.
Section 6.15. Perfection and Protection of Security Interests and Liens.
Borrower will from time to time deliver, and will cause each other Restricted
Person from time to time to deliver, to Administrative Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by Restricted
Persons in form and substance satisfactory to Administrative Agent, which
Administrative Agent requests for the purpose of perfecting, confirming, or
protecting any Liens or other rights in Collateral securing any Obligations.
Section 6.16. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to each Lender a security interest, a lien,
and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Lender at common Law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Lender from
or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower with any Lender, and
(c) any other credits and claims of Borrower at any time existing against any
Lender, including claims under certificates of deposit. At any time and from
time to time during the continuance of any Event of Default, each Lender is
hereby authorized to foreclose upon, or to offset against the Obligations then
due and payable (in either case without notice to Borrower), any and all items
hereinabove referred to. The remedies of foreclosure and offset are separate
and cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other.
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Section 6.17. Guaranties of Borrower's Subsidiaries. Each Subsidiary of
Borrower now existing or created, acquired or coming into existence after the
date hereof shall, promptly upon request by Administrative Agent, execute and
deliver to Administrative Agent an absolute and unconditional guaranty of the
timely repayment of the Obligations and the due and punctual performance of the
obligations of Borrower hereunder, which guaranty shall be satisfactory to
Administrative Agent in form and substance. Each Subsidiary of Borrower
existing on the date hereof shall duly execute and deliver such a guaranty prior
to the making of any Loan hereunder. Borrower will cause each of its
Subsidiaries to deliver to Administrative Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Administrative
Agent and its counsel that such Subsidiary has taken all corporate or
partnership action necessary to duly approve and authorize its execution,
delivery and performance of such guaranty and any other documents which it is
required to execute.
Section 6.18. Interest Rate Hedging Agreements. Borrower shall at all
times maintain interest rate Hedging Contracts which are: (a) for combined
durations as of any day of not less than 24 months following such time, (b) in
combined notional amounts not less than fifty percent (50%) of the sum of (i)
the Revolver Loans projected by Borrower in good faith to be outstanding and
(ii) the outstanding principal balance of the Term Loans, (c) in compliance with
Section 7.3, and (d) otherwise on terms acceptable to Administrative Agent in
its sole discretion.
Section 6.19. Compliance with Agreements. Each Restricted Person shall
observe, perform or comply with any agreement with any Person or any term or
condition of any instrument, if such agreement or instrument is materially
significant to Borrower or to Borrower and its Subsidiaries on a Consolidated
basis or materially significant to any Guarantor, and such failure is not
remedied within the applicable period of grace (if any) provided in such
agreement or instrument.
Section 6.20. Year 2000.
(a) Borrower (i) no later than December 31, 1998 shall have completed the
analysis of its operations and the operations of Restricted Persons and their
Affiliates that could be adversely affected by failure to become Year 2000
compliant (that is, that computer applications, imbedded microchips and other
systems will be able to perform date-sensitive functions prior to and after
December 31, 1999) and developed a plan for Restricted Persons and their
Affiliates for becoming Year 2000 compliant in a timely manner, and (ii) shall
at all times after development of such plan implement such plan in all material
respects, in a timely manner, and in accordance with the schedule of such plan.
Contemporaneously with the delivery of each compliance certificate under Section
6.2 (a) or (b) on and after December 31, 1998, Borrower shall certify that it
reasonably believes that Restricted Persons and their Affiliates will become
Year 2000 compliant for their operations on a timely basis except to the extent
that a failure to do so could not reasonably be expected to cause a Material
Adverse Change.
(b) Contemporaneously with the delivery of each compliance certificate
under Section 6.2 (a) or (b) on and after December 31, 1998, Borrower shall
certify that it reasonably believes any suppliers and vendors that are material
to the operations of Borrower or its Subsidiaries and
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Affiliates will be Year 2000 compliant for their own computer applications
except to the extent that a failure to do so could not reasonably be expected to
cause a Material Adverse Change.
Section 6.21. Rents. By the terms of the various Security Documents,
certain Restricted Persons are and will be assigning to Administrative Agent,
for the benefit of Lender Parties, all of the "Rents" (as defined therein)
accruing to the property covered thereby. Notwithstanding any such assignments,
so long as no Default has occurred and is continuing, (i) such Restricted
Persons may continue to receive and collect from the payors of such Rents all
such Rents, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified, and free and clear of such Liens,
use the proceeds of the Rents, and (ii) the Administrative Agent will not notify
the obligors of such Rents or take any other action to cause proceeds thereof to
be remitted to the Administrative Agent. Upon the occurrence of a Default,
Administrative Agent may exercise all rights and remedies granted under the
Security Documents, including the right to obtain possession of all Rents then
held by such Restricted Persons or to receive directly from the payors of such
Rents all other Rents until such time as such Default is no longer continuing.
If the Administrative Agent shall receive any Rent proceeds from any payor at
any time other than during the continuance of a Default, then it shall notify
Borrower thereof and (i) upon request and pursuant to the instructions of
Borrower, it shall, if no Default is then continuing, remit such proceeds to the
Borrower and (ii) at the request and expense of Borrower, execute and deliver a
letter to such payors confirming Restricted Persons' right to receive and
collect Rents until otherwise notified by Administrative Agent. In no case
shall any failure, whether purposed or inadvertent, by Administrative Agent to
collect directly any such Rents constitute in any way a waiver, remission or
release of any of its rights under the Security Documents, nor shall any release
of any Rents by Administrative Agent to such Restricted Persons constitute a
waiver, remission, or release of any other Rents or of any rights of
Administrative Agent to collect other Rents thereafter.
ARTICLE VII - Negative Covenants of Borrower
To conform with the terms and conditions under which each Lender is willing
to have credit outstanding to Borrower, and to induce each Lender to enter into
this Agreement and make the Loans, Borrower covenants and agrees that until the
full and final payment of the Obligations and the termination of this Agreement,
unless Majority Lenders, or all Lenders as required under Section 10.1, have
previously agreed otherwise:
Section 7.1. Indebtedness. No Restricted Person will in any manner owe
or be liable for Indebtedness except:
(a) the Obligations;
(b) Indebtedness arising under Hedging Contracts permitted under Section
7.3;
(c) Indebtedness of any Restricted Person owing to Borrower or any
wholly-owned Subsidiary of Borrower; and
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(d) other Indebtedness not to exceed the aggregate principal amount of
$25,000,000 at any one time outstanding.
Section 7.2. Limitation on Liens. No Restricted Person will create,
assume or permit to exist any Lien upon any of the properties or assets which it
now owns or hereafter acquires, except the following ("Permitted Liens"):
(a) Liens created pursuant to this Agreement or the Security Documents and
Liens existing on the date of this Agreement and listed in the Disclosure
Schedule;
(b) Liens imposed by any governmental authority for taxes, assessments or
charges not yet due or the validity of which is being contested in good faith
and by appropriate proceedings, if necessary, for which adequate reserves are
maintained on the books of any Restricted Person in accordance with GAAP;
(c) pledges or deposits under worker's compensation, unemployment
insurance or other social security legislation;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's, or other like Liens arising in the ordinary course of business for
amounts which are not more than 60 days past due or the validity of which is
being contested in good faith and by appropriate proceedings, if necessary, and
for which adequate reserves are maintained on the books of any Restricted Person
in accordance with GAAP;
(e) deposits of cash or securities to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of real
property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of any Restricted Person;
(g) Liens constituting a Capital Lease as permitted under Section 7.1(d)
hereof;
(h) Liens upon any property or assets acquired after the date hereof by a
Restricted Person, each of which either (i) existed on such property or asset
before the time of its acquisition and was not created in anticipation thereof,
or (ii) was created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
the cost of construction) of such property or asset; provided that no such Lien
shall extend to or cover any property or asset of a Restricted Person other than
the property or asset so acquired (or constructed) and the Indebtedness secured
thereby is permitted under Section 7.1(d) hereof; and any extension, renewal,
refinancing, refunding or replacement (or successive extensions, renewals,
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refinancings, refundings or replacements), in whole or part, of the foregoing,
provided, however, that such Liens shall not cover or secure any additional
Indebtedness, obligations, property or asset;
(i) rights reserved to or vested in any governmental authority by the
terms of any right, power, franchise, grant, license or permit, or by any
provision of law, to revoke or terminate any such right, power, franchise,
grant, license or permit or to condemn or acquire by eminent domain or similar
process;
(j) rights reserved to or vested by Law in any governmental authority to
in any manner, control or regulate in any manner any of the properties of any
Restricted Person or the use thereof or the rights and interests of any
Restricted Person therein, in any manner under any and all Laws;
(k) rights reserved to the grantors of any properties of any Restricted
Person, and the restrictions, conditions, restrictive covenants and limitations,
in respect thereto, pursuant to the terms, conditions and provisions of any
rights-of-way agreements, contracts or other agreements therewith; and
(l) Inchoate Liens in respect of pending litigation or with respect to a
judgment which has not resulted in an Event of Default under Section 8.1.
Section 7.3. Hedging Contracts. No Restricted Person will be a party to
or in any manner be liable on any Hedging Contract, except:
(a) Hedging Contracts entered into by a Restricted Person with the purpose
and effect of fixing interest rates on a principal amount of indebtedness of
such Restricted Person that is accruing interest at a variable rate, provided
that (i) the aggregate notional amount of such contracts never exceeds seventy-
five percent (75%) of the anticipated outstanding principal balance of the
indebtedness to be hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, (ii) the floating rate index of each
such contract generally matches the index used to determine the floating rates
of interest on the corresponding indebtedness to be hedged by such contract and
(iii) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Lender or one
of its Affiliates) at the time the contract is made has long-term unsecured and
unenhanced debt obligations rated AA or Aa2 or better, respectively, by either
Rating Agency or is an investment grade-rated industry participant or otherwise
acceptable to Majority Lenders.
(b) Hedging Contracts entered into with the purpose and effect of fixing
prices on crude oil then owned by a Restricted Person or which a Restricted
Person is then obligated to purchase, provided that at all times: (i) no such
contract fixes a price for a term of more than twelve (12) months; (ii) the
aggregate amount of oil so hedged at any one time does not exceed (A) for the
period of six (6) months beginning with the acquisition under the Acquisition
Documents, the number of barrels hedged by Borrower's Subsidiaries immediately
prior to Borrower's acquisition of such Subsidiaries and (B) at any time
thereafter, 500,000 barrels, (iii) such contract is entered
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into for the purpose of hedging the price risk on oil anticipated to be disposed
of and for which no other fixed sale price or other price fixing arrangement
exists, and (iv) each such contract is either (A) with a counterparty or has a
guarantor of the obligation of the counterparty who (unless such counterparty is
a Lender Party or one of its Affiliates) at the time the contract is made has
long-term unsecured and unenhanced debt obligations rated AA or Aa2 or better,
respectively, by either Rating Agency or (B) entered into on the New York
Mercantile Exchange through a broker listed on the Disclosure Schedule or
otherwise approved by Majority Lenders.
Section 7.4. Limitation on Mergers, Issuances of Securities. Except as
expressly provided in this section or otherwise disclosed on the Disclosure
Schedule, no Restricted Person will (a) enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), (b) acquire any business or property
from, or capital stock of, or be a party to any acquisition of, any Person
except for purchases of inventory and other property to be sold or used in the
ordinary course of business and Investments permitted under Section 7.7 hereof
or (c) sell, transfer, lease, exchange, alienate or otherwise dispose of, in
one transaction or a series of transactions, any part of its business or
property, whether now owned or hereafter acquired, except for sales or transfers
not prohibited by under Section 7.5 hereof. Any Subsidiary of Borrower may,
however, be merged into or consolidated with (i) another Subsidiary of Borrower,
so long as a Guarantor is the surviving business entity, or (ii Borrower, so
long as Borrower is the surviving business entity. Borrower will not issue any
securities other than shares of its common or preferred stock and any options or
warrants giving the holders thereof only the right to acquire such shares. No
Subsidiary of Borrower will issue any additional shares of its capital stock or
other securities or any options, warrants or other rights to acquire such
additional shares or other securities except to Borrower or to a wholly-owned
Subsidiary of Borrower. No Subsidiary of Borrower which is a partnership will
allow any diminution of Borrower's interest (direct or indirect) therein.
Section 7.5. Limitation on Sales of Property. No Restricted Person will
sell, transfer, lease, exchange, alienate or dispose of any Collateral or any of
its material assets or properties or any material interest therein except:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(b) inventory (including pipeline linefill) which is sold in the ordinary
course of business on ordinary trade terms;
(c) in other property which is sold for fair consideration not in the
aggregate in excess of $5,000,000 in any Fiscal Year, the sale of which will not
materially impair or diminish the value of the Collateral or Borrower's
Consolidated financial condition, business or operations; and
(d) sales or transfers, subject to the Security Documents, by a Subsidiary
of Borrower to Borrower or a wholly-owned Subsidiary of Borrower that is a
Guarantor.
No Restricted Person will sell, transfer or otherwise dispose of capital stock
of or interest in any Subsidiary of Borrower except to Borrower or to another
wholly-owned Subsidiary of Borrower.
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No Restricted Person will discount, sell, pledge or assign any notes payable to
it, accounts receivable or future income. So long as no Default then exists,
Administrative Agent will, at Borrower's request and expense, execute a release,
satisfactory to Borrower and Administrative Agent, of any Collateral so sold,
transferred, leased, exchanged, alienated or disposed of pursuant to the clause
(a) or (c) of this Section.
Section 7.6. Limitation on Dividends and Redemptions. No Restricted
Person will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other interest
in it, nor will any Restricted Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the capital
stock of or partnership interests in any Restricted Person (whether such
interests are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Restricted
Person, while the Revolver Loan is outstanding. Notwithstanding the foregoing,
Subsidiaries of Borrower shall not be restricted from declaring and paying
dividends or making any other distribution to Borrower. Upon the repayment in
full of all Revolver Loans with an issuance of equity and the termination of the
Revolver Commitments, dividends shall be permitted on terms acceptable to
Majority Lenders in their sole and absolute discretion.
Section 7.7. Limitation on Investments and New Businesses. No Restricted
Person will (a) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business, (b) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present businesses and
operations, (c) make any acquisitions of or capital contributions to or other
Investments in any Person, other than Permitted Investments, or (d) make any
significant acquisitions or Investments in any properties, in each case, other
than oil and gas gathering and transportation, storage, and terminalling
facilities.
Section 7.8. Limitation on Credit Extensions. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business, which extensions shall
not be for longer periods than those extended by similar businesses operated in
a normal and prudent manner.
Section 7.9. Transactions with Affiliates. No Restricted Person will
engage in any material transaction with any of its Affiliates except: (a)
transactions among Borrower and its wholly owned Subsidiaries, (b) transactions
governed by the Affiliate Agreements, and (c) other transactions entered into in
the ordinary course of business of such Restricted Person on terms which are no
less favorable to it than those which would have been obtainable at the time in
arm's-length transactions with Persons other than such Affiliates.
Section 7.10. Prohibited Contracts. Except as expressly provided for in
the Loan Documents, no Restricted Person will, directly or indirectly, enter
into, create, or otherwise allow to exist any contract or other consensual
restriction on the ability of any Subsidiary of Borrower to: (a) pay dividends
or make other distributions to Borrower, (b) redeem equity interests held in it
by Borrower, (c) repay loans and other indebtedness owing by it to Borrower, or
(d) transfer
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any of its assets to Borrower. No Restricted Person will amend or permit any
amendment to (i) any of the Affiliate Agreements or (ii) any contract or lease
which releases, qualifies, limits, makes contingent or otherwise detrimentally
affects the rights and benefits of Administrative Agent or any Lender under or
acquired pursuant to any Security Documents. No ERISA Affiliate will incur any
obligation to contribute to any "multiemployer plan" as defined in Section 4001
of ERISA that is subject to Title IV of ERISA.
Section 7.11. Limitations on Capital Expenditures. Restricted Persons
shall not make any single capital expenditure in excess of $3,000,000 nor any
capital expenditures in excess of $7,500,000 in the aggregate for all Restricted
Persons in any Fiscal Year without the approval of Majority Lenders. For
purposes of this Section 7.11, capital expenditures for the repair or
replacement of property shall be included in the foregoing calculation after
deducting proceeds received by Restricted Persons from (a) insurance related to
the property so repaired or replaced, (b) the sale, disposal, exchange, or
salvaging of the property so repaired or replaced, and (c) payments relating to
condemnation of the property so replaced. The foregoing shall not limit (i) any
capital expenditures listed on Schedule 5 or (ii) any acquisition, up to an
aggregate amount with respect to all Restricted Persons in any Fiscal Year of
$15,000,000, of property which will not transport or gather crude oil directly
to or from any of the Restricted Persons' properties owned at the time of such
acquisition and is not otherwise directly connected to or directly associated
with any of the Restricted Persons' properties owned at the time of such
acquisition.
Section 7.12. Current Ratio. The ratio of Borrower's Consolidated
current assets to Borrower's Consolidated current liabilities will never be less
than 1.0 to 1.0. For purposes of this section, Borrower's Consolidated current
liabilities will be calculated without including (a) any payments of principal
on the Notes which are required to be repaid within one year from the time of
calculation and (b) all Liabilities arising under permitted Hedging Contracts.
Section 7.13. Net Worth. Borrower's Consolidated Net Worth will never be
less than the sum of (a) $110,000,000 plus (b) fifty percent (50%) of the
Consolidated Net Income (if positive) for each Fiscal Quarter from and after
June 30, 1998 to and including the Fiscal Quarter ending on, or most recently
ended prior to the date of determination thereof plus (c) fifty percent (50%) of
the net proceeds of any equity issued by Borrower on or after the date hereof.
Section 7.14. Interest Coverage Ratio. At the end of any Fiscal Quarter,
the ratio of (a) Consolidated EBITDA to (b) Interest Expense for the four-Fiscal
Quarter period (or other period specified in the following sentence) ending with
such Fiscal Quarter will not be less than (i) 1.75 to 1 for any such period
ending on or before December 31, 1999; (ii) 2.25 to 1 for any such period ending
after December 31, 1999 and on or before December 31, 2000; and (iii) 2.50 to 1
for any period ending after December 31, 2000. For the Fiscal Quarters ending on
September 30 and December 31, 1998 and March 31 and June 30, 1999, such
determination shall be made using the period from the date of the Acquisition to
the end of such Fiscal Quarter.
