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EXHIBIT 10.11
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STOCK AND UNIT PURCHASE AGREEMENT
by and among
FIRST UNION CORPORATION
and
TITAN RESOURCES I, INC.
AND
TITAN RESOURCES, L.P.
December 11, 1995
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TABLE OF CONTENTS
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale of Securities . . . . . . . . . . . . . . . . . . 7
3. Concurrent Actions . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Representations and Warranties of Titan . . . . . . . . . . . . . . 8
4.1. Organization and Qualification . . . . . . . . . . . . . . . 9
4.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . 9
4.3. Authorization and Validity of Agreement and
Related Documents . . . . . . . . . . . . . . . . . . . . . 10
4.4. Consents and Approvals; No Violations . . . . . . . . . . . 10
4.5. No Amendments to Governing Documents . . . . . . . . . . . . 11
4.6. Title to Properties . . . . . . . . . . . . . . . . . . . . 11
4.7. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8. Status of Contracts . . . . . . . . . . . . . . . . . . . . 13
4.9. Permits and Intellectual Property . . . . . . . . . . . . . 13
4.10. Compliance with Laws . . . . . . . . . . . . . . . . . . . . 13
4.11. Environmental Laws and Regulations . . . . . . . . . . . . . 13
4.12. Production Balances and Penalties; Other
Production Sales Matters . . . . . . . . . . . . . . . . . . 14
4.13. Well Status . . . . . . . . . . . . . . . . . . . . . . . . 14
4.14. Current Commitments . . . . . . . . . . . . . . . . . . . . 15
4.15. Litigation and Claims . . . . . . . . . . . . . . . . . . . 15
4.16. Production Burdens, Taxes, Expenses and Revenues . . . . . . 15
4.17. Financial Statements . . . . . . . . . . . . . . . . . . . . 16
4.18. Books and Records . . . . . . . . . . . . . . . . . . . . . 16
4.19. Absence of Undisclosed Liabilities . . . . . . . . . . . . . 16
4.20. Absence of Changes . . . . . . . . . . . . . . . . . . . . 16
4.21. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 17
4.22. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.23. Governmental Regulation . . . . . . . . . . . . . . . . . . 17
4.24. Reserve Report . . . . . . . . . . . . . . . . . . . . . . . 17
4.25. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Representations and Warranties of First Union . . . . . . . . . . 18
5.1. Authorization and Validity of Agreement . . . . . . . . . . 18
5.2. Consents and Approvals; No Violations . . . . . . . . . . . 18
5.3. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4. Compliance with Securities Laws . . . . . . . . . . . . . . 19
5.5. Acknowledgment of Risks; Availability of Information;
Independent Engineering. . . . . . . . . . . . . . . . . . . 19
6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1. Financial Reports . . . . . . . . . . . . . . . . . . . . . 20
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6.2. Amendment of Agreements . . . . . . . . . . . . . . . . . . 20
6.3. ERISA Status of First Union . . . . . . . . . . . . . . . . 20
7. Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2. Demands . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3. Claim Cap . . . . . . . . . . . . . . . . . . . . . . . . . 21
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 23
8.6. Entire Agreement; Waivers . . . . . . . . . . . . . . . . . 23
8.7. Binding Effect and Assignment . . . . . . . . . . . . . . . 23
8.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . 23
8.9. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.10. Singular and Plural . . . . . . . . . . . . . . . . . . . . 24
8.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 24
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SCHEDULES
Schedule 1.1 Oil and Gas Properties
Schedule 4.2 Capitalization
Schedule 4.4 Consents and Approvals; No Violations
Schedule 4.6 Properties of the General Partner
Schedule 4.7 Contracts
Schedule 4.11.1 Environmental Laws and Regulations
Schedule 4.11.2 Environmental Assessment Reports
Schedule 4.12 Production Balances and Penalties; Other Production Sales
Matters
Schedule 4.14 Current Commitments
Schedule 4.19 Other Liabilities
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STOCK AND UNIT PURCHASE AGREEMENT
This Stock and Unit Purchase Agreement (the "Agreement"), dated as of
December __, 1995, is made and entered into by and among, First Union
Corporation, a North Carolina Corporation ("First Union"), Titan Resources,
L.P., a Texas limited partnership (the "Partnership"), and Titan Resources I,
Inc., a Texas corporation and the sole general partner of the Partnership (the
"General Partner"). The Partnership and the General Partner are referred to
herein together as "Titan."
W I T N E S S E T H:
WHEREAS, First Union desires to purchase shares of common stock, par
value $0.01 per share (the "Common Stock"), of the General Partner and limited
partnership units of the Partnership (the "Units") on the terms and subject to
the conditions set forth herein;
NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and for such other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms have the meanings set forth below:
"Affiliate": as to any Person, any other Person that directly or
indirectly controls or manages, is controlled or managed by or is under common
control or management with the party. As used in the preceding sentence,
control includes control of the management and policies of another Person,
whether through the ownership of voting securities, partnership interests, by
contract or otherwise; and without limiting the foregoing, it shall be deemed
that the ownership of more than 50% of the voting securities, partnership
interests or percentage interest of another Person shall be deemed to meet such
control test.
"Agreement": as defined in the introduction hereto.
"Acquisition": the Partnership's acquisition of certain West Texas and
New Mexico oil and gas properties being sold by Anadarko Petroleum Corp. and
contemporaneously therewith the Partnership's entering into the Credit
Agreement.
"Anadarko Agreement": the Purchase and Sale Agreement between Titan and
Anadarko Petroleum Corp. pertaining to the Acquisition, as in effect on the
date hereof.
"Casualty Loss": any destruction by fire, blowout, storm or other
casualty or any taking, or pending or threatened taking, in condemnation or
expropriation or under the right of eminent domain of any properties or portion
thereof.
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"Code": the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Common Stock": as defined in the preamble hereto.
