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EXHIBIT 6
EXHIBIT A-3
PREFERRED STOCK
and
WARRANT TO PURCHASE COMMON STOCK
The Preferred Stock to be issued and delivered to Shell Land & Energy
Company ("Shell Shareholder") by Plains Resources Inc. ("Plains") pursuant to
the Exchange Agreement to which this Exhibit A-3 is attached (the "Agreement")
shall be 46,600 shares of Series D Cumulative Convertible Preferred Stock (the
"Preferred Stock") of Plains, the terms and provisions of which are set forth
in the Certificate of Designation, Preferences and Rights of a Series of
Preferred Stock attached hereto as Attachment 1 (the "Certificate of
Designation").
In addition, the Agreement provides for the issuance to Shell
Shareholder of a warrant to purchase 150,000 shares (the "Warrant Shares") of
Plains common stock, $.10 per share par value ("Common Stock"), upon the terms
and conditions of which are set forth in that certain form of "Warrant for the
Purchase of Shares of Common Stock" attached hereto as Attachment 2 (the
"Warrant").
1. REGISTRATION OBLIGATIONS.
a. Shelf Registration. Plains shall, as promptly as reasonably
practicable, but in any event within ninety (90) days of the date of Closing
(as defined in the Agreement), prepare and file with the Securities and
Exchange Commission ("SEC'):
(i) a shelf registration statement (the "Preferred Stock &
Conversion Shares Registration Statement") pursuant to Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act") with respect
to the shares of preferred Stock and the shares of Common Stock of
plains into which the Preferred Stock and any dividend arrearage
thereon is convertible or exchangeable (the "Conversion, Shares") (the
Preferred Stock and Conversion Shares collectively referred to as the
"Shares") and use its best efforts to cause the Preferred Stock &
Conversion Shares Registration Statement to become and remain
effective until such time as all of the outstanding Shares can be
resold pursuant to SEC Rule 144(k) (or any successor provision) under
the Securities Act; and
(ii) a shelf registration statement (the "Warrant Shares
Registration Statement") pursuant to Rule 415 of the Securities Act
with respect to the Warrant Shares and use its best efforts to cause
the Warrant Shares Registration Statement to become and remain
effective until the earlier of(x) the expiration of the Warrant or (y)
such time as all of the Warrant Shares can be resold pursuant to SEC
Rule 144(k) (or any successor provision) under the Securities Act.
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The Preferred Stock & Conversion Shares Registration Statement and the Warrant
Shares Registration Statement are collectively referred to herein as the
"Registration Statements".
Shell Shareholder shall, within ten (10) days of the Closing, notify
Plains of its proposed method of distribution of the Shares and the Warrant
Shares, and the plan(s) of the distribution in each of the Registration
Statements shall be to sell the Shares only through the methods of distribution
so specified by Shell Shareholder. In the absence of a contrary written
indication by Shell Shareholder, the Plan of Distribution in each of the
Registration Statements shall be deemed to be as follows:
"The Shares or Warrant Shares may be sold from time to time by or for
the account of holder thereof in the over-the-counter market, or otherwise at
prices and on terms then prevailing or at prices related to then current market
price, in negotiated transactions or, with respect to the Conversion Shares or
Warrant Shares, on the American Stock Exchange ("AMEX"). The Shares or the
Warrant Shares may be sold by any one or more of the following methods:
(i) a block trade (which may involve crosses) in which the broker
or dealer so engaged will attempt to sell the securities as agent but
may position and resell a portion of the block as principal to
facilitate the transaction;
(ii) purchase by broker or dealer as principal and resale by such
broker or dealer for its account pursuant to the Prospectus;
(iii) exchange distributions and/or secondary distributions of the
Conversion Shares or the Warrant Shares in accordance with the rules
of the AMEX;
(iv) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
(v) privately negotiated transactions.
Shell Shareholder may effect any such transaction by selling Shares or
Warrant Shares through broker-dealers, and such broker-dealers may receive
compensation in the form of commissions from Shell Shareholder (which
commissions will not exceed the customary in the types of transactions
involved). Shell Shareholder and any broker-dealers that participate in the
distribution of the Shares or the Warrant Shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any profit on the sale of Shares by it and any commissions received
by any such broker-dealers may be deemed to be underwriting discounts and
commissions."
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In addition to the foregoing, Shell Shareholder may sell the Shares
under the Registration Statements through one underwritten offering under a
plan of distribution which is acceptable to Plains in its reasonable
discretion.
b. Amendments. From time to time, Plains shall prepare and file
with the SEC such amendments and supplements to each of the Registration
Statements and each prospectus used in connection with the Registration
Statements (a "Prospectus") as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by the Registration Statements.
c. Prospectus. Plains shall furnish to Shell Shareholder such
numbers of copies of each Prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as Shell Shareholder may reasonably request in order to facilitate
the disposition of the Shares or the Warrant Shares.