Section 7.15. Fixed Charge Coverage Ratio. At the end of any Fiscal
Quarter, beginning with the Fiscal Quarter ending on March 31, 2000, the ratio
of (a) the sum of Consolidated EBITDA plus Consolidated Lease Rentals to (b) the
sum of Interest Expense plus Consolidated Lease Rentals plus scheduled principal
payments required to be made on the Obligations and the
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amount of scheduled reductions in the Revolver Commitment whether or not a
repayment of the Revolver Loans is made in the same day, in each case for the
four-Fiscal Quarter period ending with such Fiscal Quarter will not be less than
(i) 1.20 to 1 for any such period ending on or before December 31, 2000; (ii)
1.30 to 1 for any such period ending after December 31, 2000 and on or before
December 31, 2001; and (iii) 1.40 to 1 for any period ending after December 31,
2001.
Section 7.16. Debt to Capital Ratio. The ratio of (a) all Consolidated
Indebtedness to (b) the sum of Consolidated Indebtedness plus Consolidated Net
Worth will never be greater than (i) .75 to 1.0 at any time on or before
December 31, 1999, (ii) .70 to 1.0 at any time after December 31, 1999 and on or
before December 31, 2000, and (iii) .60 to 1.0 at any time after December 31,
2000.
Section 7.17. Consolidated General and Administrative Expenses.
Borrower's Consolidated general and administrative expenses for any period of
twelve consecutive calendar months shall not exceed the Applicable G&A Limit.
As used herein, the Applicable G&A Limit will be $2,750,000 for each such period
ending on or prior to July 31, 1999 and shall increase by $11,460 at the end of
each calendar month thereafter. Borrower's Consolidated general and
administrative expenses will be determined in accordance with GAAP except that
(a) all capital expenditures made during any period and properly characterized
as capitalized charges will be treated as expenses in such period without regard
to the amount which may be capitalized under GAAP, and (b) general and
administrative expenses shall not include expenses relating to the Acquisition
up to the amount of $1,000,000 to the extent incurred on or prior to December
31, 1998.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events constitutes
an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay the principal component of any Loan
or any reimbursement obligation with respect to any Letter of Credit when due
and payable, whether at a date for the payment of a fixed installment or as a
contingent or other payment becomes due and payable or as a result of
acceleration or otherwise;
(b) Any Restricted Person fails to pay any Obligation (other than the
Obligations in subsection (a) above) when due and payable, whether at a date for
the payment of a fixed installment or as a contingent or other payment becomes
due and payable or as a result of acceleration or otherwise, within three
Business Days after the same becomes due;
(c) Any event defined as a "default" or "event of default" in any Loan
Document occurs, and the same is not remedied within the applicable period of
grace (if any) provided in such Loan Document;
(d) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 6.4 or Article VII;
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(e) Any Restricted Person fails (other than as referred to in subsections
(a), (b), (c) or (d) above) to duly observe, perform or comply with any
covenant, agreement, condition or provision of any Loan Document, and such
failure remains unremedied for a period of thirty (30) days after notice of such
failure is given by Administrative Agent to Borrower;
(f) Any representation or warranty previously, presently or hereafter made
in writing by or on behalf of any Restricted Person in connection with any Loan
Document shall prove to have been false or incorrect in any material respect on
any date on or as of which made, or any Loan Document at any time ceases to be
valid, binding and enforceable as warranted in Section 5.5 for any reason other
than its release or subordination by Administrative Agent;
(g) Any Restricted Person shall default in the payment when due of any
principal of or interest on any of its other Indebtedness in excess of
$2,500,000 in the aggregate (other than Indebtedness the validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves with respect thereto are maintained on the books of such Restricted
Person in accordance with GAAP), or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such Indebtedness
shall occur if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its stated
maturity;
(h) Either (i) any "accumulated funding deficiency" (as defined in Section
412(a) of the Code) in excess of $500,000 exists with respect to any ERISA Plan,
whether or not waived by the Secretary of the Treasury or his delegate, or (ii
any Termination Event occurs with respect to any ERISA Plan and the then current
value of such ERISA Plan's benefit liabilities exceeds the then current value of
such ERISA Plan's assets available for the payment of such benefit liabilities
by more than $500,000 (or in the case of a Termination Event involving the
withdrawal of a substantial employer, the withdrawing employer's proportionate
share of such excess exceeds such amount);
(i) Resources or any Restricted Person:
(i) has entered against it of a judgment, decree or order for relief
by a Tribunal of competent jurisdiction in an involuntary proceeding
commenced under any applicable bankruptcy, insolvency or other similar Law
of any jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such proceeding
commenced against it, in each case, which remains undismissed for a period
of sixty days; or
(ii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar Law now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended; or applies for or consents
to the entry of an order for relief in an involuntary case under any such
Law; or makes a general assignment for the benefit of creditors; or is
generally unable to pay (or admits in writing its inability to so pay) its
debts
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as such debts become due; or takes corporate or other action to authorize
any of the foregoing; or
(iii) has entered against it the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets in a proceeding
brought against or initiated by it, and such appointment or taking
possession is neither made ineffective nor discharged within sixty days
after the making thereof, or such appointment or taking possession is at
any time consented to, requested by, or acquiesced to by it; or
(iv) has entered against it the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of any part of the Collateral of a value in excess of
$2,500,000 in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor discharged
within sixty days after the making thereof, or such appointment or taking
possession is at any time consented to, requested by, or acquiesced to by
it; or
(v) has entered against it a final judgment for the payment of money
in excess of $1,000,000 (in each case not covered by insurance satisfactory
to Administrative Agent in its discretion), unless the same is stayed or
discharged within thirty days after the date of entry thereof or an appeal
or appropriate proceeding for review thereof is taken within such period
and a stay of execution pending such appeal is obtained; or
(vi) suffers a writ or warrant of attachment or any similar process
to be issued by any Tribunal against all or any substantial part of its
assets or any part of the Collateral of a value in excess of $2,500,000,
and such writ or warrant of attachment or any similar process is not stayed
or released within thirty days after the entry or levy thereof or after any
stay is vacated or set aside;
(j) Any Change in Control occurs; or
(k) Any "Event of Default" as defined in the Resources Credit Agreement
occurs.
Upon the occurrence of an Event of Default described in subsection (i)(i),
(i)(ii) or (i)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender to make any further Loans and any obligation of LC Issuer to issue
Letters of Credit hereunder shall be permanently terminated. During the
continuance of any other Event of Default, Administrative Agent at any time and
from time to time may (and upon written instructions from Majority Lenders,
Administrative Agent shall), without notice to Borrower or any other Restricted
Person, do either or both of the following: (1) terminate any obligation of
Lenders to make Loans hereunder and any obligation of LC Issuer to issue Letters
of Credit hereunder, and (2) declare any or all of the Obligations immediately
due
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and payable, and all such Obligations shall thereupon be immediately due and
payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of any
kind, all of which are hereby expressly waived by Borrower and each Restricted
Person who at any time ratifies or approves this Agreement.
Section 8.2. Remedies. If any Default shall occur and be continuing,
each Lender Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Lender Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Lender Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
ARTICLE IX - Administrative Agent
Section 9.1. Appointment and Authority. Each Lender Party hereby
irrevocably authorizes Administrative Agent, and Administrative Agent hereby
undertakes, to receive payments of principal, interest and other amounts due
hereunder as specified herein and to take all other actions and to exercise such
powers under the Loan Documents as are specifically delegated to Administrative
Agent by the terms hereof or thereof, together with all other powers reasonably
incidental thereto. The relationship of Administrative Agent to the other
Lender Parties is only that of one commercial lender acting as administrative
agent for others, and nothing in the Loan Documents shall be construed to
constitute Administrative Agent a trustee or other fiduciary for any Lender
Party or any holder of any participation in a Note nor to impose on
Administrative Agent duties and obligations other than those expressly provided
for in the Loan Documents. With respect to any matters not expressly provided
for in the Loan Documents and any matters which the Loan Documents place within
the discretion of Administrative Agent, Administrative Agent shall not be
required to exercise any discretion or take any action, and it may request
instructions from Lenders with respect to any such matter, in which case it
shall be required to act or to refrain from acting (and shall be fully protected
and free from liability to all Lender Parties in so acting or refraining from
acting) upon the instructions of Majority Lenders (including itself), provided,
however, that Administrative Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable Law. Upon receipt
by Administrative Agent from Borrower of any communication calling for action on
the part of Lenders or upon notice from Borrower or any Lender to Administrative
Agent of any Default or Event of Default, Administrative Agent shall promptly
notify each other Lender thereof.
Section 9.2. Exculpation, Administrative Agent's Reliance, Etc. Neither
Administrative Agent nor any of its directors, officers, agents, attorneys, or
employees shall be liable for any action taken or omitted to be taken by any of
them under or in connection with the Loan Documents, INCLUDING THEIR NEGLIGENCE
OF ANY KIND, except that each shall be liable for its own gross negligence or
willful misconduct. Without limiting the generality of the foregoing,
Administrative Agent (a) may treat the payee of any Note as the holder thereof
until
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Administrative Agent receives written notice of the assignment or transfer
thereof in accordance with this Agreement, signed by such payee and in form
satisfactory to Administrative Agent; (b) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any other
Lender Party and shall not be responsible to any other Lender Party for any
statements, warranties or representations made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Loan Documents on the part of any Restricted Person or to inspect the property
(including the books and records) of any Restricted Person; (e) shall not be
responsible to any other Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
instrument or document furnished in connection therewith; (f) may rely upon the
representations and warranties of each Restricted Person or Lender Party in
exercising its powers hereunder; and (g) shall incur no liability under or in
respect of the Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (including any facsimile, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper Person or Persons.
Section 9.3. Credit Decisions. Each Lender Party acknowledges that it
has, independently and without reliance upon any other Lender Party, made its
own analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Lender Party also acknowledges that it will, independently and without
reliance upon any other Lender Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents.
SECTION 9.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY
ADMINISTRATIVE AGENT (TO THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10)
DAYS AFTER DEMAND) FROM AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND
ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES,
ACTIONS, JUDGMENTS, SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS
(INCLUDING REASONABLE FEES OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF
ANY KIND OR NATURE WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES
AND COSTS") WHICH TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST ADMINISTRATIVE AGENT GROWING OUT OF, RESULTING
FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE COLLATERAL, THE LOAN
DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE ENFORCEMENT THEREOF) AT
ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN (WHETHER ARISING IN
CONTRACT OR IN TORT
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OR OTHERWISE AND INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL
LAWS BY ANY PERSON OR ANY LIABILITIES OR DUTIES OF ANY PERSON WITH RESPECT TO
HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY ADMINISTRATIVE AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Administrative Agent for that portion, if any, of any liabilities and costs
which is proximately caused by Administrative Agent's own individual gross
negligence or willful misconduct, as determined in a final judgment. Cumulative
of the foregoing, each Lender agrees to reimburse Administrative Agent promptly
upon demand for such Lender's Percentage Share of any costs and expenses to be
paid to Administrative Agent by Borrower under Section 10.4(a) to the extent
that Administrative Agent is not timely reimbursed for such expenses by Borrower
as provided in such section. As used in this section the term "Administrative
Agent" shall refer not only to the Person designated as such in Section 1.1 but
also to each director, officer, agent, attorney, employee, representative and
Affiliate of such Person.
Section 9.5. Rights as Lender. In its capacity as a Lender,
Administrative Agent shall have the same rights and obligations as any Lender
and may exercise such rights as though it were not Administrative Agent.
Administrative Agent may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with any
Restricted Person or their Affiliates, all as if it were not Administrative
Agent hereunder and without any duty to account therefor to any other Lender.
Section 9.6. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Administrative Agent
under Section 3.1, causes such Lender Party to have received more than it would
have received had such payment been received by Administrative Agent and
distributed pursuant to Section 3.1, then (a) it shall be deemed to have
simultaneously purchased and shall be obligated to purchase interests in the
Obligations as necessary to cause all Lender Parties to share all payments as
provided for in Section 3.1, and (b) such other adjustments shall be made from
time to time as shall be equitable to ensure that Administrative Agent and all
Lender Parties share all payments of Obligations as provided in Section 3.1;
provided, however, that nothing herein contained shall in any way affect the
right of any Lender Party to obtain payment (whether by exercise of rights of
banker's lien, set-off or counterclaim or otherwise) of indebtedness other than
the Obligations. Borrower expressly consents to the foregoing arrangements and
agrees that any holder of any such interest or other participation in the
Obligations, whether or not acquired
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pursuant to the foregoing arrangements, may to the fullest extent permitted by
Law and, subject to the provisions of Section 6.16, exercise any and all rights
of banker's lien, set-off, or counterclaim as fully as if such holder were a
holder of the Obligations in the amount of such interest or other participation.
If all or any part of any funds transferred pursuant to this section is
thereafter recovered from the seller under this section which received the same,
the purchase provided for in this section shall be deemed to have been rescinded
to the extent of such recovery, together with interest, if any, if interest is
required pursuant to the order of a Tribunal to be paid on account of the
possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Administrative Agent in good faith
determines that it is uncertain about how to distribute to Lender Parties any
funds which it has received, or whenever Administrative Agent in good faith
determines that there is any dispute among Lender Parties about how such funds
should be distributed, Administrative Agent may choose to defer distribution of
the funds which are the subject of such uncertainty or dispute. If
Administrative Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Administrative Agent is otherwise required to
invest funds pending distribution to Lender Parties, Administrative Agent shall
invest such funds pending distribution; all interest on any such Investment
shall be distributed upon the distribution of such Investment and in the same
proportion and to the same Persons as such Investment. All moneys received by
Administrative Agent for distribution to Lender Parties (other than to the
Person who is Administrative Agent in its separate capacity as a Lender Party)
shall be held by Administrative Agent pending such distribution solely as
Administrative Agent for such Lender Parties, and Administrative Agent shall
have no equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article are
intended solely for the benefit of Lender Parties, and no Restricted Person
shall be entitled to rely on any such provision or assert any such provision in
a claim or defense against any Lender (other than in relation to the reference
to Section 6.16 contained in Section 9.6 or the right to reasonably approve a
successor Administrative Agent under Section 9.9). Lender Parties may waive or
amend such provisions as they desire without any notice to or consent of
Borrower or any other Restricted Person.
Section 9.9. Resignation. Administrative Agent may resign at any time by
giving written notice thereof to Lenders and Borrower. Each such notice shall
set forth the date of such resignation. Upon any such resignation Majority
Lenders shall have the right to appoint a successor Administrative Agent,
subject to the approval of Borrower, which approval will not be unreasonably
withheld. A successor must be appointed for any retiring Administrative Agent,
and such Administrative Agent's resignation shall become effective when such
successor accepts such appointment. If, within thirty days after the date of
the retiring Administrative Agent's resignation, no successor Administrative
Agent has been appointed and has accepted such appointment, then the retiring
Administrative Agent may appoint a successor Administrative Agent, which shall
be a commercial bank organized or licensed to conduct a banking or trust
business under the Laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any retiring Administrative Agent's
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resignation hereunder the provisions of this Article IX shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Loan Documents.
Section 9.10. Other Agents. Neither the Syndication Agent nor the
Documentation Agent, in such capacities, shall have any duties or
responsibilities or incur any liabilities under this Agreement or the other Loan
Documents.
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Lender in exercising any right, power or remedy
which such Lender Party may have under any of the Loan Documents shall operate
as a waiver thereof or of any other right, power or remedy, nor shall any single
or partial exercise by any Lender Party of any such right, power or remedy
preclude any other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any Loan Document and no consent to any
departure therefrom shall ever be effective unless it is in writing and signed
as provided below in this section, and then such waiver or consent shall be
effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. No notice to or demand on any
Restricted Person shall in any case of itself entitle any Restricted Person to
any other or further notice or demand in similar or other circumstances. This
Agreement and the other Loan Documents set forth the entire understanding
between the parties hereto with respect to the transactions contemplated herein
and therein and supersede all prior discussions and understandings with respect
to the subject matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective against any party hereto unless the same
is in writing and signed by (i) if such party is Borrower, by Borrower, (ii) if
such party is Administrative Agent or LC Issuer, by such party, and (ii) if such
party is a Lender, by such Lender or by Administrative Agent on behalf of
Lenders with the written consent of Majority Lenders (which consent has already
been given as to the termination of the Loan Documents as provided in Section
10.9). Notwithstanding the foregoing or anything to the contrary herein,
Administrative Agent shall not, without the prior consent of each individual
Lender, execute and deliver on behalf of such Lender any waiver or amendment
which would: (1) waive any of the conditions specified in Article IV (provided
that Administrative Agent may in its discretion withdraw any request it has made
under Section 4.3), (2) increase the maximum amount which such Lender is
committed hereunder to lend (including in the case of Revolver Lenders, the
automatic reductions in the Revolver Commitment), (3) reduce any fees payable to
such Lender hereunder, or the principal of, or interest on, such Lender's Note,
(4) change any date fixed for any payment of any such fees, principal or
interest, (5) amend the definition herein of "Majority Lenders" or otherwise
change the aggregate amount of Percentage Shares which is required for
Administrative Agent, Lenders or any of them to take any particular action under
the Loan Documents, (6) release Borrower from its obligation to pay such
Lender's Note or any Guarantor from its guaranty of such
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payment, or (7) release any Collateral, except such releases relating to sales
of property as permitted under Section 7.5.
(b) Acknowledgments and Admissions. Borrower hereby represents, warrants,
acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Administrative Agent or any
other Lender Party, whether written, oral or implicit, other than as expressly
set out in this Agreement or in another Loan Document delivered on or after the
date hereof, (iii) there are no representations, warranties, covenants,
undertakings or agreements by any Lender Party as to the Loan Documents except
as expressly set out in this Agreement or in another Loan Document delivered on
or after the date hereof, (iv) no Lender Party has any fiduciary obligation
toward Borrower with respect to any Loan Document or the transactions
contemplated thereby, (v) the relationship pursuant to the Loan Documents
between Borrower and the other Restricted Persons, on one hand, and each Lender
Party, on the other hand, is and shall be solely that of debtor and creditor,
respectively, (vi) no partnership or joint venture exists with respect to the
Loan Documents between any Restricted Person and any Lender Party, (vii)
Administrative Agent is not Borrower's Administrative Agent, but Administrative
Agent for Lenders, (viii) should an Event of Default or Default occur or exist,
each Lender Party will determine in its sole discretion and for its own reasons
what remedies and actions it will or will not exercise or take at that time,
(ix) without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Lender Party, or any representative thereof,
and no such representation or covenant has been made, that any Lender Party
will, at the time of an Event of Default or Default, or at any other time,
waive, negotiate, discuss, or take or refrain from taking any action permitted
under the Loan Documents with respect to any such Event of Default or Default or
any other provision of the Loan Documents, and (x) all Lender Parties have
relied upon the truthfulness of the acknowledgments in this section in deciding
to execute and deliver this Agreement and to become obligated hereunder.