"Contract": any enforceable contract, agreement or instrument,
including, without limitation, supply contracts, customer agreements, any
mortgages, leases of personal property, deeds of trust, notes or guarantees,
pledges, liens, or conditional sales agreements to which the Person referred to
is a party or by which any of its assets may be bound, but excluding Leases and
Employee Benefit Plans.
"Credit Agreement": that certain Credit Agreement entered into between
the Partnership and Texas Commerce Bank National Association as of December 11,
1995, providing for at least $43.5 million in debt financing to the Partnership
($35 million in the event Anadarko elects to sell certain properties to third
parties).
"Defensible Title": such title as (i) will enable the Partnership to
receive from each well listed on Schedule 1.1 the "Net Revenue Interest" for
such xxxxx identified on Schedule 1.1, without reduction, suspension or
termination throughout the productive life of such well, except as expressly
set forth on Schedule 1.1; (ii) will obligate the Partnership to bear no
greater working interest than the "Working Interest" for each of the xxxxx
identified on Schedule 1.1 as being associated with a particular Oil and Gas
Property, without increase throughout the productive life of such well, except
as expressly set forth on Schedule 1.1; and (iii) is free and clear of all
Encumbrances, except for Permitted Encumbrances.
"ECT Securities": ECT Securities Corp., a Delaware corporation.
"Employee Benefit Plans": any employee benefit plans, policies,
programs and arrangements and all related contracts, agreements and other
descriptions thereof with respect to the employee benefits provided to the
employees of the General Partner or the Partnership.
"Employment Agreement": the Employment Agreement dated as of March 31,
1995, among Xxxxxxxxx, the General Partner and the Partnership.
"Encumbrances": liens, security interests, pledges, proxies,
shareholder agreements, voting agreements or trusts, options, rights of first
refusal, easements, mortgages, deeds of trust, rights-of-way, restrictions,
encroachments, licenses, or any other encumbrances, claims and other
restrictions or limitations on the use or ownership of real or personal
property.
"Environmental Claim": any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violations, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
(cumulatively and for purposes of this definition, "Environmental Claims"),
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including without limitation (i) any and all Environmental Claims by
governmental authorities for enforcement, cleanup, removal, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (ii) any
and all Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief relating to
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Law": any federal, state or local statute, law, rule,
regulation, ordinance, code, permit, policy or rule of common law and in each
case as amended and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to Hazardous Materials, the environment or health relating to or
arising from environmental conditions, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended 42 U.S.C. Section 9601 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 5101 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et
seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 et seq.; and relevant state and local laws.
"Environmental Liabilities": any and all Liabilities arising from, based
upon, associated with or related to (i) any Environmental Claim, (ii) any
Environmental Law or (iii) the presence, handling, management, storage,
transportation, processing, treatment, disposal, release, threatened release,
migration or escape of Hazardous Materials, (including, without limitation, all
costs arising under any theory of recovery, in law or at equity), whether based
on negligence, strict liability, or otherwise, including, without limitation,
remediation, removal, response, restoration, abatement, investigative,
monitoring, personal injury, and property damage costs and all other related
costs, expenses, losses, damages, penalties, fines, liabilities and obligations
(including interest paid or accrued, attorneys' fees, and court costs).
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date
of this Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"Exchange Act": the Securities Exchange Act of 1934, as amended, or any
successor federal statute and the rules and regulations promulgated thereunder.
"Financial Advisory Services Contract": the Financial Advisory Services
Contract dated as of March 31, 1995, between the Partnership and NGP, as
amended on the date hereof.
"First Union": as defined in the introduction hereto.
"General Partner": as defined in the introduction hereto.
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"Hazardous Materials": any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants,"
"regulated substances" or words of similar import under any applicable
Environmental Law, including but not limited to any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, radon gas and urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls.
"Hedge Agreements": as defined in Section 4.7.4.
"Xxxxxxxxx": Xxxx X. Xxxxxxxxx.
"Intellectual Property": domestic and foreign patents, patent
applications, registered and unregistered trademarks, service marks, trade
names and logos, registered and unregistered copyrights, computer programs,
data bases, trade secrets, methods, designs, processes, procedures, proprietary
information and any other intangible property used in or associated with the
conduct of Titan's business and the ownership of the assets of Titan, including
all of Titan's rights to any such property which is owned by and licensed from
others.
"Interim Balance Sheet": as defined in Section 4.17.
"JEDI": Joint Energy Development Investments Limited Partnership.
"JEDI Purchase Agreement" that certain Stock and Unit Purchase Agreement
between JEDI, the Partnership and the General Partner, a true and complete copy
of which has been supplied to First Union.
"Liabilities": any and all direct or indirect demands, claims, notices
of violation, filings, investigations, administrative proceedings, causes of
action, suits, other legal proceedings, payments, charges, judgments,
assessments, liabilities, damages, deficiencies, penalties, fines, obligations,
responsibilities, costs and expenses paid or incurred, or diminutions in value
of any kind or character (whether or not asserted prior to the date hereof, and
whether known or unknown, fixed or unfixed, conditional or unconditional, based
on negligence, strict liability or otherwise, xxxxxx or inchoate, liquidated or
unliquidated, accrued, absolute, contingent or otherwise), including, without
limitation, (i) penalties and interest on any amount payable to a third party
as a result of the foregoing, (ii) any legal or other expenses reasonably
incurred in connection with investigating or defending any claim, demand or
legal proceeding, whether or not resulting in any liability, and (iii) all
amounts paid in settlement of claims, demands, or legal proceedings.
"Limited Partnership Agreement": the Agreement of Limited Partnership
of the Partnership dated as of March 31, 1995, as amended on the date hereof.
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"Material Adverse Effect": any event or occurrence which could
reasonably be expected to result in a liability to Titan of more than
$1,000,000 or would substantially interfere with the ability of Titan to
conduct its business.