d. Blue Sky. Plains shall use its best efforts to register and
qualify the securities covered by each of the Registration Statements under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of the securities covered by each
of the Registration Statements, provided that Plains shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, and further provided that (notwithstanding anything herein to
the contrary with respect to the beating of expenses) if any jurisdiction in
which the securities shall be qualified shall require that expenses incurred in
connection with the qualification of the securities in that jurisdiction be
borne by selling shareholders, then such expenses shall be payable by Shell
Shareholder, to the extent required by such jurisdiction.
e. Expenses. All expenses incurred in connection with each
registration pursuant hereto (excluding underwriters' and brokers' discounts
and commissions), including without limitation all registration and
qualification fees, printers' and accounting fees, and fees and disbursements
of counsel for Plains, shall be borne by Plains. Shell Shareholder shall be
responsible for its own counsel fees.
f. Other Documents. Plains shall file with the SEC in a timely
manner all reports and other documents required of Plains under the Securities
Act and the Securities Exchange Act of 1934, as amended.
g. Current Prospectus. Shell Shareholder acknowledges that from
time to time, events may occur which will require a Prospectus to be
supplemented or amended in order to comply with federal securities laws. Upon
the occurrence of such event, Plains shall notify Shell Shareholder of the need
to supplement or amend a Prospectus. After receipt of such notice, Shell
Shareholder shall not sell any Shares or Warrant Shares until receipt of such
Prospectus supplement or amendment has been delivered by Plains. Plains shall
use reasonable best efforts to deliver such Prospectus supplement or amendment;
provided, however, Plains shall not be required to deliver such supplement or
amendment until the earlier of.
(i) the time disclosure of such event is required by federal
securities laws; or,
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(ii) such time as the management of Plains determines that in its
good faith judgment such disclosure is in the best interests
of Plains.
h. Indemnification: Contribution.
(i) Indemnification by Plains. Plains agrees to indemnify and
hold harmless Shell Shareholder, its officers, directors,
partners and agents and each person, if any, who controls
Shell Shareholder 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 Shares or Warrant Shares or in any amendment or
supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or
expenses arise out of; or are based upon, any such untrue
statement or omission or allegation thereof based upon
information furnished in writing to Plains by Shell
Shareholder or on Shell Shareholder's behalf expressly for use
therein. Plains also agrees to indemnify any underwriters of
the Shares, their officers, partners and directors and each
person who controls such underwriters on substantially the
same basis as that of the indemnification of Shell Shareholder
provided in this paragraph 1 .h (i) or such other
indemnification customarily obtained by underwriters at the
time of offering.
(ii) Conduct of Indemnification Proceedings If any action or
proceeding (including any governmental investigation) shall be
brought or asserted against Shell Shareholder (or its
officers, directors, partners or agents) or any person
controlling Shell Shareholder in respect of which indemnity
may be sought from Plains, Plains shall assume the defense
thereof, including the employment of counsel reasonably
satisfactory to Shell Shareholder, and shall assume the
payment of all expenses. Shell Shareholder or any controlling
person of Shell Shareholder 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 Shell Shareholder or such
controlling person unless (i) Plains 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
Shell Shareholder or such controlling person and Plains, and
Shell Shareholder or such controlling person shall have been
advised by counsel that there may be one or more legal
defenses available to Shell Shareholder or such controlling
person which conflict with those available to Plains (in which
case, if Shell Shareholder or such controlling person notifies
Plains in writing that it elects to employ separate counsel at
the expense of plains, Plains shall not have the right to
assume the defense of such action or proceeding on behalf of
Shell Shareholder or such controlling person; it being
understood, however, that Plains 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
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fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for
Shell Shareholder and such controlling persons, which firm
shall be designated in writing by Shell Shareholder). Plains
shall not be liable for any settlement of any such action or
proceeding effected without Plains'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,
Plains agrees to indemnify and hold harmless Shell Shareholder
and such controlling person from and against any loss or
liability (to the extent stated above) by reason of such
settlement or judgment.
(iii) Indemnification by Shell Shareholder. Shell Shareholder
agrees to indemnify and hold harmless Plains, its directors
and officers and each person, if any, who controls Plains
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 Plains to Shell
Shareholder, but only with respect to information included in
the prospectus in response to Item 508 (Plan of Distribution)
of Regulation S-K under the Securities Act or any information
furnished in writing by Shell Shareholder or on Shell
Shareholder's behalf expressly for use in any registration
statement or prospectus relating to the Shares or the Warrant
Shares, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall
be brought against Plains or its directors or officers, or any
such controlling person, in respect of which indemnity may be
sought against Shell Shareholder, Shell Shareholder shall have
the rights and duties given to Plains, and Plains or its
directors or officers or such controlling person shall have
the rights and duties given to Shell Shareholder, by the
preceding paragraph. Shell Shareholder also agrees to
indemnify and hold harmless underwriters of the Shares, their
officers and directors and each person who controls such
underwriters on substantially the same basis as that of the
indemnification of Plains provided in this paragraph 1 .h(iii).