(c) Representation by Lenders. Each Lender hereby represents that it will
acquire its Note for its own account in the ordinary course of its commercial
lending or investing business; however, the disposition of such Lender's
property shall at all times be and remain within its control and, in particular
and without limitation, such Lender may sell or otherwise transfer its Note, any
participation interest or other interest in its Note, or any of its other rights
and obligations under the Loan Documents subject to compliance with Sections
10.5(b) through (f), inclusive, and applicable Law.
(d) JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
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THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of the
Notes and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Lender Party and all of Lender Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Loan Document shall be deemed representations and
warranties by Borrower or agreements and covenants of Borrower under this
Agreement. The representations, warranties, indemnities, and covenants made by
Restricted Persons in the Loan Documents, and the rights, powers, and privileges
granted to Lender Parties in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
any Lender Party of any such representation, warranty, indemnity, covenant,
right, power or privilege. In particular and without limitation, no exception
set out in this Agreement to any representation, warranty, indemnity, or
covenant herein contained shall apply to any similar representation, warranty,
indemnity, or covenant contained in any other Loan Document, and each such
similar representation, warranty, indemnity, or covenant shall be subject only
to those exceptions which are expressly made applicable to it by the terms of
the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Administrative Agent may give telephonic notices to the other Lender
Parties), and shall be deemed sufficiently given or furnished if delivered by
personal delivery, by facsimile or other electronic transmission, by delivery
service with proof of delivery, or by registered or certified United States
mail, postage prepaid, to Borrower and Restricted Persons at the address of
Borrower specified on the signature pages hereto and to each Lender Party at its
address specified on the signature pages hereto (unless changed by similar
notice in writing given by the particular Person whose address is to be
changed). Any such notice or communication shall be deemed to have been given
(a) in the case of personal delivery or delivery service, as of the date of
first attempted delivery during normal business hours at the address provided
herein, (b) in the case of facsimile or other electronic transmission, upon
receipt, or (c) in the case of registered or certified United States mail, three
days after deposit in the mail; provided, however, that no Borrowing Notice or
Continuation/Conversion Notice shall become effective until actually received by
Administrative Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, Borrower will promptly (and in any event, within
30 days after any
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invoice or other statement or notice) pay: (i) all transfer, stamp, mortgage,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any of the
other Loan Documents or any other document referred to herein or therein, (ii)
all reasonable costs and expenses incurred by or on behalf of Administrative
Agent (including attorneys' fees, consultants' fees and engineering fees, travel
costs and miscellaneous expenses) in connection with (1) the negotiation,
preparation, execution and delivery of the Loan Documents, and any and all
consents, waivers or other documents or instruments relating thereto, (2) the
filing, recording, refiling and re-recording of any Loan Documents and any other
documents or instruments or further assurances required to be filed or recorded
or refiled or re-recorded by the terms of any Loan Document, (3) the borrowings
hereunder and other action reasonably required in the course of administration
hereof, (4) monitoring or confirming (or preparation or negotiation of any
document related to) Borrower's compliance with any covenants or conditions
contained in this Agreement or in any Loan Document, and (iii) all reasonable
costs and expenses incurred by or on behalf of any Lender Party (including
attorneys' fees, consultants' fees and accounting fees) in connection with the
defense or enforcement of any of the Loan Documents (including this section) or
the defense of any Lender Party's exercise of its rights thereunder. In addition
to the foregoing, until all Obligations have been paid in full, Borrower will
also pay or reimburse Administrative Agent for all reasonable out-of-pocket
costs and expenses of Administrative Agent or its agents or employees in
connection with the continuing administration of the Loans and the related due
diligence of Administrative Agent, including travel and miscellaneous expenses
and fees and expenses of Administrative Agent's outside counsel, reserve
engineers and consultants engaged in connection with the Loan Documents.
(b) Indemnity. Borrower agrees to indemnify each Lender Party, upon
demand, from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys, accountants,
experts and advisors) of any kind or nature whatsoever (in this section
collectively called "liabilities and costs") which to any extent (in whole or in
part) may be imposed on, incurred by, or asserted against such Lender Party
growing out of, resulting from or in any other way associated with any of the
Collateral, the Loan Documents and the transactions and events (including the
enforcement or defense thereof) at any time associated therewith or contemplated
therein (whether arising in contract or in tort or otherwise and including any
violation or noncompliance with any Environmental Laws by any Lender Party or
any other Person or any liabilities or duties of any or any Lender Party or any
other Person with respect to Hazardous Materials found in or released into the
environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY,
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provided only that no Lender Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including
Borrower or any of its Affiliates) ever alleges such gross negligence or willful
misconduct by any Lender Party, the indemnification provided for in this section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the term "Lender Party" shall refer
not only to each Person designated as such in Section 1.1 but also to each
director, officer, trustee, agent, attorney, employee, representative and
Affiliate of such Persons.
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments.
(a) All Obligations which are incurred by two or more Restricted Persons
shall be their joint and several obligations and liabilities. All grants,
covenants and agreements contained in the Loan Documents shall bind and inure to
the benefit of the parties thereto and their respective successors and permitted
assigns; provided, however, that no Restricted Person may assign or transfer any
of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of all Lenders. Neither Borrower nor any
Affiliates of Borrower shall directly or indirectly purchase or otherwise retire
any Obligations owed to any Lender nor will any Lender accept any offer to do
so, unless each Lender shall have received substantially the same offer with
respect to the same Percentage Share of the Obligations owed to it. If Borrower
or any Affiliate of Borrower at any time purchases some but less than all of the
Obligations owed to all Lender Parties, such purchaser shall not be entitled to
any rights of any Lender under the Loan Documents unless and until Borrower or
its Affiliates have purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person unless the agreement between such Lender and such participant at all
times provides: (i) that such participation exists only as a result of the
agreement between such participant and such Lender and that such transfer does
not give such participant any right to vote as a Lender or any other direct
claims or rights against any Person other than such Lender, (ii) that such
participant is not entitled to payment from any Restricted Person under Sections
3.2 through 3.6 of amounts in excess of those payable to such Lender under such
sections (determined without regard to the sale of such participation), and
(iii) unless such participant is an Affiliate of such Lender, that such
participant shall not be entitled to require such Lender to take any action
under any Loan Document or to obtain the consent of such participant prior to
taking any action under any Loan Document, except for actions which would
require the consent of all Lenders under subsection (a) of Section 10.1. No
Lender selling such a participation shall, as between the other parties hereto
and such Lender, be relieved of any of its obligations hereunder as a result of
the sale of such participation. Each Lender which sells any such participation
to any Person (other than an Affiliate of such Lender) shall give prompt notice
thereof to Administrative Agent and Borrower; provided, however, that no
liability shall arise if any such Lender fails to give such notice to Borrower.
(c) Except for sales of participations under the immediately preceding
subsection, no Lender shall make any assignment or transfer of any kind of its
commitments or any of its rights
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under its Loans or under the Loan Documents, except for assignments to an
Eligible Transferee or, subject to the provisions of Subsection (g) below, to an
Affiliate, and then only if such assignment is made in accordance with the
following requirements:
(i) In the case of an assignment by a Revolver Lender of less than
all of its Revolver Loans, LC Obligations, and Revolver Commitments, each
such assignment shall apply to a consistent percentage of all Revolver
Loans and LC Obligations owing to the assignor Revolver Lender hereunder
and to the same percentage of the unused portion of the assignor Lender's
Revolver Commitments, so that after such assignment is made both the
assignee Revolver Lender and the assignor Revolver Lender shall have a
fixed (and not a varying) Revolver Percentage Share in its Revolver Loans
and LC Obligations and be committed to make that Revolver Percentage Share
of all future Revolver Loans and make that Revolver Percentage Share of all
future participations in LC Obligations, and the Revolver Percentage Share
of the Revolver Commitment of both the assignor and assignee shall equal or
exceed $5,000,000.
(ii) In the case of an assignment by a Term Lender, after such
assignment is made the outstanding Term Loans of both the assignor and
assignee shall equal or exceed $5,000,000, except with respect to an
assignment of all such Lender's Term Loans or such lesser amount as may be
agreed to by the Administrative Agent and Borrower (except that no such
minimum shall be applicable with respect to an assignment to a Lender).
(iii) The parties to each such assignment shall execute and deliver
to Administrative Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in the
form of Exhibit H, appropriately completed, together with the Note subject
to such assignment and a processing fee payable by such assignor Lender
(and not at Borrower's expense) to Administrative Agent of $3,500. Upon
such execution, delivery, and payment and upon the satisfaction of the
conditions set out in such Assignment and Acceptance, then (i) Borrower
shall issue new Notes to such assignor and assignee upon return of the old
Notes to Borrower, and (ii) as of the "Settlement Date" specified in such
Assignment and Acceptance the assignee thereunder shall be a party hereto
and a Lender hereunder and Administrative Agent shall thereupon deliver to
Borrower and each Lender a schedule showing the revised Revolver Percentage
Shares and total Percentage Shares of such assignor Lender and such
assignee Lender and the revised Revolver Percentage Shares and total
Percentage Shares of all other Lenders.
(iv) Each assignee Lender which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for Federal income
tax purposes, shall (to the extent it has not already done so) provide
Administrative Agent and Borrower with the "Prescribed Forms" referred to
in Section 3.7(d).
(d) Nothing contained in this section shall prevent or prohibit any Lender
from assigning or pledging all or any portion of its Loans and Note to any
Federal Reserve Bank as collateral
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security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank;
provided that (i) no such assignment or pledge shall relieve such Lender from
its obligations hereunder and (ii) all related costs, fees and expenses incurred
by such Lender in connection with such assignment and the reassignment back to
it, free of any interests of such Federal Reserve Banks shall be for the sole
account of such Lender.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Administrative Agent and each other Lender Party that such assignee understands
and agrees to the terms hereof, including Article IX hereof.
(f) Administrative Agent shall maintain a copy of each Assignment and
Acceptance and a register for the recordation of the names and addresses of
Lenders and the Percentage Shares of, and principal amount of the Loans owing
to, each Lender from time to time (in this section called the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and Borrower and each Lender Party may treat each Person whose name is recorded
in the Register as a Lender Party hereunder for all purposes. The Register
shall be available for inspection by Borrower or any Lender Party at any
reasonable time and from time to time upon reasonable prior notice.
(g) Except for sales of participations under the immediately preceding
subsection, no Lender shall make any assignment or transfer of any kind of its
commitments or any of its rights under the Loans or under its Loan Documents,
except for assignments to an Eligible Transferee or, subject to the provisions
of subsection (h) below to an Affiliate, and then only if such assignment is
made in accordance with the following requirements.
(h) Any Lender may assign or transfer its commitment or its rights under
its Loans or under the Loan Documents to (i) any Affiliate that is wholly-owned
direct or indirect subsidiary of such Lender or of any Person that wholly owns,
directly or indirectly, such Lender, or (ii) if such Lender is a fund that makes
or invests in bank loans, any other fund that invests in bank loans and is
advised or managed by (A) the same investment advisor as any Lender or (B) any
Affiliate of such investment advisor that is a wholly-owned direct or indirect
subsidiary of any Person that wholly owns, directly or indirectly, such
investment advisor, subject to the following additional conditions:
(x) any right of such Lender assignor and such assignee to vote as a
Lender, or any other direct claims or rights against any other Persons,
shall be uniformly exercised or pursued in the manner that such Lender
assignor would have so exercised such vote, claim or right if it had not
made such assignment or transfer;
(y) such assignee shall not be entitled to payment from any Restricted
Person under Sections 3.2 through 3.7 of amounts in excess of those payable
to such Lender assignor under such sections (determined without regard to
such assignment or transfer); and
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(z) if such Lender assignor is a Revolver Lender that assigns or transfers
to such assignee any of such Lender Revolver Commitment, assignee may
become primarily liable for such Revolver Commitment, but such assignment
or transfer shall not relieve or release such Lender from such Revolver
Commitment.
Section 10.6. Confidentiality. Each Lender Party agrees (on behalf of
itself and each of its Affiliates, and each of its and their directors,
officers, agents, attorneys, employees, and representatives) that it (and each
of them) will take all reasonable steps to keep confidential any non-public
information supplied to it by or at the direction of any Restricted Person so
identified when delivered, provided, however, that this restriction shall not
apply to information which (a) has at the time in question entered the public
domain, (b) is required to be disclosed by Law (whether valid or invalid) of any
Tribunal, (c) is disclosed to any Lender Party's Affiliates, auditors,
attorneys, or agents, (d) is furnished to any other Lender Party or to any
purchaser or prospective purchaser of participations or other interests in any
Loan or Loan Document (provided each such purchaser or prospective purchaser
first agrees to hold such information in confidence on the terms provided in
this section), or (d) is disclosed in the course of enforcing its rights and
remedies during the existence of an Event of Default.
Section 10.7. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT
THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT,
THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED
STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. BORROWER
HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER WITH RESPECT
TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK AS LENDER PARTIES MAY ELECT, AND, BY EXECUTION AND
DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. BORROWER AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN
DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING
BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN FURTHERANCE
OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY DESIGNATES AND
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APPOINTS CORPORATION SERVICE COMPANY, 80 STATE STREET, ALBANY, NEW YORK 12207,
AS AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER
WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED BY
LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW, BUT
THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL FURNISH TO LENDER PARTIES A
CONSENT OF CORPORATION SERVICE COMPANY AGREEING TO ACT HEREUNDER PRIOR TO THE
EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF LENDER PARTIES TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CORPORATION SERVICE COMPANY
SHALL RESIGN OR OTHERWISE CEASE TO ACT AS BORROWER'S AGENT, BORROWER HEREBY
IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
ACCEPTABLE TO ADMINISTRATIVE AGENT TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT,
SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CORPORATION SERVICE COMPANY
FOR ALL PURPOSES HEREOF AND (B) PROMPTLY DELIVER TO AGENT THE WRITTEN CONSENT
(IN FORM AND SUBSTANCE SATISFACTORY TO ADMINISTRATIVE AGENT) OF SUCH NEW AGENT
AGREEING TO SERVE IN SUCH CAPACITY.
Section 10.8. Limitation on Interest. Lender Parties, Restricted Persons
and the other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be charged
by applicable Law from time to time in effect. Neither any Restricted Person
nor any present or future guarantors, endorsers, or other Persons hereafter
becoming liable for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under applicable Law from time
to time in effect, and the provisions of this section shall control over all
other provisions of the Loan Documents which may be in conflict or apparent
conflict herewith.
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Section 10.9. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing or outstanding
elect in a written notice delivered to Administrative Agent to terminate this
Agreement. Upon receipt by Administrative Agent of such a notice, if no
Obligations are then owing or outstanding this Agreement and all other Loan
Documents shall thereupon be terminated and the parties thereto released from
all prospective obligations thereunder. Notwithstanding the foregoing or
anything herein to the contrary, any waivers or admissions made by any
Restricted Person in any Loan Document, any Obligations under Sections 3.2
through 3.6, and any obligations which any Person may have to indemnify or
compensate any Lender Party shall survive any termination of this Agreement or
any other Loan Document. At the request and expense of Borrower, Administrative
Agent shall prepare and execute all necessary instruments to reflect and effect
such termination of the Loan Documents. Administrative Agent is hereby
authorized to execute all such instruments on behalf of all Lenders, without the
joinder of or further action by any Lender.
Section 10.10. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 10.12. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. TO THE
EXTENT PERMITTED BY LAW, LENDER PARTIES AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER PARTIES' ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER AND EACH LENDER PARTY HEREBY FURTHER (A) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES," AS DEFINED BELOW, (B) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C)
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ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.
PLAINS ALL AMERICAN INC.,
Borrower
By: /s/ Phil Kramer
------------------------------
Phil Kramer
Executive Vice President
Address:
500 Dallas Street
Suite 700
Houston, Texas 77002
Attention: Phil Kramer
Telephone: (713) 654-1414
Fax: (713) 654-1523
ING (U.S.) CAPITAL CORPORATION,
Administrative Agent and Lender
By: /s/ Christopher R. Wagner
------------------------------
Christopher R. Wagner
Senior Vice President
Address:
ING (U.S.) Capital Corporation
135 East 57th Street
New York, New York
Attention: Christopher Wagner
Telephone: (212) 409-1500
Fax: (212) 832-3616
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ING BARING (U.S.) CAPITAL
CORPORATION, Syndication Agent
By: /s/ Christopher R. Wagner
------------------------------
Christopher R. Wagner
Senior Vice President
Address:
ING Baring (U.S.) Capital Corporation
135 East 57th Street
New York, New York
Attention:
Telephone: (212)
Fax: (212)
BANKBOSTON, N.A.,
Documentation Agent, LC Issuer and Lender
By: /s/ Terrence Ronan
------------------------------
Name: Terrence Ronan
Title: Vice President
Address:
100 Federal Street
Boston, Massachusetts 02110
Attention: Terrence Ronan
Mail Code: 01-08-04
Telephone: (617) 434-5472
Fax: (617) 434-3652
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BANK OF SCOTLAND
By: /s/ Annie Chin Tat
------------------------------
Name: Annie Chin Tat
Title: Senior Vice President
Address:
565 Fifth Avenue
New York, New York 10017
Attention: Annie Chin Tat
Telephone: (212) 450-0871
Fax: (212) 557-9460
With Copy to:
1200 Smith Street
Houston, Texas 77002
Attention: Richard C. Butler
Telephone: (713) 651-1870
Fax: (713) 651-9714
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CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: /s/ Russell A. Johnson
------------------------------
Name: Russell A. Johnson
Title: Vice President
Address:
600 Travis Street
Chase Tower 20th Floor
Houston, Texas 77002
Attention: Russell Johnson
Telephone: (713) 216-5617
Fax: (713) 216-4295
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DEN NORSKE BANK ASA
By: /s/Byron L. Cooley
------------------------------
Name: Byron L. Cooley
Title: Senior Vice President
By: /s/ William V. Moyer
------------------------------
Name: William V. Moyer
Title: First Vice President
Address:
Three Allen Center
333 Clay Street, Suite 4890
Houston, Texas 77002
Attention: Byron L. Cooley
Telephone: (713) 844-9258
Fax: (713) 757-1167
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WELLS FARGO BANK (TEXAS)
NATIONAL ASSOCIATION
By: /s/ Ann M. Rhoads
------------------------------
Ann M. Rhoads
Vice President
Address:
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: Ann Rhoads
Telephone: (713) 250-4035
Fax: (713) 850-7912
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COMERICA BANK - TEXAS
By: /s/ James Kimble
------------------------------
Name: James Kimble
Title: Vice President
Address:
910 Louisiana, Suite 410
Houston, Texas 77002
Attention: Jim Kimble
Telephone: (713) 220-5614
Fax: (713) 220-5650
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NATIONSBANK, N.A.