"Material Contract": any Contract which requires special authorization
by the General Partners Board of Directors pursuant to Article Four of the
General Partner's bylaws.
"NGP": Natural Gas Partners, L.P., a Delaware limited partnership, and
Natural Gas Partners II, L.P., a Delaware limited partnership.
"Non-Compete Agreements": those certain Confidentiality and Non-Compete
Agreements, each dated March 31, 1995, by and between the Partnership, the
General Partner and one of the following individuals: Messrs. Benfatti,
Colwell, Xxxxx, Xxxxxx and Xxxxxxx.
"Oil and Gas Property": all rights, titles, interests and estates in and
to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, licenses, concessions, farmout
rights, royalty, overriding royalty or other non-working or carried interests,
operating rights, net profit and production payment interests, any reserved or
residual interest of whatever nature and any other mineral rights of every
nature and any rights that arise by operation of law or otherwise.
"Option Plan": the Option Plan of the Partnership effective as of March
31, 1995.
"Options": any options issued or to be issued under the Option Plan.
"Partnership": as defined in the introduction hereto.
"Permitted Encumbrances": (i) lessors' royalties, overriding royalties,
division orders, reversionary interests, and similar burdens that do not
operate to reduce the net revenue interest of the Partnership in any of the
Oil and Gas Properties to less than the amount set forth therefor on Schedule
1.1, (ii) the Contracts insofar as they do not operate to increase the working
interest of the Partnership set forth on Schedule 1.1 for any of the Oil and
Gas Properties or decrease the net revenue interest of the Partnership set
forth on Schedule 1.1 for any of the Oil and Gas Properties; (iii) liens for
taxes, assessments or other governmental charges or levies not yet due; (iv)
operators', vendors', repairmen's, mechanics', workmen's, materialmen's,or
other like liens arising by operation of law in the ordinary course of business
or incident to the exploration, development, operation and maintenance of Oil
and Gas Properties in respect of obligations which are not yet due and payable
or are being contested in good faith, for which reserves or other provisions,
if appropriate, have been made and reflected in the Interim Balance Sheet; (v)
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations, and minor defects, irregularities and deficiencies in title
which individually or in the aggregate will not have a Material Adverse Effect;
and (vi) any Encumbrances securing the indebtedness incurred pursuant to the
terms of the Credit Agreement.
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"Permits": any license, permit, franchise, consent, approval,
certification or authority granted by any Person.
"Person": any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or other department or agency
thereof or any other legally recognized entity.
"Purchase Price": as defined in Section 2 hereof.
"Registration Rights Agreement": the Registration Rights Agreement,
dated as of March 31, 1995, among Xxxxxxxxx and NGP, as amended on the date
hereof.
"Related Documents": the documents and instruments delivered
concurrently with this Agreement to the extent the referenced party is a party
thereto, including, without limitation, the documents and instruments set forth
in Section 3 hereof.
"Securities": as defined in Section 2 hereof.
"Shareholders Agreement": the Voting and Shareholders Agreement dated
as of March 31, 1995 among the General Partner, Xxxxxxxxx and NGP, as amended
on the date hereof.
"Substances": all severed crude oil, natural gas, casinghead gas, drip
gasoline, natural gasoline, petroleum, natural gas liquids, condensate,
products, liquids and other hydrocarbons and other minerals or materials of
every kind and description produced from the Oil and Gas Properties.
"Tax": any net income, alternative or add-on minimum tax, advance,
corporation, gross income, gross receipts, sales, use, ad valorem, franchise,
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty imposed by any
governmental authority with respect thereto, and any liability for such amounts
as a result either of being a member of an affiliated group or of a contractual
obligation to indemnify any other entity.
"Titan": as defined in the introduction hereto.
"Units": as defined in the preamble hereto.
Other terms may be defined elsewhere in the text of this Agreement. The words
"hereof," "herein" and "hereunder," and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not any particular
provision of this Agreement. The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa. The terms defined
in the neuter or masculine gender shall include the feminine, neuter and
masculine genders, unless the context clearly indicates otherwise. Reference
to the "best knowledge" of a Person or words of similar import shall mean the
actual or constructive best
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knowledge of such Person after reasonable due diligence by such Person as to
the facts and circumstances addressed.
2. Purchase and Sale of Securities. On the date hereof First Union
shall purchase and the Partnership and the General Partner, as applicable,
shall sell (i) 2,567.5 shares of Common Stock and 2,541,825 Units (together the
"Securities") for an aggregate purchase price of $5 million (the "Purchase
Price"), allocated as follows: $4.95 million to the Units and $50,000 to the
Common Stock.
3. Concurrent Actions. Concurrently with the execution of this
Agreement, the following actions have taken place:
3.1. First Union has delivered $5 million by wire transfer to
the General Partner, of which $4.95 million shall be for the purchase of the
Units and $50,000 shall be for the purchase of the Common Stock, and
contemporaneously therewith the General Partner shall deliver to First Union
certificates representing the 2,567.5 shares of Common Stock;
3.2. The Partnership, the General Partner and the requisite
number of partners of the Partnership have entered into an amendment of the
Limited Partnership Agreement, including an amendment to Schedule 1 thereof to
evidence First Union's purchase of the Units issued in accordance herewith in
the form attached as Exhibit A;
3.3. First Union has executed a signature page to the Limited
Partnership Agreement and any other adoption agreements to other documents to
which it is intended to be a party in connection with this Agreement;
3.4. First Union has received evidence of adoption of
amendments to the Bylaws of the General Partner by the Board of Directors and,
if applicable, the shareholders of the General Partner in the form attached as
Exhibit B;
3.5. First Union, Xxxxxxxxx, NGP (and JEDI) have entered into
an amendment and restatement of the Voting and Shareholders Agreement in the
form attached as Exhibit C;
3.6. First Union, Xxxxxxxxx, NGP (and JEDI) have entered into
an amendment to the Registration Rights Agreement in the form attached as
Exhibit D;
3.7. The General Partner has delivered to First Union evidence
of the consent of (i) the limited partners of the Partnership in accordance
with the terms of the Limited Partnership Agreement to the waiver of the
preemptive rights of the limited partners under Section 3.2 of the Limited
Partnership Agreement and (ii) the shareholders of the General Partner in
accordance with the terms of the Articles of Incorporation to the waiver of the
preemptive rights of the shareholders under Article 11 of the Articles of
Incorporation;
3.8. The Partnership, the General Partner and First Union have
entered into a Designation Agreement in the form attached as Exhibit E;
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3.9. The General Partner, Xxxxxxxxx, NGP, JEDI and First Union
have entered into an Agreement Re: Conversion Event in the form attached as
Exhibit F;
3.10. The General Partner has delivered to First Union a
certificate of its president and secretary in the form attached as Exhibit G;
and
3.11. Xxxxxxxx & Knight, counsel to Titan, has delivered to
First Union its legal opinion in the form attached as Exhibit H.