(iv) Contribution If the indemnification provided for in this
paragraph 1 .h is unavailable to Plains, Shell Shareholder 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 Plains and Shell
Shareholder on the one hand and the underwriters on the other,
in such proportion as is appropriate to reflect the relative
benefits received by Plains and Shell Shareholder on the one
hand and the underwriters on the other from the offering of
the Shares, 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 plains and Shell Shareholder 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 Plains,
on the one hand, and Shell Shareholder on the other, in such
proportion as is appropriate to reflect the relative fault of
Plains and of Shell Shareholder in connection with such
statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by
Plains and Shell Shareholder 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 Plains and Shell Shareholder 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 Plains and
Shell Shareholder on the one hand and of the underwriters on
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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 Plains and
Shell Shareholder or by the underwriters. The relative fault
of plains on the one hand and of Shell Shareholder 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.
Plains and Shell Shareholder agree that it would not be just and
equitable if contribution pursuant to this paragraph 1 .h 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 paragraph 1 .h, no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares 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 Shell
Shareholder shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares of Shell Shareholder were
offered to the public exceeds the amount of any damages which Shell Shareholder
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 1 l(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
i. Binding Effect: Assignment. The terms and provisions of this
Section 1. Obligations shall be binding upon and inure to the benefit of and
be enforceable by Plains and Shell Shareholder and their respective successors
and assigns.
2. NOTICE. Plains will provide written notice to Shell
Shareholder prior to the issuance of Parity Stock (as defined in the
Certificate of Designation).
3. LISTING OF THE CONVERSION SHARES AND WARRANT SHARES. Plains
shall cause the Conversion Shares and the Warrant Shares to be listed on the
American Stock Exchange, when and as issued.
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4. ASSISTANCE IN OFFERING. If Shell Shareholder desires to sell
all of the Preferred Stock in a public offering or a private offering to a
third party who is not an affiliate of Shell Shareholder, Plains shall
cooperate with Shell Shareholder and its investment banking firm to facilitate
such offering, including participating in road show presentations. If, in the
written opinion of Shell Shareholder's investment banker (which shall be a firm
of recognized standing), the gross proceeds from the sale of all of the
Preferred Stock in such offering will be less than $23.3 million, Plains shall
amend the Certificate of Designation to increase the annual dividend rate on
the Preferred Stock to a percentage reasonably estimated in good faith by such
investment banker to be required to enable Shell Shareholder to receive $23.3
million of gross proceeds in such offering; provided however, in no event shall
the annual dividend rate exceed 7.5 percent.
5. RIGHT OF FIRST REFUSAL.
a. Preferred Stock. If Shell Shareholder receives an offer to
purchase all or any of the shares of Preferred Stock (other than in a public
offering) from a nonaffiliated which it intends to accept (a "Preferred Stock
Offer"), Shell Shareholder shall give written notice to Plains, with full
information concerning the Preferred Stock Offer. Plains shall then have the
optional prior right, which may be exercised by written notice to Shell
Shareholder within seven business days after the notice is received, to
purchase the shares of Preferred Shares for which the Preferred Stock Offer is
made by payment of 105% of the purchase price proposed in the Preferred Stock
Offer. If Plains exercises this right to purchase, the purchase price shall be
paid to Shell Shareholder within three business days after its written notice
of exercise is given to Shell Shareholder. Upon receipt of the purchase price
Shell Shareholder shall deliver to Plains the certificate[s] for the Preferred
Stock being sold, duly endorsed for transfer.
b. Warrant. If Shell Shareholder receives an offer to purchase
all or part of Warrant (other than in a public offering) from a non-affiliate
which it intends to accept (a "Warrant Offer"), Shell Shareholder shall give
written notice to Plains, with full information concerning the Warrant Offer.
Plains shall then have the optional prior right, which may be exercised by
written notice to Shell Shareholder within five business days after the notice
is received, to purchase the Warrant or part thereof for which the Warrant
Offer is made by payment of 105% of the purchase price proposed in the Warrant
Offer. If plains exercises this right to purchase, the purchase price shall be
paid to Shell Shareholder within three business days after its written notice
of exercise is given to Shell Shareholder. Upon receipt of the purchase price
Shell Shareholder shall deliver to Plains the certificate[s] for the Warrant or
part thereof being sold, duly endorsed for transfer.
6. REPRESENTATIONS AND WARRANTIES OF PLAINS. Plains represents
and warrants to Shell Shareholder as follows:
a. The issuance, sale and delivery of the Preferred Stock in
accordance with the Agreement, including this Exhibit A-3, have been duly
authorized by all necessary corporate action on the part of Plains and its
stockholders, and the Preferred Stock when so issued, sold and delivered
against payment therefor in accordance with the Agreement and this Exhibit A-3
will be duly and validly issued, fully paid and nonassessable.
b. The issuance and delivery of the Conversion Shares have been
duly authorized and reserved for issuance by all necessary corporate action on
the part of Plains and its stockholders, and the Conversion
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Shares, when issued in accordance with the Certificate of Designation, will be
duly and validly issued, fully paid and nonassessable.
c. The issuance and delivery of the Warrant and the Warrant
Shares have been duly authorized and the Warrant Shares have been duly reserved
for issuance by all necessary corporate action on the part of plains and its
stockholders, and the Warrant Shares, when issued in accordance with the
Warrant, will be duly and validly issued, fully paid and nonassessable.