By: /s/ James R. Allred
------------------------------
Name: James R. Allred
Title: Senior Vice President
Address:
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: James R. Allred
Telephone: (713) 247-6327
Fax: (713) 247-6432
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THE SANWA BANK LIMITED
By: /s/ C. Lawrence Murphy
------------------------------
C. Lawrence Murphy
Senior Vice President
Address:
55 East 52nd Street
New York, New York 10055
Attention: Kentaro Yamagishi
Telephone: (212) 339-6207
Fax: (212) 754-2360
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SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Thierry Namuroy
------------------------------
Name: Thierry Namuroy
Title: Vice President
Address:
1111 Bagby Street, Suite 2020
Houston, Texas 77002
Attention: Thierry Namuroy
Telephone: (713) 759-6316
Fax: (713) 650-0824
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MEESPIERSON CAPITAL CORP.
By: /s/ Darrell W. Holley
------------------------------
Name: Darrell W. Holley
Title: Senior Vice President
By: /s/ Deirdre M. Sanborn
------------------------------
Name: Deirdre M. Sanborn
Title: Assistant Vice President
Address:
Three Stamford Plaza
301 Tresser Blvd.
Stamford, Connecticut 06901-3239
Attention: Darrell W. Holley
Telephone: (214) 953-9307
Fax: (214) 754-5981
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THE FUJI BANK, LIMITED
By: /s/ Teiji Teramoto
------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
Address:
1221 McKinney, Suite 4100
Houston, Texas 77010
Attention: Mark Polasek
Telephone: (713) 650-7863
Fax: (713) 759-0717
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CREDIT AGRICOLE INDOSUEZ
By: /s/ Katherine L. Abbott
------------------------------
Name: Katherine L. Abbott
Title: First Vice President
By: /s/ W. Leroy Startz
------------------------------
Name: W. Leroy Startz
Title: First Vice President
Address:
600 Travis Street, Suite 2340
Houston, Texas 77002
Attention: Brian Knezeak
Telephone: (713) 223-7001
Fax: (713) 223-7029
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THE SAKURA BANK, LIMITED - NEW YORK BRANCH
By: /s/ Taminiro Kawauchi
------------------------------
Name: Taminiro Kawauchi
Title: Senior Vice President & Group
Head Real Estate-Project
Finance Group
Address:
277 Park Avenue
New York, New York 10172-0098
Attention: Vincas Snipas
Telephone: (212) 756-6978
Fax: (212) 888-7651
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NATEXIS BANQUE
By: /s/ John H. Thieroff
------------------------------
Name: John H, Thieroff
Title: Vice President
By: /s/ Mark A. Harrington
------------------------------
Name: Mark A. Harrington
Title: Vice President & Regional
Manager
Address:
Southwest Representative Office
333 Clay Street, Suite 4340
Houston, Texas 77002
Attention: John. H. Thieroff
Telephone: (713) 759-9401
Fax: (713) 759-9908
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BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Thomas J. Scifo
------------------------------
Name: Thomas J. Scifo
Title: Assistant Vice President
By: /s/ Anthony Heyman
------------------------------
Name: Anthony Heyman
Title: AssistantVice President
Address:
590 Madison Avenue
New York, New York 10022
Attention: Tom Sciffo
Telephone: (212) 756-5912
Fax: (212) 756-5536
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BALANCED HIGH-YIELD FUND I LTD.
By: BHF-BANK AKTIENGESELLSCHAFT,
ACTING THROUGH ITS NEW YORK
BRANCH AS ATTORNEY IN FACT
By: /s/ Thomas J. Scifo
------------------------------
Name: Thomas J. Scifo
Title: Assistant Vice President
By: /s/ John Sykes
------------------------------
Name: John Sykes
Title: Vice President
Address:
59 Madison Avenue
New York, New York 10022
Attention: Tom Sciffo
Telephone: (212) 756-5912
Fax: (212) 756-5536
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MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By: /s/ Sheila A. Finnerty
------------------------------
Name: Sheila A. Finnerty
Title: Vice President
Address:
c/o Dean Witter InterCapital, Inc.
Two World TradeCenter 72nd Floor
New York, New York 10048
Attention: Sheila Finnerty
Telephone: (212) 392-5686
Fax: (212) 392-5345
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BANKERS TRUST COMPANY
By: /s/ Rosemary F. Dunne
------------------------------
Name: Rosemary F. Dunne
Title: Vice President
Address:
130 Liberty Street
New York, New York 10006
Attention: Joanne Dobson
Telephone: (212) 250-2407
Fax: (212) 250-5256
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<PAGE>
SENIOR HIGH INCOME PORTFOLIO, INC.
By: /s/ Gilles Marchand
------------------------------
Name: Gilles Marchand
Title: Certified Public Accountant
Address:
c/o Merrill Lynch Asset Management
800 Scudders Mill Road - Area 1B
Plainsboro, New Jersey 08536
Attention: Gilles Marchand
Telephone: (609) 282-3348
Fax: (609) 282-2756
95
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: /s/ Gilles Marchand
------------------------------
Name: Gilles Marchand
Title: Certified Public Accountant
Address:
c/o Merrill Lynch Asset Management
800 Scudders Mill Road - Area 1B
Plainsboro, New Jersey 08536
Attention: Gilles Marchand
Telephone: (609) 282-3348
Fax: (609) 282-2756
96
<PAGE>
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
By: ING Capital Advisors, Inc., as
Investment Advisor
By: /s/ Michael P. McAdams
------------------------------
Name: Michael P. McAdams
Title: Managing Director
Address:
333 S. Grand Avenue, Suite 4250
Los Angeles, California 90071
Attention: Michael McAdams
Telephone: (213) 346-3970
Fax: (213) 346-3995
97
<PAGE>
ARCHIMEDES FUNDING, L.L.C.
By: ING Capital Advisors, Inc., as
Collateral Manager
By: /s/ Michael P. McAdams
------------------------------
Name: Michael P. McAdams
Title: Managing Director
Address:
333 S. Grand Avenue, Suite 4250
Los Angeles, California 90071
Attention: Michael McAdams
Telephone: (213) 346-3970
Fax: (213) 346-3995
98
<PAGE>
KZH-ING-1 CORPORATION
By: /s/ Dennis Kildea
------------------------------
Name: Dennis Kildea
Title: Authorized Agent
Address:
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Fax: (212) 946-7776
99
<PAGE>
EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
Dated as of July 30, 1998
By and Among
Plains Resources Inc.
and
The Purchasers Named Herein
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<C> <S> <C>
1 - DEFINITIONS........................................................ 1
1.1 Certain Defined Terms........................................ 1
1.2 Accounting Terms............................................. 4
1.3 References................................................... 4
1.4 Singular and Plural.......................................... 4
1.5 Certain Terms................................................ 4
2 - PURCHASE AND SALE OF THE SHARES.................................... 4
2.1 Sale and Purchase............................................ 4
2.2 Certificate of Designation................................... 4
3 - PURCHASE PRICE AND CLOSING......................................... 4
3.1 Purchase Price............................................... 4
3.2 Closing...................................................... 5
3.3 Deliveries of the Company.................................... 5
3.4 Deliveries of Purchasers..................................... 5
4 - REGISTRATION RIGHTS................................................ 5
4.1 Registration................................................. 5
4.2 Registration Procedures...................................... 6
4.3 Registration Expenses........................................ 9
4.4 Indemnification; Contribution................................ 10
4.5 Participation in Underwritten Registrations.................. 12
4.6 Rule 144..................................................... 13
5 - REPRESENTATIONS AND WARRANTIESOF THE COMPANY....................... 13
5.1 Organization................................................. 13
5.2 Authority.................................................... 13
5.3 Authorization................................................ 13
5.4 Binding Agreement............................................ 14
5.5 No Conflicts................................................. 14
5.6 Capitalization............................................... 14
5.7 Valid Issuance............................................... 14
5.8 Absence of Bankruptcy Proceedings............................ 15
5.9 Brokers...................................................... 15
5.10 Financial Statements......................................... 15
5.11 No Material Adverse Change................................... 15
5.12 Commission Documents......................................... 15
5.13 Properties................................................... 15
5.14 Registration Rights.......................................... 16
5.15 Offering..................................................... 16
</TABLE>
(i)
<PAGE>
<TABLE>
<C> <S> <C>
5.16 No Defaults................................................. 16
5.17 Litigation.................................................. 16
5.18 Compliance with Laws........................................ 17
5.19 Taxes....................................................... 17
5.20 ERISA....................................................... 17
5.21 Compliance with Environmental Laws.......................... 17
6 - REPRESENTATIONS AND WARRANTIES OF PURCHASERS...................... 18
6.1 General..................................................... 18
6.2 Accredited Investor, Etc.................................... 19
7 - COVENANTS OF THE COMPANY.......................................... 19
7.1 Operation of the Business of the Company Pending Closing.... 19
7.2 Taking of Necessary Action.................................. 20
7.3 Restrictions on Certain Actions............................. 20
7.4 Use of Proceeds............................................. 20
7.5 Reservation of Common Stock................................. 20
8 - CLOSING CONDITIONS................................................ 20
8.1 The Company's Closing Conditions............................ 20
8.2 Purchasers' Closing Conditions.............................. 21
9 - TERMINATION....................................................... 22
9.1 Grounds for Termination..................................... 22
9.2 Effect of Termination....................................... 22
10 - MISCELLANEOUS..................................................... 22
10.1 Survival of Representations and Warranties.................. 22
10.2 Indemnification............................................. 23
10.3 Antitrust Laws.............................................. 23
10.4 Notices..................................................... 23
10.5 Incidental Expenses......................................... 23
10.6 Entire Agreement............................................ 24
10.7 Governing Law............................................... 24
10.8 Counterparts................................................ 24
10.9 Waiver...................................................... 24
10.10 Binding Effect; Assignment.................................. 24
10.11 Brokers..................................................... 24
10.12 Construction................................................ 24
</TABLE>
(ii)
<PAGE>
Schedule A Purchased Shares
Exhibit A Certificate of Designation
Exhibit B Opinion of Fulbright & Jaworski L.L.P.
Exhibit C Opinion of Michael R. Patterson
(iii)
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of the 30th day of July, 1998,
is by and among Plains Resources Inc., a Delaware corporation (the "Company"),
on the one hand, and the Purchasers named on Schedule A hereto on the other hand
(collectively, "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company desires to issue and sell to each Purchaser, and each
Purchaser desires to purchase from the Company, in the amount indicated opposite
such Purchaser's name on Schedule A hereto, shares of the Company's authorized
but unissued Series E Cumulative Convertible Preferred Stock, par value $1.00
per share (the "Preferred Stock"), which shares shall have such rights,
preferences, privileges and restrictions as set forth in the Certificate of
Designation, Preferences and Rights of Series E Cumulative Convertible Preferred
Stock of Plains Resources Inc. attached hereto as Exhibit A (the "Certificate of
Designation") on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties set forth in this Agreement, the parties to this
Agreement hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Certain Defined Terms. The following terms, as used in this
Agreement, shall have the following meanings:
"Celeron Acquisition" means the consummation of the transactions
contemplated by the Celeron Agreement.
"Celeron Agreement" means the Stock Purchase Agreement among the
Company, Plains All American Inc. and Wingfoot Ventures Seven, Inc. dated
as of March 15, 1998.
"Closing" has the meaning given such term in Section 3.2.
"Closing Date" has the meaning given such term in Section 3.2.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder as in effect on the date hereof.
"Commission Documents" has the meaning given such term in Section
5.12.
"Common Stock" means the common stock, $.10 par value, of the Company.
"Conversion Shares" means the shares of Common Stock issuable upon the
conversion of Preferred Stock into, or exchange of Preferred Stock for,
Common Stock.
"Environmental Laws" has the meaning given such term in Section 5.21.
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor statute, as at the time in effect. Reference to a particular
section of such Act shall include a reference to the comparable section, if
any, of such successor statute.
"Financial Statements" means the financial statements of the Company
and its consolidated subsidiaries, including the notes thereto, as of and
for the year ended December 31, 1997 and as of and for the three months
ended March 31, 1998.
"GAAP" means generally accepted accounting principles, as set forth in
the opinions of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements of the Financial Accounting
Standards Board or in such opinions and statements of such other entities
as shall be approved by a significant segment of the accounting profession
in the United States of America.
"Governmental Authority" means (i) the United States of America or any
state within the United States of America and (ii) any court or any
governmental department, commission, board, bureau, agency or other
instrumentality of the United States of America or of any state within the
United States of America.
"Holder" means the Purchasers and any other holder from time to time
of Preferred Stock or Registrable Securities (other than the Company or any
Subsidiary).
"ING Agreement" means that certain $325,000,000 limited recourse bank
facility made available to Plains All American by ING (U.S.) Capital
Corporation and BankBoston, N.A. and certain other lenders.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Inspectors" has the meaning given such term in Section 4.2(h).
"Law" means any applicable statute, law, ordinance, regulation, rule,
ruling, order, restriction, requirement, writ, injunction, decree or other
official act of or by any Governmental Authority.
"Material Adverse Effect" with respect to a Person means a material
and adverse effect on the financial condition, results of operations,
business or properties of such Person and its consolidated subsidiaries,
taken as a whole.
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, a limited liability
company, a government or any department or agency of a government.
-2-
<PAGE>
"Plains All American" means Plains All American Inc., a Delaware
corporation and a Subsidiary of the Company.
"Pollutants" has the meaning given such term in Section 5.21.
"Purchase Price" has the meaning given such term in Section 3.1.
"Records" has the meaning given such term in Section 4.2(h).
"Registrable Securities" means Conversion Shares until such time as
such shares are sold in a public distribution pursuant to a Registration
Statement under the Securities Act or pursuant to transactions exempt from
registration under the Securities Act where Securities sold in such
transaction may be resold without subsequent registration under the
Securities Act.
"Registration Expenses" has the meaning given such term in Section
4.3.
"Registration Statement" has the meaning given such term in Section
4.2(a).
"Releases" has the meaning given such term in Section 5.21.
"SEC" means the United States Securities and Exchange Commission or
any successor agency.
"Securities Act" means the Securities Act of 1933, or any successor
statute, as at the time in effect. Reference to a particular section of
such Act shall include a reference to the comparable section, if any, of
such successor statute.
"Selling Holder" means a holder of Registrable Securities who is
selling such Registrable Securities pursuant to a Registration Statement.
"Shares" has the meaning given such term in Section 2.1.
"Shelf Registration Statement" has the meaning given such term in
Section 4.1(b).
"Subsidiary" means (a) a corporation a majority of whose voting stock
is at the time, directly or indirectly, owned by the Company, by one or
more subsidiaries of the Company or by the Company and one or more
subsidiaries of the Company or (b) any other Person (other than a
corporation) in which the Company, a subsidiary of the Company or the
Company and one or more subsidiaries of the Company, directly or
indirectly, at the date of determination thereof, has (i) at least a
majority ownership or (ii) the power to elect or direct the election of the
directors or other governing body of such Person.
-3-
<PAGE>
1.2 Accounting Terms. For the purposes of this Agreement, all accounting
terms not otherwise defined in this Agreement shall have the meanings assigned
to such terms in accordance with GAAP.
1.3 References. Unless the context otherwise indicates, references in
this Agreement to a particular section, exhibit or schedule are to the
corresponding section of, or the corresponding exhibit or schedule to, this
Agreement.
1.4 Singular and Plural. The definitions contained in Section 1.1 are
equally applicable to both the singular and plural form of the terms defined in
such Section.
1.5 Certain Terms. As used in this Agreement, the term "knowledge" means
actual knowledge, without any requirement for independent investigation or
verification, of any fact, circumstance or condition by the executive officers
(or any of them) of the party involved, and does not include (i) knowledge
imputed to the party involved by reason of knowledge of or notice to any person,
firm or corporation other than its executive officers or (ii) knowledge deemed
to have been constructively given by reason of any filing, registration or
recording of any document or instrument in any public record or with any
Governmental Authority. As used in this Agreement, the term "day" means any
calendar day. As used in this Agreement, all references to "dollars" or the
symbol "$" shall refer to lawful currency of the United States of America.
ARTICLE 2 - PURCHASE AND SALE OF THE SHARES
2.1 Sale and Purchase. Subject to the terms and conditions set forth in
this Agreement, at the Closing each Purchaser agrees to purchase, and the
Company agrees to issue and sell to each Purchaser, the number of shares of the
Preferred Stock (the "Shares") set forth opposite such Purchaser's name on
Schedule A, free and clear of all liens, claims, pledges, security interests or
other encumbrances. At the Closing, each Purchaser will pay the portion of the
Purchase Price set forth opposite its name in Schedule A.
2.2 Certificate of Designation. The Preferred Stock shall have the rights
and preferences set forth in the Certificate of Designation.
ARTICLE 3 - PURCHASE PRICE AND CLOSING
3.1 Purchase Price. The aggregate purchase price that shall be payable at
the Closing by Purchasers to the Company for the Shares shall be $85,000,000
(the "Purchase Price"). At the Closing, each Purchaser shall pay in immediately
available funds to the account designated by the Company the portion of the
Purchase Price set forth opposite its name on Schedule A.
3.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on the date and at the location
designated for the closing under the Celeron Agreement and at a location
mutually agreed upon by the Company and the Purchasers, or at such other date or
place as the parties may agree in writing (the "Closing Date").
-4-
<PAGE>
3.3 Deliveries of the Company. At Closing, the Company shall deliver to
Purchasers certificates representing the Shares, each such certificate to be
executed by the Company's President and Secretary and to be appropriately
registered in the name of each Purchaser.
3.4 Deliveries of Purchasers. At Closing, Purchasers shall deliver to the
Company the Purchase Price in immediately available funds to the Company as
provided in Section 3.1.
ARTICLE 4 - REGISTRATION RIGHTS
4.1 Registration.
(a) The Company shall, as promptly as reasonably possible, but, in any
event, within 90 days of the Closing, prepare and file with the SEC a shelf
registration statement (the "Shelf Registration Statement") on an
appropriate form pursuant to Rule 415 (or any similar provision that may be
adopted by the SEC) under the Securities Act with respect to the
Registrable Securities.