4. Representations and Warranties of Titan. The General Partner and
the Partnership hereby represent and warrant, jointly and severally, to First
Union as follows, as of the date hereof, but it is expressly agreed by the
parties hereto that each representation and warranty set forth in this Section
4, is made prior to and does not include or cover any of the assets and
properties to be acquired in the Acquisition (it being acknowledged that the
representation contained in Section 4.24 is being made notwithstanding such
exclusion and the representation in such section refers to the Company Reserve
Report used by Titan in connection with its evaluation of such assets and
properties, but is not a representation as to such assets and properties):
4.1. Organization and Qualification.
4.1.1. The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Texas and has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Related
Documents and to consummate the transactions contemplated thereby. The
Partnership is duly qualified to do business and is in good standing as
a foreign limited partnership in each jurisdiction where the nature of
the properties owned or the business transacted by the Partnership
requires it to be so qualified, the failure of which would have a
Material Adverse Effect.
4.1.2. The General Partner is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Texas and has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and Related
Documents and to consummate the transactions contemplated thereby. The
General Partner is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of the
properties owned or the business transacted by the General Partner
requires it to be so qualified, the failure of which would have a
Material Adverse Effect.
4.2. Capitalization.
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4.2.1. The entire authorized capital stock of the General
Partner consists of 100,000 shares of Common Stock of which 20,540
shares, other than the 5,135 shares of Common Stock to be issued to JEDI
under the JEDI Purchase Agreement and the 2,567.5 shares of Common Stock
to be issued to First Union hereunder, are issued and outstanding, fully
paid and nonassessable and held beneficially and of record by the
shareholders as set forth on Schedule 4.2. There are no shares of
Common Stock reserved for issuance.
4.2.2. Schedule 1 to the Limited Partnership Agreement and
Schedule 1 to the Option Plan lists all of the issued and outstanding
Units and Options, respectively, other than the 5,083,650 Units to be
issued to JEDI hereunder and the 2,541,825 Units to be issued to First
Union hereunder, all of which are fully paid and nonassessable and held
beneficially and of record by the partners or option holders, as
applicable, set forth therein. Other than Units reserved for issuance
upon exercise of the Options, there are no Units reserved for issuance.
4.2.3. Upon issuance, the Securities will be validly
issued, fully paid and non-assessable. Other than the Options or as set
forth in the Limited Partnership Agreement or the Shareholders
Agreement, there are no outstanding subscriptions, options, convertible
securities, indebtedness convertible into equity securities, warrants,
calls or rights of any kind (issued, contracted for, granted by, or
binding upon the General Partner or the Partnership) to purchase or
otherwise acquire any security of or equity interest in the General
Partner or the Partnership. Other than the Registration Rights
Agreement, there are no outstanding registration rights relating to the
capital stock of the General Partner or interests in the Partnership.
All capital stock of the General Partner and partnership interests in
the Partnership have been issued in compliance with exemptions from the
registration requirements of federal and state securities laws, as
applicable. Except as set forth in the Limited Partnership Agreement or
the Shareholders Agreement, neither the General Partner nor the
Partnership has any obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interest
therein or to pay any dividend or make any other distribution in respect
thereof. Neither the General Partner (except with respect to the
Partnership) nor the Partnership has any Subsidiaries.
4.3. Authorization and Validity of Agreement and Related
Documents. The General Partner has full corporate power and authority and the
Partnership had full power and authority to execute and deliver this Agreement
and the Related Documents, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of this Agreement and the Related Documents by Titan and the
consummation of the transactions contemplated thereby, have been duly
authorized and approved by the Board of Directors of the General Partner and no
other action on the part of Titan is necessary to authorize the execution,
delivery and performance of this Agreement or the Related Documents by Titan
and the consummation of the transactions contemplated thereby. This Agreement
and the Related Documents have been duly executed and delivered by Titan and
are valid and binding obligations of Titan enforceable against Titan in
accordance with their respective terms, except to the extent that such
enforceability may be subject to applicable
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bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
4.4. Consents and Approvals; No Violations. The execution,
delivery and performance of this Agreement and the Related Documents by Titan
and the consummation by Titan of the transactions contemplated thereby will
not, with or without the giving of notice or the lapse of time or both: (i)
violate, conflict with, or result in a breach or default under any provision of
the charter or bylaws of the General Partner or the Limited Partnership
Agreement; (ii) violate any statute, ordinance, rule, regulation, order,
judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to Titan or by which any of its properties or
assets may be bound; (iii) require any filing by or with, or require Titan to
obtain any Permit from, or require Titan to give any notice to, any
governmental or regulatory body, agency or authority other than as set forth on
Schedule 4.4 attached hereto; or (iv) other than as set forth on Schedule 4.4
attached hereto, result in a violation or breach by Titan of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Titan (or give rise to any right of termination, cancellation, payment or
acceleration) under or result in the creation of any Encumbrance other than a
Permitted Encumbrance upon any of the properties or assets of Titan under any
of the terms, conditions, or provisions of any Permit, Contract, Lease or other
instrument or obligation to which Titan is a party, or by which it or any of
its properties or assets may be bound.