(b) The Company agrees to use its best efforts to have the Shelf
Registration Statement declared effective as soon as practicable after the
filing thereof and to keep the Shelf Registration Statement continuously
effective until the earlier of (1) the fourth anniversary of the Closing
Date; or (2) such time as all of the Registrable Securities can be resold
pursuant to Rule 144(k) under the Securities Act (or any successor
provision). Further, the Company shall cause the Registrable Securities to
be listed on the American Stock Exchange as soon as practicable after the
Closing Date, when and as issued, and shall maintain the listing of such
Registrable Securities after their issuance; provided that the Company
shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would reasonably be expected to result in
Holders of Registrable Securities covered thereby not being able to offer
and sell such Registrable Securities during that period using the
prospectus included in the Shelf Registration Statement, unless such action
is required by applicable law (including, but not limited to, reasonable
periods necessary to prepare appropriate disclosure); and provided,
further, that the foregoing proviso shall not apply to actions taken by the
Company in good faith and for business reasons ("Suspension Event"),
including, without limitation, a merger, consolidation or similar
transaction, the acquisition or divestiture of assets and the offering or
sale of securities, so long as the Company promptly thereafter complies
with the requirements of Section 4.2(f) hereof, if applicable, and so long
as the Company gives prompt notice of the existence of such Suspension
Event to Holders of Registrable Securities. Any such period during which
the Company fails to keep the Shelf Registration Statement effective and
usable for offers and sales of Registrable Securities is referred to as a
"Suspension Period." A Suspension Period shall commence on and include the
date that the Company gives notice that the Shelf Registration Statement is
no longer effective or the prospectus included therein is no longer usable
for offers and sales of Registrable Securities and shall end on the date
when each Selling Holder either receives the copies of the supplemented or
amended prospectus contemplated by Section 4.2(f) hereof or
-5-
<PAGE>
is advised in writing by the Company that use of the prospectus may be
resumed. If one or more Suspension Periods occur, the date referenced in
(1) above shall be extended by the number of days in each such Suspension
Period.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or
supplement, as the case may be, (i) to comply in all material respects with
the applicable requirements of the Securities Act and the rules and
regulations of the SEC and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading other
than statements or omissions made in reliance upon and in conformity with
information furnished to the Company in writing by the Holders of
Registrable Securities expressly for use in such Shelf Registration
Statement and the related prospectus or any amendment or supplement
thereto.
4.2 Registration Procedures. In connection with any registration pursuant
to Section 4.1 hereof, the following provisions shall apply:
(a) The Company shall (i) prior to filing the Shelf Registration
Statement or any other registration statement registering Registrable
Securities (in either case, "Registration Statement") or prospectus or any
amendments or supplements thereto, furnish to one counsel selected by the
Holders of Registrable Securities of a majority in aggregate principal
amount or number of shares, as the case may be, of the Registrable
Securities covered by such Registration Statement copies of all such
documents proposed to be filed, which documents will be subject to the
review of such counsel, and (ii) as soon as reasonably possible, furnish to
each Selling Holder, prior to filing a Registration Statement, copies of
such Registration Statement as proposed to be filed, and thereafter furnish
to such Selling Holder such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including
all exhibits thereto), the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents
as such Selling Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Selling Holder.
(b) The Company shall notify the Selling Holders in writing:
(i) when the Registration Statement and any amendment thereto
has been filed with the SEC and when the Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus included
therein or for additional information;
-6-
<PAGE>
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such
purpose.
(c) The Company shall use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Selling Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such Selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Selling Holder;
provided that the Company will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (c), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any
such jurisdiction.
(d) The Company shall use reasonable efforts to prevent the issuance
or obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time.
(e) The Company shall use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the Selling Holder or Selling Holders
thereof to consummate the disposition of such Registrable Securities.
(f) The Company shall notify each Selling Holder of such Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the occurrence of an event requiring
the preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and promptly file with the SEC
and make available to each Selling Holder any such supplement or amendment,
provided that no such filing shall be required during the existence of a
Suspension Event.
(g) If requested in writing by the Holders beneficially owning at
least 25% collectively of the Registrable Securities, the Company shall
enter into customary agreements (including an underwriting agreement in
customary form with underwriters selected by such Holders and reasonably
approved by the Company), shall take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such
Registrable Securities, and shall notify each other Holder of Registrable
Securities of such underwritten
-7-
<PAGE>
offerings and offer such Holders the opportunity to have their Registrable
Securities included in such underwritten offering; provided, however, that
the Company shall not be required to participate in more than two
underwritten offerings under the Shelf Registration Statement pursuant to
this Section 4.2(g).
(h) The Company shall make available for inspection by any Selling
Holder of such Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other professional retained by any such Selling Holder or
underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company and
its Subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause the Company's and its subsidiaries' officers, directors and
employees to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Each Selling
Holder of such Registrable Securities agrees that information obtained by
it as a result of such inspections which is deemed confidential shall not
be used by it as the basis for any market transactions in securities of the
Company unless and until such is made generally available to the public by,
on behalf of or with the consent of, the Company. Notwithstanding the
previous sentence, the parties agree that the Company shall have no
obligation to make generally available to the public any confidential
information, regardless of whether the Company provides such data to the
Selling Holders or the Inspectors. Except as required by law or judicial
process, no Selling Holder shall disclose any such confidential information
to any Person other than an Inspector, and each Selling Holder will cause
any Inspector retained by it to maintain the confidentiality of such
information. Each Selling Holder of such Registrable Securities further
agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.
(i) In the event of a sale pursuant to an underwritten offering, the
Company shall use its best efforts to obtain (i) a comfort letter or
comfort letters from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
comfort letters as the Selling Holders of a majority of Registrable
Securities being sold or the managing underwriter reasonably requests and
(ii) an opinion of counsel to the Company covering such matters as are
customarily covered by such opinions, which opinion may be that of the
Company's General Counsel as to matters upon which the Company's
underwriters have relied upon the opinions of such General Counsel in
connection with the Company's prior underwritten offerings of its
securities.
(j) The Company will use its best efforts to comply with all the rules
and regulations of the SEC to the extent and so long as they are applicable
to the Registration Statement and will make generally available to its
security holders after the effective date of the applicable Registration
Statement an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act.
-8-
<PAGE>
The Company may require each Selling Holder of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing and such other
information as may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 4.2(f)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.2(f) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such Selling Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
4.3 Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Article 4, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed, and fees and disbursements of counsel for the Company
and its independent certified public accountants (including the expenses of any
special audit or comfort letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain such
insurance), the reasonable fees and expenses of any special experts retained by
the Company in connection with such registration, fees and expenses of other
persons retained by the Company, and reasonable fees and expenses of one counsel
for the Holders (who shall be reasonably acceptable to the Company) incurred in
connection with each registration hereunder (but not including any underwriting
discounts or commissions attributable to the sale of Registrable Securities)
(all such expenses being herein called "Registration Expenses"), will be borne
by the Company.
4.4 Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Selling Holder of Registrable Securities, its
officers, directors, partners and agents and each person, if any, who
controls such Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages (whether in contract, tort or otherwise),
liabilities and expenses (including reasonable costs of investigation)
whatsoever (as incurred or suffered) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus relating to the Registrable
Securities or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such
-9-
<PAGE>
losses, claims, damages, liabilities or expenses arise out of, or are
based upon, any such untrue statement or omission or allegation thereof
based upon information furnished in writing to the Company by such Selling
Holder or on such Selling Holder's behalf expressly for use therein. The
Company also agrees to indemnify any underwriters of the Registrable
Securities, their officers, partners and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 4.4(a) or
such other indemnification customarily obtained by underwriters at the time
of offering.
(b) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any Selling Holder (or its officers, directors, partners
or agents) or any person controlling any such Selling Holder in respect of
which indemnity may be sought from the Company, the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Selling Holder, and shall assume the payment of all
expenses. Such Selling Holder or any controlling person of such Selling
Holder shall have the right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Selling Holder or such
controlling person unless (i) the Company has agreed to pay such fees and
expenses or (ii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Selling Holder or such
controlling person and the Company, and such Selling Holder or such
controlling person shall have been advised by counsel that there may be one
or more legal defenses available to such Selling Holder or such controlling
person which conflict with those available to the Company (in which case,
if such Selling Holder or such controlling person notifies the Company in
writing that it elects to employ separate counsel at the expense of the
Company, the Company shall not have the right to assume the defense of such
action or proceeding on behalf of such Selling Holder or such controlling
person, it being understood, however, that the Company shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for such
Selling Holder and such controlling persons, which firm shall be designated
in writing by such Selling Holder). The Company shall not be liable for
any settlement of any such action or proceeding effected without the
Company's written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless such Selling
Holder and such controlling person from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
(c) Indemnification by Selling Holders. Each Selling Holder agrees,
severally but not jointly, to indemnify and hold harmless the Company, its
directors and officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act, as amended, to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with respect to
information furnished in writing by such Selling Holder or on such Selling
Holder's behalf
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expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors or officers, or any such controlling
person, in respect of which indemnity may be sought against such Selling
Holder, such Selling Holder shall have the rights and duties given to the
Company, and the Company or its directors or officers or such controlling
person shall have the rights and duties given to such Selling Holder, by
the preceding paragraph. Each Selling Holder also agrees to indemnify and
hold harmless underwriters of the Registrable Securities, their officers
and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this Section 4.4(c).
(d) Contribution. If the indemnification provided for in this Section
4.4 is unavailable to the Company, the Selling Holders or the underwriters
in respect of any losses, claims, damages, liabilities or judgments
referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) as between the Company and the
Selling Holders on the one hand and the underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Holders on the one hand and the underwriters on
the other from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Holders on the one hand and
of the underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations and (ii)
as between the Company on the one hand and each Selling Holder on the
other, in such proportion as is appropriate to reflect the relative fault
of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Holders on the one hand and the underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Holders bear to the total
underwriting discounts and commissions received by the underwriters, in
each case as set forth in the table on the cover page of the prospectus.
The relative fault of the Company and the Selling Holders on the one hand
and of the underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Holders or
by the underwriters. The relative fault of the Company on the one hand and
of each Selling Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4(d), no underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
Selling Holder were offered to the public exceeds the amount of any damages
which such Selling Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
4.5 Participation in Underwritten Registrations. No person may
participate in any underwritten registration hereunder unless such person (a)
agrees to sell such person's securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.
4.6 Rule 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act, and
that it will take such further action as any holder of Conversion Shares may
reasonably request, all to the extent required from time to time to enable
holders of Conversion Shares to sell Conversion Shares without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any holder of Conversion Shares, the Company will deliver to such
holder a written statement as to whether it has complied with such requirements.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Purchasers as follows:
5.1 Organization. The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.
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The Company and each of its Subsidiaries is duly qualified or licensed to do
business as a foreign corporation, and in good standing, in every jurisdiction
in which its ownership of property or the conduct of its business requires such
qualification or licensing, except where the failure to be so qualified or
licensed would not have a Material Adverse Effect upon the Company. Attached
hereto as Exhibit A is a true and complete copy of the Certificate of
Designation. True and complete copies of the Second Restated Certificate of
Incorporation and Bylaws of the Company, each as amended to date, have been
provided to Purchasers.
5.2 Authority. The Company has all requisite corporate power and
authority to carry on its business as presently conducted and to enter into this
Agreement and the Celeron Agreement and to perform its obligations contemplated
hereunder or thereunder. Plains All American has all requisite corporate power
and authority to carry on its business as presently conducted and as
contemplated to be conducted after the consummation of the Celeron Acquisition
and to enter into the Celeron Agreement and the ING Agreement and to perform its
obligations contemplated thereunder.
5.3 Authorization. The execution, delivery and performance of this
Agreement and the Celeron Agreement and the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite corporate action
on the part of the Company and its stockholders. The execution, delivery and
performance of the Celeron Agreement and the ING Agreement and the transactions
contemplated thereby have been duly and validly authorized by all requisite
corporate action on the part of Plains All American.
5.4 Binding Agreement. Each of this Agreement and the Celeron Agreement
has been duly executed and delivered by the Company and each of the Celeron
Agreement and the ING Agreement has been duly executed and delivered by Plains
All American and each of this Agreement, the Celeron Agreement and the ING
Agreement constitutes a legal, valid and binding obligation of the Company or
Plains All American, as the case may be, enforceable against it in accordance
with its terms, subject to applicable bankruptcy and other similar laws of
general application with respect to creditors and subject to principles of
equity and public policy that affect enforceability of agreements generally.
5.5 No Conflicts. Neither the execution or delivery of this Agreement,
the Celeron Agreement or the ING Agreement, nor the consummation of the
transactions contemplated hereby and thereby, will result in a breach or
violation of, or constitute a default under, the certificate of incorporation,
bylaws or other governing documents of the Company or its Subsidiaries, or any
agreement, indenture or other instrument to which any of the Company or its
Subsidiaries is a party or by which any of them is bound or to which any of
their properties are subject, nor will the performance by the Company and its
Subsidiaries of any of their obligations hereunder or thereunder violate any Law
or result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or assets of the Company or its Subsidiaries other
than liens pursuant to the ING Agreement. No permit, consent, approval,
authorization or order of any Governmental Authority or other Person is required
in connection with the consummation by the Company and its Subsidiaries of the
transactions contemplated by this Agreement, the Celeron Agreement or the ING
Agreement, except such as have been obtained.
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5.6 Capitalization. The authorized capital stock of the Company consists
of 50,000,000 shares of common stock, par value $.10 per share, of which
16,851,879 are issued and outstanding, and 2,000,000 shares of preferred stock,
par value $1.00 per share, of which there are 46,600 shares of Series D
Cumulative Convertible Preferred Stock issued and outstanding. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. The Company has reserved
a total of 3,226,853 shares of Common Stock for issuance pursuant to existing
employee benefit plans, of which 2,865,591 shares are currently issuable upon
exercise. In addition, 1,000,000 shares of Common Stock are issuable upon
exercise of various outstanding warrants. Except for the foregoing, there are
no outstanding subscriptions, options, warrants, rights, convertible securities
or other agreements or commitments of any character obligating the Company to
purchase, redeem, issue, transfer or deliver any shares of Common Stock,
preferred stock or other equity security.
5.7 Valid Issuance.
(a) The issuance, sale and delivery of the Shares in accordance with
this Agreement have been duly authorized by all necessary corporate action on
the part of the Company and its stockholders, and the Shares when so issued,
sold and delivered against payment therefor in accordance with this Agreement
will be duly and validly issued, fully paid and nonassessable.
(b) The issuance and delivery of the Conversion Shares has been duly
authorized by all necessary corporate action on the part of the Company and its
stockholders, and the Conversion Shares have been duly reserved for issuance
and, when issued, will be duly and validly issued, fully paid and nonassessable.
5.8 Absence of Bankruptcy Proceedings. There are no bankruptcy,
reorganization or arrangement proceedings pending against, being contemplated
by, or to the knowledge of the Company, threatened against, the Company.
5.9 Brokers. No broker or finder has acted for or on behalf of the
Company in connection with the investment in the Preferred Stock by the
Purchasers, and no broker or finder is entitled to any brokerage or finder's fee
or commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Company in connection with the
investment in the Preferred Stock by the Purchasers.
5.10 Financial Statements. The Financial Statements (i) present fairly the
financial position of the Company and its consolidated Subsidiaries as of
December 31, 1997 and March 31, 1998, (ii) present fairly the results of
operations, cash flows and changes in stockholders' equity of the Company and
its consolidated Subsidiaries for the year ended December 31, 1997 and the three
months ended March 31, 1998 and (iii) were prepared in accordance with GAAP
consistently followed throughout the periods involved, except as otherwise noted
therein. The Company has no material liabilities, contingent or otherwise, not
reflected in the balance sheet as of December 31, 1997 (or the notes thereto) or
the balance sheet as of March 31, 1998 (or the notes thereto) included
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in the Financial Statements, other than any such liabilities incurred in the
ordinary course of business since December 31, 1997.
5.11 No Material Adverse Change. Since December 31, 1997, there has not
been any material adverse change in the financial condition, results of
operations, business or properties of the Company.
5.12 Commission Documents. The Company has filed all registration
statements, proxy statements, reports and other documents required to be filed
by it under the Securities Act or the Exchange Act, and all amendments thereto
(collectively, the "Commission Documents"). Each Commission Document complied
as to form when filed in all material respects with the rules and regulations of
the SEC and did not on the date of filing contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
5.13 Properties.
(a) Each of the Company and its Subsidiaries has good and defensible
title to all of its respective interests in oil and gas leases, free and
clear of any encumbrances, except as described in the Commission Documents,
subject only to liens for taxes or charges of mechanics or materialmen not
yet due and to encumbrances under gas sales contracts, operating
agreements, unitization and pooling agreements and other similar agreements
as are customarily found in connection with comparable drilling and
producing operations and to title defects and other encumbrances that are,
singularly and in the aggregate, not material in amount and do not
interfere with its use or enjoyment of its oil and gas properties. Each of
the Company and its Subsidiaries has complied in all material respects with
the terms of the oil and gas leases in which it purports to own an
interest, and all of such leases are in full force and effect (except where
the failure so to comply or to be in full force and effect will not have a
Material Adverse Effect upon the Company).
(b) The Company and its Subsidiaries do not own any material
properties or other assets that are not described in the Commission
Documents. Each of the Company and its Subsidiaries has good and
defensible title to all properties and assets described in the Commission
Documents as owned by it, in valid, subsisting and enforceable leases for
the properties described in the Commission Documents as leased by them, in
each case free and clear of all liens, charges, encumbrances or
restrictions, except for such as are described in the Commission Documents
and such as do not have a Material Adverse Effect on the Company.
5.14 Registration Rights. Except for the Registration Rights Agreement
dated February 25, 1991 by and among the Company, The Aetna Casualty and Surety
Company and Aetna Life Insurance Company, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to include such securities in the Shelf Registration
Statement.
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5.15 Offering. Subject to the accuracy of the Purchasers' representations
in Article 6 hereof, the offer, sale and issuance of the Shares and the
Conversion Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and the securities laws of any
state having jurisdiction with respect to the transactions contemplated by this
Agreement, and neither the Company nor anyone acting on its behalf has or will
take any action that would cause the loss of such exemption.
5.16 No Defaults. Neither the Company nor any Subsidiary is (a) in
violation of any provision of its charter or bylaws, (b) in breach, violation or
default, in any material respect, of or under any material contract, lease,
commitment or instrument to which it is a party or by which it is bound or to
which any of its properties or assets are subject, and no event has occurred
which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a breach, violation or
default or (c) in material violation of any Law.
5.17 Litigation. There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or its Subsidiaries or any properties or rights of any of them by or
before any Governmental Authority that (i) relates to or challenges the legality
of this Agreement, the Celeron Agreement, the ING Agreement or the Preferred
Stock, (ii) would reasonably be expected to have a Material Adverse Effect upon
the Company (except as disclosed in the Commission Documents) or (iii) would
reasonably be expected to impair the ability of the Company to perform fully on
a timely basis any obligations that it has under this Agreement, the Celeron
Agreement, or any documents related hereto and thereto, or the ability of Plains
All American to perform fully on a timely basis any obligations that it has
under the Celeron Agreement, the ING Agreement or any documents related thereto.
5.18 Compliance with Laws. The Company and its Subsidiaries are in
compliance in all material respects with all laws and regulations in all
jurisdictions in which the Company and its Subsidiaries are presently doing
business and where the failure to effect such compliance would reasonably be
expected to have a Material Adverse Effect upon the Company.
5.19 Taxes. All tax returns required to be filed by the Company and its
Subsidiaries in any jurisdiction have been so filed, and all taxes, assessments,
fees and other charges shown thereon to be due and payable have been paid, other
than those being contested in good faith. The Company does not know of any
actual or proposed material additional tax assessments for any fiscal period
against it or any of its Subsidiaries. None of the Company's or its
Subsidiaries' tax returns are under audit, and no waivers of the statute of
limitations or extensions of time with respect to any tax returns have been
granted to the Company or any of its Subsidiaries, except such audits, waivers
or extensions as would not reasonably be expected to have a Material Adverse
Effect upon the Company.
5.20 ERISA. Neither the execution and delivery of this Agreement nor the
sale of the Shares to be purchased by the Purchasers is a prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) on the
part of the Company or any of its Subsidiaries that is not exempt by statute,
regulation or class exemption. The Company is in compliance in all material
respects with all presently applicable provisions of ERISA; no "reportable
event" (as defined
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in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any material liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Section 412 (whether or not waived) or 4971 of the Code; and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, that would cause
the loss of such qualification.
5.21 Compliance with Environmental Laws. The business and properties of
the Company and its Subsidiaries have been operated in compliance with all
applicable federal, state or local laws, rules, regulations or orders
(collectively, "Environmental Laws") relating to pollution or protection of the
environment, including, without limitation, any law, rule, regulation or order
relating to emissions, discharges, releases or threatened releases ("Releases")
of chemicals, pollutants, contaminants, wastes, petroleum or petroleum products,
toxic substances or hazardous substances ("Pollutants") for which noncompliance
would have a Material Adverse Effect upon the Company. Neither the Company nor
any Subsidiary has received any written communication, whether from a
Governmental Authority, citizens' group, landowner, employee or otherwise, nor,
to the knowledge of the Company, has the Company or any Subsidiary received any
oral communication from a Governmental Authority, alleging that (i) the Company
or any such Subsidiary is not in compliance with any Environmental Law
applicable to it and its business and properties, or (ii) any employee or third
party has suffered bodily injury or property damage as a result of one or more
Releases of Pollutants arising out of or resulting from the operations of the
Company, its Subsidiaries, or prior owners and operators of their business or
property, which allegation, if true, would have a Material Adverse Effect upon
the Company. Except as disclosed in the Commission Documents, neither the
Company nor any Subsidiary has any material obligation to remediate, repair or
replace any property, whether real or personal, owned by the Company, its
Subsidiaries or any third party, as a result of one or more Releases of
Pollutants arising out of or resulting from the operations of the Company, its
Subsidiaries, or prior owners and operators of their business or properties.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
OF PURCHASERS
6.1 General. Each Purchaser other than State Street Research and
Management Company on behalf of Bell South Master Pension Trust severally
represents and warrants with respect to itself to the Company as of the date
hereof as follows:
(a) Organization. Each Purchaser that is a corporation, limited liability
company or limited partnership is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
(b) Authority. Each Purchaser that is a corporation, a limited partnership
or a limited liability company has all requisite power and authority to enter
into this Agreement and the other documents and agreements contemplated hereby,
to purchase the Shares on the terms described in this Agreement, and to perform
its other obligations contemplated by this Agreement.
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(c) Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereunder have been duly and validly
authorized by all requisite corporate, partnership or limited liability company
action on the part of each Purchaser that is a corporation, a limited
partnership or a limited liability company.
(d) Binding Agreement. This Agreement has been duly executed and delivered
by each Purchaser and constitutes a legal, valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with its terms,
subject to bankruptcy and other similar laws of general application with respect
to creditors and subject to principles of equity and public policy that affect
enforceability of agreements generally.
(e) No Conflicts. Neither the execution nor delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in a breach
or violation of, or constitute a default under, the governing documents of any
Purchaser that is a corporation, a limited partnership or a limited liability
company, or any material agreement, indenture or other instrument to which the
Purchasers are a party or by which any of them are bound or to which any of
their properties are subject, nor will the performance by the Purchasers of
their obligations hereunder violate any Law or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or assets
of the Purchasers. No permit, consent, approval, authorization or order of any
Governmental Authority or other Person is required in connection with the
consummation by the Purchasers of the transactions contemplated by this
Agreement, except such as have been obtained and as otherwise contemplated by
this Agreement.
(f) Absence of Bankruptcy Proceedings. There are no bankruptcy,
reorganization or arrangement proceedings pending against, being contemplated
by, or to any Purchaser's knowledge, threatened against, any Purchaser.
(g) No Brokers. No broker or finder has acted for or on behalf of
Purchasers in connection with the investment in the Preferred Stock by the
Purchasers, and no broker or finder is entitled to any brokerage or finder's fee
or commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Purchasers in connection with the
investment in the Preferred Stock by the Purchasers.
6.2 Accredited Investor, Etc. Each Purchaser severally represents and
warrants that it is an "accredited investor" within the meaning of Rule 501
under the Securities Act. Each Purchaser severally represents and warrants that
it is acquiring the Shares for its own account and not for distribution or
resale, with no present intention of distributing or reselling said Shares or
Conversion Shares or any part thereof; provided that the disposition of such
Purchaser's property shall at all times remain within its control. Each
Purchaser severally agrees: (a) that such Purchaser will not sell, assign,
pledge, give, transfer or otherwise dispose of the Shares or any interest
therein, or make any offer or attempt to do any of the foregoing, except
pursuant to a registration of the Shares under the Securities Act and all
applicable state securities laws or in a transaction which, in the written
opinion of counsel for such Purchaser satisfactory to the Company (which
requirement may be waived by the Company upon advice of counsel), is exempt from
the registration provisions of the Securities Act and all applicable state
securities laws; (b) that the certificate(s) for the Shares will bear a legend
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making reference to the foregoing restrictions for so long as such legend may be
required pursuant to applicable federal securities laws; and (c) that the
Company and any transfer agent for the Shares shall not be required to give
effect to any purported transfer of any of the Shares except upon compliance
with the foregoing restrictions.
ARTICLE 7 - COVENANTS OF THE COMPANY
7.1 Operation of the Business of the Company Pending Closing. From and
after the date of execution of this Agreement and until the Closing, except as
otherwise consented to by Purchasers in writing and subject to the constraints
of applicable operating and other agreements, the Company will continue to
operate its business in the ordinary course of business, in accordance, in all
material respects, with all applicable Laws.
7.2 Taking of Necessary Action. Subject to the terms and conditions of
this Agreement and to applicable law, each of the parties to this Agreement
shall use all reasonable efforts promptly to take or cause to be taken all
action and promptly to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement.
7.3 Restrictions on Certain Actions. From and after the date hereof to
the day immediately following the issuance of the Shares hereunder, the Company
will not:
(a) Pay or declare any dividend payable in shares of its Common Stock
or take any other action which, if taken after the date of such issuance,
would result under the terms of the Certificate of Designation in a change
in the number of Conversion Shares into which the Shares may be converted;
or
(b) Make any amendment to the Second Restated Certificate of
Incorporation of the Company, or file any resolution of the board of
directors with the Delaware Secretary of State containing any provisions,
which would materially and adversely affect or otherwise impair the rights
of the Holders.
7.4 Use of Proceeds. The Company shall contribute the proceeds from the
sale of the Shares to Plains All American as a capital contribution to be used
for the consummation of the Celeron Acquisition.
7.5 Reservation of Common Stock. The Company shall at all times provide
for, reserve and keep available out of its authorized but unissued Common Stock,
solely for the purpose of issuance upon conversion or exchange of the Preferred
Stock, such number of shares of Common Stock as shall then be issuable upon
conversion or exchange of all issued and outstanding shares of Preferred Stock.
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ARTICLE 8 - CLOSING CONDITIONS
8.1 The Company's Closing Conditions. The obligations of the Company
under this Agreement are subject, at the option of the Company, to the
satisfaction at or prior to the Closing of the following conditions:
(a) All representations of Purchasers contained in this Agreement
shall be true at and as of the Closing as if such representations were made
at and as of the Closing, and Purchasers shall have performed and satisfied
all agreements required by this Agreement to be performed and satisfied by
Purchasers at or prior to the Closing;
(b) Simultaneously with the sale of the shares hereunder, the
transactions contemplated by the Celeron Agreement and the ING Agreement
shall be consummated;
(c) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by the Company) shall be pending or
threatened before any Governmental Authority seeking to restrain the
Company or prohibit the Closing or seeking damages against the Company as a
result of the consummation of this Agreement.
8.2 Purchasers' Closing Conditions. The obligations of Purchasers under
this Agreement are subject, at the option of Purchasers, to the satisfaction at
or prior to the Closing of the following conditions:
(a) All representations of the Company contained in this Agreement
shall be true at and as of the Closing as if such representations were made
at and as of the Closing, and the Company shall have performed and
satisfied all agreements required by this Agreement to be performed and
satisfied by the Company at or prior to the Closing;
(b) Simultaneously with the sale of the shares hereunder, the
transactions contemplated by the Celeron Agreement and the ING Agreement
shall be consummated;
(c) Purchasers shall have received a certificate dated as of the
Closing, executed by a duly authorized officer of the Company, to the
effect that to such officer's knowledge the conditions set forth in Section
8.2(a) and (b) above are satisfied at and as of the Closing;
(d) Purchasers shall have received a legal opinion dated as of the
Closing from Fulbright & Jaworski L.L.P., in substantially the form of
Exhibit B hereto;
(e) Purchasers shall have received a legal opinion dated as of the
Closing from Michael R. Patterson, general counsel of the Company, in
substantially the form of Exhibit C hereto;
(f) Purchasers shall have received a certificate of the Secretary or
the Assistant Secretary of the Company certifying, among other things, as
to the due authorization of the transactions contemplated hereby;
-20-
<PAGE>
(g) Purchaser shall have received certificates of existence and good
standing for the Company and each of its Subsidiaries in the jurisdiction
of its incorporation and each jurisdiction in which it is qualified or
licensed to do business and own material assets;
(h) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Purchasers) shall be pending or
threatened before any Governmental Authority seeking to restrain Purchasers
or prohibit the Closing, seeking damages against Purchasers as a result of
the consummation of this Agreement or seeking to restrain or prohibit the
closing of the Celeron Acquisition or the transactions contemplated by the
ING Agreement;
(i) The Certificate of Designation shall have been duly filed by the
Company with the Secretary of State of the State of Delaware and the
Purchasers shall have received satisfactory evidence thereof;
(j) Except for the Certificate of Designation, no amendments to the
Second Restated Certificate of Incorporation or Bylaws of the Company as in
effect on the date hereof shall have been effected; and
(k) Purchasers shall have received a copy of any required written
consent or waiver by any third party or Governmental Authority to the
transactions contemplated hereby and by any Governmental Authority to the
transactions contemplated by the Celeron Agreement or the ING Agreement.
ARTICLE 9 - TERMINATION
9.1 Grounds for Termination. This Agreement may be terminated at any time
prior to Closing:
(a) By mutual agreement of the Company, on one hand, and the
Purchasers, on the other hand; and
(b) By the Company or any Purchaser if the Closing shall not have
occurred on or before September 30, 1998, provided, however, that no party
shall be entitled to terminate this Agreement under this Section 9.1(b) if
the Closing has failed to occur because such party negligently or willfully
failed to perform or observe in any material respect its covenants and
agreements hereunder.
9.2 Effect of Termination. In the event that the Closing does not occur
as a result of any party hereto exercising its rights to terminate pursuant to
this Article 9, then this Agreement shall be null and void and, except as
expressly provided herein, no party shall have any rights or obligations under
this Agreement, except that nothing herein shall relieve any party from
liability for any willful or negligent failure to perform or observe in any
material respect any agreement or covenant contained herein. In the event the
termination of this Agreement results from the willful or negligent failure of
any party to perform in any material respect any agreement or covenant herein,
then the
-21-
<PAGE>
other parties shall be entitled to all remedies available at law or in
equity and shall be entitled to recover court costs and reasonable attorneys'
fees in addition to any other relief to which such party may be entitled.
ARTICLE 10 - MISCELLANEOUS
10.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements of the Company contained in this Agreement
or made in writing by the Company in connection herewith, and all
representations and warranties of any Purchaser contained in this Agreement or
made in writing by any Purchaser in connection herewith, shall survive the
execution, delivery and performance of this Agreement and the transfer of the
Shares, regardless of any investigation made by such party or on such party's
behalf and without any other document being delivered at the Closing.
10.2 Indemnification. The Company shall indemnify and hold harmless each
Purchaser, and each Purchaser shall severally and not jointly indemnify and hold
harmless the Company, from and against any and all claims, losses, damages and
liabilities (and actions in respect thereof) and any and all costs and expenses
(including reasonable attorneys' fees and expenses) that such person may sustain
or incur as a result of any misrepresentation or breach of warranty or the
nonperformance of any obligation on the part of the other under this Agreement.
10.3 Antitrust Laws. Purchasers and the Company agree to use their best
efforts to make such filings with and provide such information to the Federal
Trade Commission or the Department of Justice with respect to the transactions
contemplated by this Agreement as may be required under the HSR Act,
sufficiently in advance of any transaction which may require such filing so as
to permit the lapse of the normal waiting periods described in the HSR Act in
advance of such transaction and to join in a request for early termination.
Purchasers and the Company agree to use such best efforts to obtain all
governmental approvals required to consummate the transactions contemplated by
this Agreement and to cause early termination of the waiting period under the
HSR Act.
10.4 Notices. Except as otherwise expressly provided in this Agreement,
all communications required or permitted under this Agreement shall be in
writing and any such communication or delivery shall be deemed to have been duly
given and received when actually delivered to the address set forth below of the
party to be notified personally (by a recognized commercial courier or delivery
service that provides a receipt) or by telecopier (confirmed in writing by a
personal delivery as set forth above), addressed as follows:
If to the Company: Plains Resources Inc.
500 Dallas, Suite 700
Houston, Texas 77002
Attention: Mr. Michael R. Patterson
Telecopy No.: (713) 654-1523
If to Purchasers, to them at the addresses as listed on Schedule A:
-22-
<PAGE>
Any party may, by written notice so delivered to the other, change the address
to which delivery shall thereafter be made.
10.5 Incidental Expenses. The Company shall promptly pay after receipt of
an invoice all accrued fees and expenses of Purchasers, including fees and
expenses of Baker & Botts, L.L.P., counsel to Purchasers, in connection with the
negotiation, preparation, execution and delivery of the Agreement and related
documents and the consummation of the transactions contemplated hereby.
10.6 Entire Agreement. This Agreement embodies the entire agreement
between the parties with respect to the subject matter of this Agreement
(superseding all prior agreements, arrangements, understandings and
solicitations of interest or offers related to the subject matter of this
Agreement), and this Agreement may be supplemented, altered, amended, modified
or revoked by writing only, signed by the Company and the Holders of at least
66 2/3% of the Registrable Securities. The headings in this Agreement are for
convenience only and shall have no significance in the interpretation of any
term or provision of this Agreement.
10.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
RULES CONCERNING CONFLICTS OF LAWS.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, and each and every counterpart shall be deemed for all purposes
one agreement.
10.9 Waiver. Any of the terms, provisions, covenants, representations,
warranties or conditions contained in this Agreement may be waived only by a
written instrument executed by the party waiving compliance. No waiver by any
party of any condition, or of the breach of any term, provision, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other term, provision, covenant,
representation or warranty.
10.10 Binding Effect; Assignment. All the terms, provisions, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties to this
Agreement and their respective successors and assigns; but this Agreement and
the rights and obligations hereunder shall not be assignable or delegable by any
party without the express written consent of the non-assigning or non-delegating
parties.
10.11 Brokers. Without limiting the parties' respective representations in
Sections 5.9 and 6.1, each party agrees to indemnify and hold the other harmless
from and against any claim for a brokerage or finder's fee or commission in
connection with this Agreement to the extent such claim arises from or is
attributable to the actions of such indemnifying party.
10.12 Construction. Each party hereby acknowledges and agrees that such
party has consulted legal counsel in connection with the negotiation of this
Agreement and that such party has bargaining power equal to that of the other
party in connection with the negotiation and execution
-23-
<PAGE>
of this Agreement. Accordingly, the parties agree the rule of contract
construction to the effect that an agreement shall be construed against the
draftsman shall have no application in the construction or interpretation of
this Agreement.
-24-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
PLAINS RESOURCES INC.
By: /s/ Michael R. Patterson
------------------------------
Name: Michael R. Patterson
Title: Vice President
ENCAP ENERGY CAPITAL FUND III, L.P.
Encap Investments L.C., General Partner
By: /s/ Gary R. Petersen
------------------------------
Name: Gary R. Petersen
Title: Managing Director
ENCAP ENERGY CAPITAL FUND III-B, L.P.
Encap Investments L.C., General Partner
By: /s/ Gary R. Petersen
------------------------------
Name: Gary R. Petersen
Title: Managing Director
BOCP ENERGY PARTNERS, L.P.
Encap Investments L.C., Manager
By: /s/ Gary R. Petersen
-------------------------------
Name: Gary R. Petersen
Title: Managing Director
<PAGE>
ENERGY CAPITAL INVESTMENT
COMPANY PLC
By: /s/ Gary R. Petersen
------------------------------
Name: Gary R. Petersen
Title: Director
ARBCO ASSOCIATES, L.P.
Kayne Anderson Investment Management, Inc.,
General Partner
By: /s/ David Shladovsky
------------------------------
Name: David Shladovsky
Title: General Counsel and Secretary
KAYNE, ANDERSON NON-TRADITIONAL
INVESTMENTS, L.P.