4.5. No Amendments to Governing Documents. The Articles of
Incorporation of the General Partner have not been amended since their filing
with the Secretary of State of Texas on March 30, 1995 and, other than in
connection with this Agreement, the Bylaws of the General Partner have not been
amended since their initial adoption by the Board of Directors on March 30,
1995. Other than in connection with this Agreement, the Limited Partnership
Agreement, including Schedule 1 thereto, has not been amended since its
execution as of March 31, 1995. The Option Plan, including Schedule 1 thereto,
has not been amended since its effective date.
4.6. Title to Properties. The Partnership has Defensible Title
to its Oil and Gas Properties. The Partnership has title to all of its real
and personal property other than the Oil and Gas Properties free of all
Encumbrances other than the Permitted Encumbrances. Schedule 4.6 sets forth a
complete description of all real and personal property owned by the General
Partner and having a value in excess of $100,000. The General Partner has
title to all of its real and personal property free of all Encumbrances other
than the Permitted Encumbrances. Schedule 1.1 contains a complete and
accurate list of the status of any "payout" balance, as of the dates shown in
Schedule 1.1, for each well that is subject to a reversion or other adjustment
at some level of cost recovery or payout.
4.7. Contracts. Except as set forth in Schedule 4.7, Titan is
not a party to or otherwise bound by:
4.7.1. other than the Employment Agreement, any Contract
for the employment of any officer, employee or other person (whether of a
legally binding nature or in
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the nature of informal understandings) on a full-time or consulting basis which
is not terminable on notice without cost or other liability to Titan, except
normal severance arrangements and accrued vacation pay;
4.7.2. other than the Option Plan, any bonus, pension,
profit-sharing, retirement, hospitalization, insurance, stock purchase, stock
option or other plan, contract or understanding pursuant to which benefits are
provided to any employee of Titan (other than group insurance plans applicable
to employees generally);
4.7.3. other than the Credit Agreement and the instruments
executed in connection therewith and any capital lease of assets not exceeding
a total cost to Titan in excess of $25,000, any Contract relating to the
borrowing of money or to the mortgaging or pledging of, or otherwise placing a
lien or security interest on, any asset of Titan; or any guaranty of any
obligation for borrowed money or otherwise;
4.7.4. other than the Anadarko Agreement, the Credit
Agreement, any Contracts relating to xxxxxx and commodity swaps entered into
with First Union, Enron Capital & Trade Resources Corp. and Texas Commerce Bank
National Association (or any of their respective Affiliates) (the "Hedge
Agreements") and any Contracts entered into in the normal course of Titan's
sale of Substances, any tax sharing agreement or any Contract providing for
environmental indemnification of another party;
4.7.5. other than the Shareholders Agreement, the Limited
Partnership Agreement and the General Partner's Articles of Incorporation, any
voting trust or agreement, shareholders' agreement, pledge agreement, buy-sell
agreement or first refusal or preemptive rights agreement relating to any
securities of Titan;
4.7.6. other than the Options, any Contract or obligation
(contingent or otherwise) to issue, sell or otherwise distribute or to
repurchase or otherwise acquire or retire any share of its capital stock or
partnership interests, as applicable, or any of its other equity securities;
4.7.7. other than the Limited Partnership Agreement,
Shareholders Agreement, Registration Rights Agreement, Option Plan, Employment
Agreement, Financial Advisory Services Contract, Non-Compete Agreements, the
Administrative Services Contract with Xxxxxx Operating Co., dated March 31,
1995, and the purchase agreement pursuant to which Titan acquired Oil and Gas
Properties and related assets from certain of its officers and their
affiliates, any Contract with any affiliate;
4.7.8. any Contract under which it has granted any person
any registration rights, other than the Registration Rights Agreement;
4.7.9. any Contract under which it has limited or
restricted its right to compete with any person in any respect;
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4.7.10. other than the Hedge Agreements, any Contract for
the sale, exchange or other disposition of Substances produced from the Oil and
Gas Properties that is not cancelable without penalty on not more than 60 days
prior written notice;
4.7.11. any option to purchase or call on the Substances
produced from the Oil and Gas Properties;
4.7.12. any material Contract that contains terms or
conditions that are not customary in the oil and gas industry; or
4.7.13. any other Material Contract not described in the
foregoing provisions of this 4.7.
4.8. Status of Contracts. All of the Contracts and other
obligations of Titan that relate to its properties (i) are in full force and
effect, and (ii) neither Titan nor, to the knowledge of Titan, any other party
to the Contracts (a) is in breach of or default, or with the lapse of time or
the giving of notice, or both, would be in breach or default, with respect to
any of its obligations thereunder to the extent that such breaches or defaults
could have a Material Adverse Effect or (b) has given or threatened to give
notice of any default under or inquiry into any possible default under, or
action to alter, terminate, rescind or procure a judicial reformation of any
Contract.
4.9. Permits and Intellectual Property. Titan possesses all
Permits and Intellectual Property which are necessary to its business as
presently conducted. All of the foregoing items are in full force and effect.
Titan has not received any notice that it is infringing upon the Intellectual
Property of any other person, and Titan is not aware of any such infringement.