Kayne Anderson Investment Management, Inc.,
General Partner
By: /s/ David Shladovsky
------------------------------
Name: David Shladovsky
Title: General Counsel and Secretary
OFFENSE GROUP ASSOCIATES, L.P.
Kayne Anderson Investment Management, Inc.,
General Partner
By: /s/ David Shladovsky
------------------------------
Name: David Shladovsky
Title: General Counsel and Secretary
<PAGE>
OPPORTUNITY ASSOCIATES, L.P.
Kayne Anderson Investment Management, Inc.,
General Partner
By: /s/ David Shladovsky
------------------------------
Name: David Shladovsky
Title: General Counsel and Secretary
KAYNE ANDERSON ENERGY FUND, L.P.
Kayne Anderson Investment Management, Inc.,
General Partner
By: /s/ David Shladovsky
------------------------------
Name: David Shladovsky
Title: General Counsel and Secretary
KAYNE ANDERSON OFFSHORE LIMITED
By: /s/ W. T. Miller
------------------------------
Name: W. T. Miller
Title: Chief Financial Officer
GLACIER WATER SERVICES, INC.
By: /s/ Jerry A. Gordon
------------------------------
Name: Jerry A. Gordon
Title: President and Chief Operating Officer
NORTH POINTE FINANCIAL SERVICES, INC.
By: /s/ J. H. Berry
------------------------------
Name: John H. Berry
Title: Chief Financial Officer
<PAGE>
QUEENSWAY INTERNATIONAL INDEMNITY
GROUP
By: /s/ Karen L. Simmons
------------------------------
Name: Karen L. Simmons
Title: Assistant Vice President
J. RODERICK MACARTHUR FOUNDATION
By: /s/ Marylou Bane
------------------------------
Name: Marylou Bane
Title: Administrator
CM & RH NEWMAN CHARITABLE TRUST
By: /s/ Dexter F. Lowry
------------------------------
Name: Dexter F. Lowry
Title: VP-Trust Officer, Union Bank of California
PHILIP D. AND HENRIETTA B. ADLER
FOUNDATION
By: /s/ Marlin M. Volz
------------------------------
Name: Marlin M. Volz, Trustee
Title: Sr. Vice President, Norwest Bank I.A
By: /s/ Betty A. Schermer
------------------------------
Name: Betty Schermer, Trustee
INTERMATIC, INC.
By: /s/ Douglas M. Kinney
------------------------------
Name: Douglas M. Kinney
Title: Chairman of the Board
COMER FOUNDATION
By: /s/ Jeffrey J. Budzisz
------------------------------
Name: Jeffrey J. Budzisz
Title: Account Administrator, Marshall & Ilsley
Trust
<PAGE>
MRMB CHARITABLE REMAINDER TRUST
By: /s/ Michael Tepper
------------------------------
Name: Michael Tepper
Title: Trustee
RH NEWMAN TTE UNDER THE RH NEWMAN
LIVING TRUST U/A/D 4/18/89
By: /s/ Dexter F. Lowry
------------------------------
Name: Dexter F. Lowry
Title: VP-Trust Officer, Union Bank of California
DM KINNEY P/S TRUST
By /s/ Douglas M. Kinney
-------------------------------
Name: Douglas M. Kinney
ARNOLD & ELLEN RISSMAN
By: /s/ Patricia Pates
-------------------------------
Name: Pat Pates
Title: Account Administrator/Agent
GREGORY S. REID
By: /s/ Gregory S. Reid
-------------------------------
Name: Gregory S. Reid
CIRCLE OF SERVICE FOUNDATION
By: /s/ Joseph E. Cohen
-------------------------------
Name: Joseph Cohen
Title: Treasurer
<PAGE>
DAVID B. HELLER P/T ROLLOVER IRA
By: /s/ David B. Heller
-------------------------------
Name: David B. Heller
BETTY A. SCHERMER AS TRUSTEE OF THE
BETTY A. SCHERMER DECL OF TRUST DTD
11/17/89
By: /s/ Patricia Pates
-------------------------------
Name: Pat Pates
Title: Account Administrator/Agent
LLOYD G. SCHERMER AS TRUSTEE OF THE
LLOYD G. SCHERMER DECL OF TRUST DTD
11/17/89
By: /s/ Patricia Pates
-------------------------------
Name: Pat Pates
Title: Account Administrator/Agent
HOWARD KRANE FOUNDATION
By: /s/ Howard G. Krane
-------------------------------
Name: Howard G. Krane
Title: President
RHN CORPORATION
By: /s/ David B. Heller
-------------------------------
Name: David B. Heller
Title: President
DAVID MATTENSON P/S TRUST
By: /s/ David Mattenson
-------------------------------
Name: David Mattenson
DAVID & HEATHER GLICKMAN
By: /s/ David Glickman
-------------------------------
Name: David Glickman
<PAGE>
CHARLES SCHWAB & CO., INC.
F/B/O BRIEN M. O'BRIEN IRA
By: /s/ Brien M. O'Brien
-------------------------------
Name: Brien M. O'Brien
STROME PARTNERS, L.P.
By its General Partner, SSCO Inc.
By: /s/ Jeffery S. Lambert
-------------------------------
Name: Jeffery S. Lambert
Title: Chief Financial Officer
STROME SUSSKIND HEDGECAP FUND, L.P.
By its General Partner, SSCO Inc.
By: /s/ Jeffery S. Lambert
-------------------------------
Name: Jeffery S. Lambert
Title: Chief Financial Officer
STROME HEDGECAP LIMITED
By: /s/ Jeffery S. Lambert
-------------------------------
Name: Jeffery S. Lambert
Title: Director
STROME OFFSHORE LIMITED
By its General Partner, SSCO Inc.
By: /s/ Jeffery S. Lambert
-------------------------------
Name: Jeffery S. Lambert
Title: Director
<PAGE>
STATE STREET RESEARCH & MANAGEMENT COMPANY ON
BEHALF OF METROPOLITAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT EN
By: /s/ Peter C. Bennett
-------------------------------
Name: Peter C. Bennett
Title: Executive Vice President
STATE STREET RESEARCH & MANAGEMENT COMPANY ON
BEHALF OF BELL SOUTH MASTER PENSION TRUST
By: /s/ Peter C. Bennett
-------------------------------
Name: Peter C. Bennett
Title: Executive Vice President
STATE STREET RESEARCH & MANAGEMENT COMPANY ON
BEHALF OF STATE STREET RESEARCH ENERGY AND
NATURAL RESOURCES HEDGE FUND, LLC
By: /s/ Peter C. Bennett
-------------------------------
Name: Peter C. Bennett
Title: Executive Vice President
SAWTOOTH CAPITAL MANAGEMENT, INC.
By: /s/ Bartley B. Blout
-------------------------------
Name: Bartley B. Blout
Title: President
/s/ Richard Kayne
-----------------------------------
Richard Kayne
/s/ John E. Anderson
-----------------------------------
John Anderson
<PAGE>
/s/ Robert Sinnott
-----------------------------------
Robert Sinnott
/s/ Howard Zelikow
-----------------------------------
Howard Zelikow
/s/ Michael B. Targoff
-----------------------------------
Michael B. Targoff
/s/ Arthur E. Hall
-----------------------------------
Arthur E. Hall, President
/s/ Ken Iscol
-----------------------------------
Ken Iscol
/s/ Daniel O. Conwill, IV
-----------------------------------
Daniel O. Conwill, IV
SYMONDS TRUST CO., LTD.
By: /s/ J. Taft Symonds
-------------------------------
Name: J. Taft Symonds
Title: President
/s/ William M. Hitchcock
----------------------------------
William M. Hitchcock
<PAGE>
/s/ Tom H. Delimitros
----------------------------------
Tom H. Delimitros
/s/ John H. Lollar
----------------------------------
John H. Lollar
GARY C. COMER
By: /s/ Jeffrey J. Budzisz
-------------------------------
Name: Jeffrey J. Budzisz
Title: Account Administrator, Marshall & Ilsley
Trust
GRANT E. SCHERMER
By: /s/ Patricia Pates
-------------------------------
Name: Pat Pates
Title: Account Administrator/Agent, American
National Bank
DOUGLAS M. KINNEY PERSONAL
By: /s/ Douglas M. Kinney
-------------------------------
Name: Douglas M. Kinney
STEPHEN HASSENFELD TRUST F/B/O ELLEN
H. BLOCK DTD 11/23/84
By: /s/ Ellen H. Block, Trustee
-------------------------------
Name: Ellen H. Block, Trustee
<PAGE>
PLAINS RESOURCES INC.
SERIES E CUMULATIVE CONVERTIBLE STOCK
ORIGINAL ISSUANCE - 7/30/98
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
EnCap Energy Capital Fund III , L.P. 21,240 10,620,000
c/o EnCap Investments L.C.
Attn: Gary R. Petersen, Managing Director
1100 Louisiana, Suite 3150
Houston, Texas 77002
713/659-6100
713/659-6130-fax
EnCap Energy Capital Fund III-B, L.P. 16,063 8,031,500
c/o EnCap Investments L.C.
Attn: Gary R. Petersen, Managing Director
1100 Louisiana, Suite 3150
Houston, Texas 77002
713/659-6100
713/659-6130-fax
Energy Capital Investment Company PLC 7,500 3,750,000
c/o EnCap Investments L.C.
Attn: Gary R. Petersen, Managing Director
1100 Louisiana, Suite 3150
Houston, Texas 77002
713/659-6100
713/659-6130-fax
BOCP Energy Partners, L.P. 5,197 2,598,500
c/o EnCap Investments L.C.
Attn: Gary R. Petersen, Managing Director
1100 Louisiana, Suite 3150
Houston, Texas 77002
713/659-6100
713/659-6130-fax
Arbco Associates, L.P. 3,300 1,650,000
Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2/nd/ Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Kayne Anderson Non-Traditional Investments, L.P. 3,000 1,500,000
Attn: David Shladovsky
1800 Avenue of the Stars, 2/nd/ Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Offense Group Associates, L.P. 3,000 1,500,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2/nd/ Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Opportunity Associates, L.P. 1,400 700,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2/nd/ Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Kayne Anderson Offshore Limited 800 400,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2/nd/ Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Glacier Water Services, Inc. 3,000 1,500,000
Attn: Jerry Gordon
2261 Cosmos Court
Carlsbad, California 92009
619/930-2420
619/930-1206-fax
North Pointe 2,000 1,000,000
Attn: Celaska Fredianelli
28819 Franklin Road
P. O. Box 2223
Southfield, MI 48037-2223
248/358-1171
248/357-3895-fax
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Queensway International Indemnity Group 1,000 500,000
Attn: Karen Simmons
2910 Miller Road
Decatur, Georgia 30035
770/981-7100
770/593-2121-fax
Kayne Anderson Energy Fund, L.P. 32,550 16,275,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2nd Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Richard Kayne 2,150 1,075,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2nd Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
John Anderson 2,000 1,000,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2nd Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Robert Sinnott 1,000 500,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2nd Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
Howard Zelikow 1,000 500,000
c/o Kayne Anderson Investment Management, Inc.
Attn: David Shladovsky
1800 Avenue of the Stars, 2nd Floor
Los Angeles, California 90067
310/284-6438
310/284-6444-fax
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Michael B. Targoff 1,400 700,000
1330 Avenue of the Americas
36th Floor
New York, New York 10019
Arthur E. Hall 1,650 825,000
P. O. Box 1479
Minden, Nevada 89423
310/284-6438
Ken Iscol 1,000 500,000
c/o Zackiva Communications
63 Lyndel Road
Pound Ridge, New York 10576
Daniel O. Conwill, IV 200 100,000
400 Poydras, Suite 2140
New Orleans, Louisiana 70130
Union Bank of California F/B/O RH Newman TTEE 350 175,000
Under the RH Newman Living Trust U/A/D 4/18/89
c/o Union Bank of California
Attn: Pam Lloyd
475 Sansome Street
San Francisco, California 94111
Charles Schwab & Co., Inc. 200 100,000
Gregory S. Reid
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
Charles Schwab & Co., Inc. F/B/O 1,000 500,000
David B. Heller P/T Rollover IRA
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
Charles Schwab & Co., Inc. F/B/O 200 100,000
Howard Krane Foundation
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Charles Schwab & Co., Inc. F/B/O 800 400,000
RHN Corporation
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
Charles Schwab & Co., Inc. F/B/O 400 200,000
David Mattenson P/S Trust
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
Charles Schwab & Co., Inc. F/B/O 200 100,000
David & Heather Glickman
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
DEVACO Tax ID # 36-2987067, F/B/O 3,200 1,600,000
J. Roderick MacArthur Foundation
c/o LaSalle National Bank
Attn: Gail Levine
135 S. LaSallle Street
Chicago, IL 60605
Union Bank of California F/B/O CM & RH 400 200,000
Newman Charitable Trust
c/o Union Bank of California
Attn: Pam Lloyd
475 Sansome Street
San Francisco, CA 94111
Auer & Co. 800 400,000
c/o Norwest Bank IA
Attn: Window 42
16 Wall Street, 4th Floor
New York, NY 10015
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
DEVACO Tax ID #36-2987067, F/B/O 3,200 1,600,000
Intermatic, Inc.
c/o LaSalle National Bank
Attn: Gail Levine
135 LaSalle Street
Chicago, IL 60605
DEVACO Tax ID #36-2987067, F/B/O 600 300,000
MRMB Charitable Remainder Trust
c/o LaSalle National Bank
Attn: Gail Levine
135 LaSalle Street
Chicago, IL 60605
DEVACO Tax ID #36-2987067, F/B/O 600 300,000
DM Kinney P/S Trust
c/o LaSalle National Bank
Attn: Gail Levine
135 LaSalle Street
Chicago. IL 60605
DEVACO Tax ID #36-2987067, F/B/O 200 100,000
Circle of Service Foundation
c/o LaSalle National Bank
Attn: Gail Levine
135 S. LaSalle Street
Chicago, IL 60605
Charles Schwab & Co., Inc. F/B/O 50 25,000
Brien M. O'Brien IRA
c/o Charles Schwab & Co., Inc.
Attn: Securities Processing
101 Montgomery Street
San Francisco, CA 94104
Marshall & Ilsley F/B/O Comer Foundation 2,000 1,000,000
c/o Marshall & Ilsley
Attn: Caroline Stevens
1000 N. Water Street
Milwaukee, WI 53202
Arnold & Ellen Rissman in care of 600 300,000
American National Bank, 10/th/ Floor
Attn: Pat Pates
120 S. LaSalle Street
Chicago, IL 60603
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Betty A. Schermer as Trustee of the 800 400,000
Betty A. Schermer Decl. Of Trust DTD 11/17/89
in care of American National Bank
Attn: Pat Pates
120 S. LaSalle Street, 10/th/ Floor
Chicago, IL 60603
Lloyd G. Schermer as Trustee of the 800 400,000
Lloyd G. Schermer Decl. Of Trust DTD 11/17/89
Attn: Pat Pates
in care of American National Bank
120 S. LaSalle Street, 10/th/ Floor
Chicago, Illinois 60603
312/565-1414
312/565-2002-Fax
Strome Partners L.P. 4,368 2,184,000
Attn: Jeff Lambert
100 Wilshire Blvd., 15/th/ Floor
Santa Monica, California 90401
800/964-9034
310/917-6600
310/917-6613-fax
Strome Susskind Hedgecap Fund, L.P. 1,360 680,000
Attn: Jeff Lambert
100 Wilshire Boulevard, 15th Floor
Santa Monica, California 90401
800/964-9034
310/917-6600
310/917-6613-fax
Strome Susskind Hedgecap Fund, L.P. 2,809 1,404,500
Attn: Jeff Lambert
100 Wilshire Boulevard, 15th Floor
Santa Monica, California 90401
800/964-9034
310/917-6600
310/917-6613-fax
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Strome Offshore Limited 5,339 2,669,500
Attn: Jeff Lambert
100 Wilshire Boulevard. 15th Floor
Santa Monica, California 90401
800/964-9034
310/917-6600
310/917-6613-fax
Sandpiper & Co. 11,000 5,500,000
Chase Manhattan Bank
A/C State Street Bank and Trust Co.
Attn: Jennifer John
4 New York Plaza
Ground Floor/Outsource Department
New York, New York 10004
Portfolio 2G79
212/623-5953
Marine Crew & Co. 5,000 2,500,000
Chase Manhattan Bank
A/C State Street Bank and Trust Co.
Attn: Jennifer John
4 New York Plaza
Ground Floor/Outsource Department
New York, New York 10004
212/623-5953
Royter & Co. 2,000 1,000,000
NSCC, New York Window
Concourse Level/S Building
Account: Morgan Sanley New York
Energy and Natural Resources Hedge Fund, LLC
55 Water Street
New York, New York 10041-0002
Sawtooth Partners, L.P. 2,800 1,400,000
Attn: Bartley B. Blout
100 Wilshire Blvd., Suite 1500
Santa Monica, California 90401
310/260-6876
310/260-6845-fax
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Sawtooth Offshore Limited 600 300,000
Attn: Bartley B. Blout
100 Wilshire Blvd., Suite 1500
Santa Monica, California 90401
310/260-6876
310/260-6845-fax
Polaris Prime Small Cap Value, L.P. 1,000 500,000
Attn: Bartley B. Blout
100 Willshire Blvd., Suite 1500
Santa Monica, California 90401
William M. Hitchcock 2,000 1,000,000
c/o Avalon Financial, Inc.
4550 Post Oak Place, Suite 119
Houston, Texas 77027
713/961-0534
713/961-0574-fax
Symonds Trust Co. Ltd. 400 200,000
Attn: J. Taft Symonds, President
2040 North Loop West, Suite 200
Houston, Texas 77018
713/681-5461
713/681-7554-fax
Tom H. Delimitros 50 25,000
6813 Golf Drive
Dallas, Texas 75205
214/696-3828
214/905/9761-fax
John H. Lollar 100 50,000
c/o Newgulf Exploration L.P.
1100 Louisiana, Suite 1470
Houston, Texas 77002
713/756-1190, ext. 559
713/756-1196-fax
Marshall & Ilsley F/B/O Gary C. Comer 2,000 1,000,000
c/o Marshall & Ilsley
Attn: Caroline Stevens
1000 N. Water Street
Milwaukee, WI 53202
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO.
PURCHASER SHARES $ AMOUNT
<S> <C> <C>
Grant E. Schermer in care of 600 300,000
American National Bank
Attn: Pat Pates
120 S. LaSalle Street, 10th Floor
Chicago, IL 60603
DAVACO Tax ID #36-2987067, F/B/O 400 200,000
Douglas M. Kinney, Personal
c/o LaSalle National Bank
Attn: Gail Levine
135 S. LaSalle Street
Chicago, IL 60605
Stephen Hassengeld Trust F/B/O Ellen H. Block 600 300,000
DTP 11/23/1984
c/o Harris Trust and Savings Bank
Attn: Eileen Rea
Strome Hedgecap Limited 240 120,000
Attn: Jeff Lambert
100 Wilshire Boulevard, 15th Floor
Santa Monica, California 90401
800/964-9034
310/917-6600
310/917-6613-fax
Strome Hedgecap Limited 484 242,000
Attn: Jeff Lambert
100 Wilshire Boulevard, 15th Floor
Santa Monica, California 90401
800/964-9034
310/917-6600
310/917-6613-fax
Total 170,000 $85,000,000
</TABLE>
<PAGE>
EXHIBIT 3.1
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 250,000 Shares of Preferred Stock Designated
"SERIES E 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 March 19, 1998, 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
250,000 shares of Preferred Stock designated "Series E 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 E 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 E Cumulative
Convertible Preferred Stock" (hereinafter called this "Series"), and the number
of shares constituting this Series shall be 250,000. Shares of this Series
shall have a stated value of $500 per share. 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, but the number of authorized shares of this Series shall not be
increased, except as provided in Section 2(b) hereof. The shares of this Series
shall rank prior to the Junior Stock (as defined in Section 10) 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, dividends as provided in this Section 2 on
the stated value per share of this Series, and no more. 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 the date of
original issue of such shares 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 and October 1 of each year, commencing October 1, 1998
(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 six-month period (or such period from
the date of original issue until October 1, 1998) 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 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) With respect to each dividend declared and timely paid on shares of
this Series, the Company may pay a cash dividend at the Dividend Rate (as
defined in Section 10) or, at its option, and in lieu of payment in cash, may
pay such dividend by issuing additional fully paid and nonassessable shares, or
fractions thereof, of this Series having an aggregate stated value equal to the
cash dividend otherwise payable. Each dividend that accrues during each
Dividend Period shall be deemed to be timely paid only if it is paid on the
dividend payment date on which such Dividend Period expires. Any dividend not
declared and timely paid on shares of this Series may thereafter be paid only by
(i) issuing additional fully paid and nonassessable shares of this Series, or
fractions thereof ("Arrearage Shares"), having an aggregate stated value equal
to the cash that would have been paid had such dividend been timely paid in cash
and (ii) paying an amount in cash equal to the aggregate amount of cash
dividends, if any, that would have accrued on such Arrearage Shares had such
Arrearage Shares been issued on the dividend payment date for such dividend, or,
at the Company's option, and in lieu of such cash payment, issuing additional
fully paid and nonassessable shares, or fractions thereof, of this Series having
an aggregate stated value equal to the cash payment otherwise to be made. Each
fractional share of this Series outstanding shall be entitled to a ratably
proportionate amount of all dividends accruing with respect to each outstanding
share of this Series pursuant to Section 2(a) hereof, and all such dividends
with respect to such outstanding fractional shares shall be fully cumulative and
shall accrue (whether or not declared) and shall be payable in the same manner
and at such times as provided for in Section 2(a) hereof with respect to
dividends on each outstanding share of this Series. The Board of Directors shall
authorize additional shares of this Series to be available for issuance as
dividends if the number of authorized shares of this Series is insufficient to
continue accruing or paying dividends in shares of this Series.
2
<PAGE>
(c) No full dividends shall be declared or paid or set apart for payment
on Parity Stock (as defined in Section 10) 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 Parity
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 Parity
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. Except as set
forth in Section 2(b) above, 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.
(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) On July 30, 2012, the Company shall redeem, to the extent it has
legally available funds therefor, all shares of this Series then outstanding at
a redemption price per share equal to the sum of $500 per share plus the Deemed
Arrearage Value (as defined in Section 10) per share. At any time when the
Company shall not have redeemed the full number of shares of this Series
required to be redeemed pursuant to this Section 3(a), no dividends (other than
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 any such stock) by the Company
(except by conversion into or in exchange for Junior Stock), nor shall any
Parity 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 any Parity Stock) by the Company (except by
conversion into or in exchange for Junior Stock), unless, in the case of the
mandatory redemption of, repurchase of, or fulfillment of a sinking fund
obligation in respect of, any other series of Parity Stock, payments made
3
<PAGE>
in respect of the mandatory redemption of, repurchase of, or fulfillment of a
sinking fund obligation in respect of, this Series and all other series of
Parity Stock then issued and outstanding and entitled to such mandatory payments
are made pro rata, as nearly as practicable, so that the amounts of such
payments made on this Series and such other series of Parity Stock shall in all
cases bear to each other the same ratio, as nearly as practicable, that such
mandatory payments required to be made on this Series and such other series of
Parity Stock bear to each other.
(b) From and after March 31, 1999, 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 the following redemption prices per share, in each case together with the
Deemed Arrearage Value per share:
REDEMPTION
PRICE IF REDEEMED DURING THE PERIOD:
- ---------- ---------------------------------
$550.00 From April 1, 1999 through
December 31, 1999
525.00 From January 1, 2000 through
December 31, 2003
500.00 From January 1, 2004 and
thereafter
(c) 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 in a
pro rata manner.
(d) 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 nor more than 60 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.
(e) 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 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 plus the Deemed Arrearage Value to the redemption date) 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
4
<PAGE>
redeemed, a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(f) Any shares of this Series that shall at any time have been redeemed or
purchased by the Company, or exchanged for shares of Common Stock pursuant to
Section 7, 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.
(g) Notwithstanding the foregoing provisions of this Section 3, if any
dividends on this Series are in arrears, no shares of this Series shall be
redeemed pursuant to Section 3(b) unless all outstanding shares of this Series
are simultaneously redeemed, and the Company shall not purchase or otherwise
acquire any shares of this Series; provided, however, that the foregoing shall
not prevent the purchase or acquisition of shares of this Series pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of this Series.
SECTION 4. Voting.
(a) Except as otherwise required by law, 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. 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 and (ii) the amendment,
alteration or repeal of any of the provisions of the Second Restated 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 said rights, preferences,
privileges or voting power.
(c) So long as at least 10,000 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 shares 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 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, 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
5
<PAGE>
the date such vote is taken or any written consent of 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 Deemed Arrearage Value of such share
plus $500.00 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 prior to the third Trading Day before the
redemption date for such share, 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 shares of fully paid and nonassessable shares of Common Stock
determined by dividing the sum of $500.00 plus the Deemed Arrearage Value by the
Conversion Price in effect at the time of conversion.
(b) 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 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. 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.
SECTION 7. Exchange.
(a) At the option of the Company, each outstanding share of this Series
shall be exchanged for the number of shares of fully paid and nonassessable
shares of Common Stock determined pursuant to Section 7(b); provided that such
option shall not be exercisable unless and until either:
(i) (A) either (x) the Midstream Entities have merged or consolidated
with Plains All American Inc., or (y) the Company has received at least
$180 million in gross proceeds from a public offering of up to 35% of the
equity interests in an entity taxable as a partnership for
6
<PAGE>
federal income tax purposes that then owns, directly or through
subsidiaries, substantially all of the Midstream Entities or has otherwise
succeeded to substantially all of the business and assets of the Midstream
Entities; (B) the average of the Per Share Market Values of the Common
Stock for any 30 consecutive Trading Days prior to the mailing of the
notice as required by Section 7(d) and subsequent to the sale of shares of
this Series shall have equaled or exceeded the First Threshold Price; and
(C) notice of exercise pursuant to Section 7(d) is mailed no later than
December 31, 1999; or
(ii) the average of the Per Share Market Values of the Common Stock
for any 30 consecutive Trading Days prior to the mailing of the notice as
required by Section 7(d) and subsequent to the sale of shares of this
Series shall have equaled or exceeded the Second Threshold Price.
(b) If the conditions required under subsection 7(a)(i) have been met,
then the number of shares of Common Stock for which each outstanding share of
this Series may be exchanged pursuant to Section 7(a) shall be determined by
dividing the sum of $500.00 plus the Deemed Arrearage Value of such share by the
Exchange Price in effect at the time of such exchange. If the condition required
under subsection 7(a)(ii) has been met, then, without regard to whether the
conditions set forth in subsection 7(a)(i) have also been met, the number of
shares of Common Stock for which each outstanding share of this Series may be
exchanged pursuant to Section 7(a) shall be determined by dividing the sum of
$500.00 plus the Deemed Arrearage Value of such share by the Conversion Price in
effect at the time of such exchange.
(c) Notwithstanding any other provision of this Section 7(a), in the event
that (i) no registration statement with respect to the shares of Common Stock to
be issued upon exchange of shares of this Series has been declared effective,
(ii) such registration statement has been declared effective but ceases to be
effective, (iii) the prospectus which is a part thereof cannot be used at the
time of the exchange, (iv) necessary consents and filings with any Governmental
Authority relating to the issuance of Common Stock and the exchange have not
been obtained, accomplished or waived or (v) the shares of Common Stock to be
issued upon exchange in accordance with Section 7(a) have not been approved for
listing on the principal securities exchange on which the Common Stock is then
listed, such exchange shall be delayed until such time as none of the foregoing
is continuing, provided that such exchange will occur on the Trading Day
following the first day that none of the foregoing is continuing and the Per
Share Market Value has equaled or exceeded the First Threshold Price with
respect to an exchange under Section 7(a)(i) or the Second Threshold Price with
respect to an exchange under Section 7(a)(ii).
(d) The Company shall exercise its option under Section 7(a) by giving
notice of such election by first class mail, postage prepaid, mailed (i) not
more than 10 business days after each of the conditions required under
subsection 7(a)(i) have been met or the condition in subsection 7(a)(ii) has
been met (and provided that none of the conditions in Section 7(c) then exist),
and (ii) not less than 30 nor more than 60 days prior to the exchange date, to
each holder of record of the shares of this Series to be exchanged, at such
holder's address as the same appears on the stock register of the
7
<PAGE>
Company. Each such notice shall state: (i) that the Board of Directors of the
Company has determined in good faith that each of the conditions required under
subsection 7(a)(i) have been met or the condition set forth in subsection
7(a)(i) has been met (and that none of the conditions in Section 7(c) exist);
(ii) the exchange date; (iii) the number of shares of Common Stock to be
exchanged for each share of this Series; (iv) the place or places where
certificates for such shares are to be surrendered in exchange for shares of
Common Stock; and (v) that dividends on the shares of this Series to be
exchanged will cease to accrue on such exchange date.
(e) Notice having been mailed as aforesaid, from and after the exchange
date, dividends on the shares of this Series so called for exchange shall cease
to accrue, and said shares shall no longer be deemed to be outstanding, and all
rights of the holders as holders of share of this Series (except the right to
receive from the Company the number of shares of Common Stock issuable pursuant
to this Section 7) shall cease. Upon surrender in accordance with said notice
of the certificates for shares of this Series so exchanged (properly endorsed or
assigned for transfer, if the Board shall so require and the notice shall so
state), such certificates shall be exchanged for certificates representing the
number of shares of Common Stock for which shares of this Series have been
exchanged. Until so surrendered, certificates for shares of this Series shall
represent, after the exchange date, the number of shares of Common Stock for
which shares of this Series have been exchanged. Share certificates
representing shares of this Series that are so surrendered shall be canceled.
(f) Notwithstanding the foregoing provisions of this Section 7, if any
dividends on this Series are in arrears, no shares of this Series shall be
exchanged pursuant to Section 7(a) unless all outstanding shares of this Series
are simultaneously exchanged, and the Company shall not purchase or otherwise
acquire any shares of this Series; provided, however, that the foregoing shall
not prevent the purchase or acquisition of shares of this Series pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of this Series.
SECTION 8. Adjustment of Conversion Price, Exchange Price, First Threshold
Price and Second Threshold Price.
(a) The Conversion Price initially shall be $18.00 (the "Conversion
Price"), and the Exchange Price initially shall be $15.00 (the "Exchange
Price"). The Conversion Price and the Exchange Price 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
8
<PAGE>
class or classes, the Conversion Price and the Exchange 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 or
exchanged 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 or
exchanged 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. Notwithstanding the foregoing, no
adjustment in the Conversion Price or the Exchange Price shall be made by
reason of the payment of dividends on shares of Preferred Stock in
additional shares of Preferred Stock. An adjustment made pursuant to this
subsection 8(a)(i) shall become effective immediately after the record 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) In case 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 and the
Exchange Price shall be reduced by multiplying the Conversion Price and the
Exchange Price, as the case may be, in effect 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 and the Exchange Price pursuant to this subsection
8(a)(ii), if any such right or warrant shall expire and shall not have been
exercised, the Conversion Price and the Exchange Price shall immediately
upon such expiration, be recomputed and effective immediately upon such
expiration be increased to the prices which they would have been (but
reflecting any other adjustments in the Conversion Price and Exchange Price
made pursuant to the provisions of this Section 8 after the issuance of
such rights or warrants) had the adjustment of the Conversion Price and the
Exchange 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 actually exercised.
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(iii) In case 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 8(a)(ii)
above) then in each such case the Conversion Price and the Exchange Price
shall be determined by multiplying the Conversion Price or the Exchange
Price, as the case may be, in effect 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 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 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, 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 8(a)) 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 and
the Exchange Price shall be reduced by multiplying the Conversion Price and
the Exchange 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 8(b).
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(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 8(a)) 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 and the
Exchange Price shall be reduced by multiplying the Conversion Price and the
Exchange 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 and
the Exchange Price pursuant to this subsection 8(a)(v), if such Purchase
Right shall not have been fully exercised, the Conversion Price and the
Exchange Price shall immediately upon such expiration be recomputed and
effective immediately upon such expiration be increased to the prices which
they would have been (but reflecting any other adjustments in the
Conversion Price and the Exchange Price made pursuant to the provisions of
this Section 8 after the issuance of such Purchase Rights) had the
adjustment of the Conversion Price and the Exchange 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 8(b).
(vi) No notification to the holders of any adjustment in the
Conversion Price or the Exchange Price otherwise required by this Section 8
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 8(a)(vi) 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 adjustments shall be made calculating the conversion rights
of such holder. All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(vii) Whenever the Conversion Price or the Exchange Price is adjusted,
as herein provided, the Company shall promptly mail to each registered
holder of shares of this Series
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a notice setting forth the Conversion Price and the Exchange Price after
such adjustment and setting forth a brief statement of facts requiring such
adjustment. Such notice prepared in good faith shall be conclusive evidence
of the correctness of such adjustment absent manifest error.
(viii) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which share exchange the Common Stock
is converted into other securities, cash or property, 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, consolidation, merger, sale, transfer or
share exchange 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, consolidation, merger, sale,
transfer or share exchange.
This provision shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(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
(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
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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).
(b) 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 nationally recognized or major regional investment
banking firm or 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 8), of the
Conversion Price or the Exchange Price (including, if necessary, any adjustment
as to the securities into which shares of this Series may thereafter be
convertible or exchangeable) 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 or the Exchange 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 or the Exchange Price to more than the
Conversion Price or the Exchange Price, respectively, then in effect.
(c) Upon any adjustment of the Conversion Price and the Exchange Price
pursuant to this Section 8, then the First Threshold Price and the Second
Threshold Price shall be adjusted, as of the date of such adjustment of the
Conversion Price and the Exchange Price, to that price determined by multiplying
the First Threshold Price and the Second Threshold Price in effect immediately
prior to such adjustment of the Conversion Price and the Exchange Price by a
fraction (i) the numerator of which shall be the Conversion Price in effect
immediately after such adjustment of the Conversion Price, and (ii) the
denominator of which shall be the Conversion Price in effect immediately prior
to such adjustment.
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SECTION 9. Fractional Shares; Transfer Taxes; HSR Act.
(a) 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. 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.
(b) The issuance of certificates for shares of Common Stock on conversion
of this Series 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 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.
(c) The exercise by a holder of shares of this Series of the conversion
rights granted in Section 6 and the exercise by the Company of the exchange
rights as set forth in Section 7 are 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 10. Definitions. For the purposes hereof, the following terms
shall have the following respective meanings:
"Arrearage Shares" has the meaning given such term 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 Price" has the meaning given such term in Section 8(a).
"Deemed Arrearage Value" of a share of this Series means (i) the cash
dividend accrued at the Dividend Rate on such share during the partial
Dividend Period ending on the date of conversion, the date fixed for
redemption, the exchange date or the date of payment upon liquidation, as
the case may be, and (ii) if one or more dividends has accrued and has
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not been timely paid on such share, an amount in cash equal to $500
multiplied by the number of whole and fractional shares of this Series that
would have been issued as dividends on such share had all such accrued and
unpaid dividends been timely paid in shares of this Series, together with
the aggregate amount of cash dividends that would have accrued on such
dividend shares to the date of conversion, the date fixed for redemption,
the exchange date or the date of payment upon liquidation, as the case may
be.
"Dividend Period" has the meaning given such term in Section 2(a).
"Dividend Rate" means 9.5% per annum.
"Exchange Price" has the meaning given such term in Section 8(a).
"First Threshold Price" of a share of Common Stock shall initially be
$18.00. The First Threshold Price is subject to adjustment pursuant to
Section 8(c).
"Governmental Authority" shall mean (i) the United States of America
or any state within the United States of America and (ii) any court or any
governmental department, commission, board, bureau, agency or other
instrumentality of the United States of America or of any state within the
United States of America.
"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.
"Midstream Entities" means Plains Marketing & Transportation Inc,
Plains Terminal & Transfer Corporation, PLX Crude Lines Inc. and PLX
Ingleside Inc.
"Parity Stock" means any stock of the Company ranking as to
distribution of assets 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 final 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
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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.
"Second Threshold Price" of a share of Common Stock shall initially be
$21.60. The Second Threshold Price is subject to adjustment pursuant to
Section 8.
"Senior Stock" means any shares or class of the Company that are by
their terms expressly given priority over this Series as to distribution of
assets on any liquidation of the Company.
"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).
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IN WITNESS WHEREOF, said Plains Resources Inc. has caused this Certificate
to be signed by a duly authorized officer, this 24th day of July, 1998.
PLAINS RESOURCES INC.
By: /s/ Phillip D. Kramer
----------------------------------
Name: Phillip D. Kramer
Title: Executive Vice President
ATTEST:
By: /s/ Michael R. Patterson
------------------------------
Name: Michael R. Patterson
Title: Secretary
17