4.10. Compliance with Laws. Titan has complied and is in
compliance with all applicable federal, state, municipal and other political
subdivision or governmental agency statutes, ordinances and regulations in
every applicable jurisdiction, in respect of the ownership of its properties
and the conduct of its business, including, without limitation, all
occupational safety and health, fair employment, equal opportunity and
antitrust laws, rules and regulations. Titan is not aware of any facts,
conditions or circumstances in connection with, related to or associated with
its properties or the ownership or operation of any thereof that could
reasonably be expected to give rise to any claim or assertion that Titan, its
properties or the ownership or operation of any thereof is not in compliance
with any applicable law, rule, regulation, ordinance, order, decision or decree
of any governmental authority or with any term or conditions of any applicable
permit, license, approval, consent, certificate or other authorization. The
Partnership is treated as a partnership for federal income tax purposes.
4.11. Environmental Laws and Regulations. Except as is set forth
on Schedule 4.11.1 or in the written environmental assessment reports
previously delivered to First Union and listed on Schedule 4.11.2, (i) Titan,
its properties and the ownership and operation thereof are in compliance with
all applicable Environmental Laws and all prior instances of non-compliance
have been fully and finally resolved to the satisfaction of all governmental
authorities with
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jurisdiction over such matters; (ii) neither Titan, its properties, nor the
ownership or operation thereof is subject to any Environmental Claim or
Environmental Liabilities, arising from, based upon, associated with or related
to the properties or the ownership or operation of any thereof; (iii) Titan has
not received any notice of any Environmental Claim, Environmental Liabilities
or any violation or non-compliance with any Environmental Law, arising from,
based upon, associated with or related to its properties or the ownership or
operation of any thereof; (iv) no Hazardous Materials are present, or have been
handled, managed, stored, transported, processed, treated, disposed of,
released, migrated or have escaped on, in, from, under or in connection with
Titan's properties or the ownership or operation of any thereof, such as to
cause a condition or circumstance that could reasonably be expected to result
in an Environmental Claim or Environmental Liabilities or a violation of any
Environmental Law; and (v) Titan is not otherwise aware of any facts,
conditions or circumstances in connection with, related to or associated with
its properties or the ownership or operation of any thereof, that could
reasonably be expected to give rise to any Environmental Claim, Environmental
Liabilities or any claim or assertion that Titan, its properties or the
ownership or operation thereof are not in compliance with all Environmental
Laws.
4.12. Production Balances and Penalties; Other Production Sales
Matters. Except as set forth on Schedule 4.12 or as otherwise could not either
individually or in the aggregate cause a Material Adverse Effect (i) none of
the purchasers under any production sales contracts is entitled to "make-up" or
otherwise receive deliveries of Substances without paying at the time of such
deliveries the full contract price therefor by reason of prior payments; (ii)
none of the purchasers under any production sales contracts has exercised any
economic out provision; (iii) none of the purchasers under any production
sales contracts has curtailed its takes of natural gas in violation of such
contracts; (iv) none of the purchasers under any production sales contracts has
given notice that it desires to amend the production sales contracts with
respect to price or quantity of deliveries under take-or-pay provisions or
otherwise; (v) no person is entitled to receive any portion of the interest of
the Partnership in any Substances or to receive cash or other payments to
"balance" any disproportionate allocation of Substances under any operating
agreement, gas balancing and storage agreement, gas processing or dehydration
agreement, gas transportation or other similar agreements; and (vi) Titan is
not obligated to pay any penalties or other payments under any gas
transportation or other agreement as a result of the delivery of quantities of
gas from the Oil and Gas Properties in excess of the contract requirements.
4.13. Well Status. As of the date of this Agreement, the
Partnership's accrued plugging and abandonment liabilities are less than
$100,000 with respect to all xxxxx located on the Oil and Gas Properties that
(i) Titan is currently obligated by law or contract to presently plug and
abandon; (ii) Titan will be obligated by law or contract to plug and abandon
with the lapse of time or notice or both because the well is not currently
capable of producing Substances in commercial quantities or otherwise currently
being used in normal operations; (iii) are subject to exceptions to a
requirement to plug and abandon issued by a regulatory authority having
jurisdiction over the Oil and Gas Properties; or (iv) to the best knowledge of
Titan, have been plugged and abandoned but have not been plugged in accordance
in all material respects with all applicable requirements of each regulatory
authority having jurisdiction over the Oil and Gas Properties.
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4.14. Current Commitments. Schedule 4.14 contains a true and
complete list as of the date of this Agreement of all authorities for
expenditures ("AFEs") to drill or rework xxxxx or for capital expenditures
pursuant to any of the Contracts having a cost to the Partnership in excess of
$500,000 that either (i) have been proposed by any person on or after August 1,
1995 or (ii) not been fully funded by all parties participating in such AFE.
4.15. Litigation and Claims. There is no litigation at law or
in equity, and no proceeding or investigation before or by any governmental
agency pending or, to the knowledge of Titan, threatened against or affecting
Titan or its properties or the transactions contemplated in this Agreement or
the Related Documents and Titan is not aware of any facts, conditions or
circumstances in connection with, related to or associated with its properties
or the ownership or operation of any thereof that could reasonably be expected
to give rise to any such claim, demand, filing, investigation, administrative
proceeding, action, suit or other legal proceeding. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency, or by arbitration, pursuant to a
grievance or other procedure) against or affecting Titan or its properties or
business. Titan has not received any notice from any governmental authority
or any other person (including employees) (i) claiming any violation or
repudiation of the Oil and Gas Properties or any violation of any law, rule,
regulation, ordinance, order, decision or decree of any governmental authority
(including, without limitation, any such law, rule, regulation, ordinance,
order, decision or decree concerning the conservation of natural resources) or
(ii) requiring, or calling attention to the need for, any work, repairs,
construction, alterations, installations, remediation, response, removal or
abatement actions, restoration, investigation or monitoring of, on, in, under,
in connection with or related to its properties or the ownership or operation
of any thereof. There is no action or suit by Titan pending or threatened
against others.
4.16. Production Burdens, Taxes, Expenses and Revenues. All
rentals, royalties, excess royalty, overriding royalty interests and other
payments due under or with respect to the Oil and Gas Properties have been
properly and timely paid. All Taxes which have become due and payable by Titan
have been properly and timely paid. No waiver of the time to assess any Tax is
in effect and no request for a waiver is pending. All expenses payable under
the terms of the Contracts have been properly and timely paid except for such
expenses as are being currently paid prior to delinquency in the ordinary
course of business or that are being contested in good faith, for which
reserves or other provisions, if appropriate, have been made and reflected in
the Interim Balance Sheet. All of the proceeds from the sale of Substances are
being properly and timely paid to Seller by the purchasers of production
without suspension or indemnity other than standard division order indemnities.
4.17. Financial Statements. The General Partner has delivered
to First Union the unaudited balance sheets of the General Partner and the
Partnership for the six-month period ended September 30, 1995 (the "Interim
Balance Sheet") and the related unaudited statements of income and cash flows
(all of the foregoing being referred to as the "Financial Statements"). The
Financial Statements have been prepared in accordance with the books and
records of Titan and
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present fairly the financial position of Titan at the dates indicated and the
results of its operations for the periods indicated.
4.18. Books and Records. The books and records of Titan
(including the books and records of account) are in all material respects
complete and correct and reflect the record of all financial affairs, meetings
and proceedings of the Board of Directors and the shareholders of the General
Partner and the partners of the Partnership.
4.19. Absence of Undisclosed Liabilities. Except with respect
to liabilities incurred pursuant to the terms of the Credit Agreement or as
reflected in the Interim Balance Sheet or on Schedule 4.19 hereto, Titan has
not incurred, and none of its assets or properties are subject to, any absolute
or contingent liabilities or obligations other than liabilities arising in the
ordinary course of their business since the date of the Interim Balance Sheet.
Titan is not aware of any facts in existence on the date hereof which might
serve as the basis for any such liability or obligation which are not disclosed
on the Interim Balance Sheet.
4.20. Absence of Changes. Since the date of the Interim
Balance Sheet, there has not been:
4.20.1 any event either individually or in the aggregate,
which could cause a Material Adverse Effect;
4.20.2 any obligation or liability incurred by Titan or
any agreement to issue any such obligation or liability other than in the
ordinary course of its business, as contemplated by or described in the Interim
Balance Sheet or incurred pursuant to the terms of the Credit Agreement;
4.20.3 any direct or indirect redemption, purchase or
other acquisition by Titan of any shares of its equity securities, or any
declaration, setting aside or payment of any dividends or other distributions
in respect of any such securities or agreement to do so;
4.20.4 any material reduction in the rate of production of
Substances from any of the Oil and Gas Properties other than changes (i) in the
ordinary course of operation, (ii) that result from depletion in the ordinary
course of operation and (iii) that result from variances in markets for
Substances ; or
4.20.5 any Casualty Loss with respect to any of the Oil
and Gas Properties, whether or not covered by insurance.
4.21. Employee Benefit Plans. None of the Employee Benefit
Plans are subject to Title IV of ERISA or the minimum funding obligations of
Section 412 of the Code, and Titan and any entity required to be aggregated
therewith pursuant to Section 414(b) or (c) of the Code have no liability under
Title IV of ERISA or under Section 412(f) or 412(n) of the Code.
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4.22. No Brokers. Other than the advisory fees to be paid to
ECT Securities and the payments due by Titan to The Winrock Group, Ltd. (or its
Affiliates), Titan has no direct or indirect agreement with any person, firm or
corporation for the payment of any commission, brokerage or "finder's fee" in
connection with the transactions contemplated herein.
4.23. Governmental Regulation. Titan is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended, nor is Titan subject to regulation under the Federal Power Act, the
Interstate Commerce Act or to any federal or state statute or regulation
limiting its ability to incur indebtedness for borrowed money.
4.24. Reserve Report. Reserve Report. Titan has delivered to
First Union (i) a copy of a reserve report prepared by the Company dated
October 16, 1995 entitled "Titan Resources, L.P. Anadarko Purchase Economics
Book 1 and Book 2 prepared by Xxxxxx Xxxxxxx" covering the Oil and Gas
Properties being acquired in the Acquisition (the "Company Reserve Report"),
and (ii) a reserve report prepared by Xxxxxxxxxx Petroleum Consultants
("Xxxxxxxxxx Report") dated October 12, 1995, with respect to all of the
Partnership's existing Oil and Gas Properties (collectively, the "Reserve
Reports") relating to the oil and gas reserves attributable to the Oil and Gas
Properties owned by the Partnership (collectively, the "Reserves"). The
estimates of the Reserves in the Company's Reserve Report were prepared in
accordance with standard geological and engineering methods generally applied
by Titan, which, to Titan's knowledge, are consistent with those accepted in
the oil and gas industry, and were based upon historical factual information
provided to it by Anadarko. The estimates of the Reserves in the Xxxxxxxxxx
Report were prepared in accordance with standard geological and engineering
methods generally accepted in the oil and gas industry. The estimates of the
lease operating expenses in the Xxxxxxxxxx Report are reasonable and represent
the historical experience of the Oil and Gas Properties covered therein. The
historical factual information relied on in connection with the preparation of
the Xxxxxxxxxx Report was accurate and complete in all material respects. The
Company is not aware of any facts which have caused it to question the factual
information upon which the Reserve Reports were based.
4.25. Disclosure. No representation or warranty by Titan in
this Agreement (including the Schedules attached hereto) or in any certificate
or other document delivered by or on behalf of Titan to First Union in
connection herewith, contains any untrue statement of a material fact, or omits
to state a material fact which would be necessary to make the statements
contained herein or therein not misleading. There is no fact known to Titan
that either individually or in the aggregate could result in a Material Adverse
Effect that has not been set forth in this Agreement or otherwise disclosed in
writing to First Union in connection herewith other than matters generally
affecting the oil and gas industry. Titan has provided to First Union a true
and correct copy of the Anadarko Agreement and has provided or otherwise made
available for review by First Union and its agents and representatives, all of
the documents, instruments, reports, opinions and other records and written
information provided to Titan by or on behalf of
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Anadarko Petroleum Corp. as of the date hereof in connection with the
Acquisition (the "Acquisition Information").
5. Representations and Warranties of First Union. First Union
represents and warrants to Titan as follows:
5.1. Authorization and Validity of Agreement. First Union is a
corporation duly organized, validly existing and in good standing under the
laws of the State of North Carolina and has all requisite power and authority
to execute, deliver and perform its obligations under this Agreement and the
Related Documents and to consummate the transactions contemplated thereby.
This Agreement and the Related Documents have been duly executed and delivered
by an authorized officer of First Union and are valid and binding obligations
of First Union enforceable against First Union in accordance with its terms,
except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
5.2. Consents and Approvals; No Violations. The execution,
delivery and performance of this Agreement and the Related Documents by First
Union and the consummation by First Union of the transactions contemplated
thereby will not, with or without the giving of notice or the lapse of time or
both: (i) violate, conflict with, or result in a breach or default under any
provision of its charter or bylaws; (ii) violate any statute, ordinance, rule,
regulation, order, judgment or decree of any court or of any governmental or
regulatory body, agency or authority applicable to First Union or by which any
of its properties or assets may be bound; (iii) require any filing by with, or
require First Union to obtain any Permit from, or require First Union to give
any notice to, any governmental or regulatory body, agency or authority; or
(iv) result in a violation or breach by First Union of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
First Union (or give rise to any right of termination, cancellation, payment or
acceleration) under or result in the creation of any Encumbrance upon any of
the properties or assets of First Union under any of the terms, conditions, or
provisions of any Permit, Contract, Lease or other instrument or obligation to
which First Union is a party, or by which it or any of its properties or assets
may be bound.
5.3. No Brokers. First Union has no direct or indirect
agreement with any person, firm or corporation for the payment of any
commission, brokerage or "finder's fee" in connection with the transactions
contemplated herein.
5.4. Compliance with Securities Laws. First Union represents
that it is an "accredited investor" within the meaning of Regulation D under
the Securities Act of 1933, as amended. First Union further represents and
warrants that it has reviewed all of the representations and warranties set
forth in Section 10.1 of the Partnership Agreement, which (except for Sections
10.1(i) and 10.1(k)(i)) are incorporated herein by reference as if fully set
forth herein, and hereby makes such incorporated representations and warranties
with respect to its acquisition of the Common Stock as well as its acquisition
of the Units.
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5.5. Acknowledgment of Risks; Availability of Information;
Independent Engineering. First Union acknowledges that the purchase of
Securities involves a number of significant risks and that an investment in
Titan may result in a loss of all or part of its investment in the Securities.
First Union has carefully evaluated these risks before making a decision to
purchase the Securities. First Union further acknowledges that (i) Titan has
made available to First Union and its attorneys, accountants, engineers and
other advisors, (hereafter collectively, the "Purchaser Advisors"), prior to
any issuance of the Securities, all documents or other matters that they have
requested relating to Titan and its proposed operations and an investment in
Titan or any other matters requested by such persons, (ii) Titan has accorded
First Union and the Purchaser Advisors the opportunity to review files of Titan
relating to its currently owned properties and the Acquisition Information and
to ask questions and receive answers from Titan and the engineering, legal,
accounting and other advisors of Titan to all their questions concerning Titan
and its operations and an investment in Titan and such other matters raised by
First Union and the Purchaser Advisors, (iii) Titan has provided documents,
responses to questions and other materials, (iv) First Union has conducted its
own independent engineering review of Titan's Oil and Gas Properties and the
properties to be acquired by Titan in the acquisition; and (v) First Union
acknowledges that Titan has identified to it certain properties which were
initially contemplated to be acquired by Titan in the Acquisition which are now
contemplated to be sold by Anadarko to certain third parties as of the
effective date of the Acquisition (resulting in an approximately $14.4 million
reduction in the purchase price).
6. Covenants. From and after the date hereof for so long as First
Union or an Affiliate of First Union continues to own the Units or Shares of
Common Stock initially purchased hereunder, the parties agree as follows:
6.1. Financial Reports. Titan shall deliver monthly financial
statements to First Union including a balance sheet and related income
statement and covering the matters provided for in Section 7.3(a) of the
Limited Partnership Agreement. In addition, Titan shall concurrently deliver
to First Union reports, on an aggregate basis, relating to Titan's monthly
production volumes, revenues, sales volumes, lease operating expenses, capital
expenditures, net cash flow and such other information as First Union may
reasonably request in writing from time to time. The foregoing reports shall
be delivered monthly within the time periods set forth in Section 7.3(a) of the
Limited Partnership Agreement.
6.2. Amendment of Agreements. During any period in which First
Union owns an equity interest in Titan, Titan shall not, without the prior
written consent of First Union, (i) amend the Financial Advisory Services
Contract(other than an amendment thereto to increase the fee payable thereunder
by $10,000 per annum, to be entered into concurrently with or promptly after
the consummation of the purchase of the Securities) nor enter into any similar
agreement with NGP or (ii) make any preferential distributions or payments to
NGP.
6.3. ERISA Status of First Union. Upon the request of Titan at
the time of admission of any additional limited partners after the date hereof
or at the time any action is to be taken to adjust sharing ratios of the
partners, First Union will provide a certificate to Titan stating whether at
that time First Union is or is not (i) an employee benefit plan as defined in
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Section 3(3) of the United States Employee Retirement Income Security Act of
1974, as amended ("ERISA") (whether or not subject to the provisions of Title I
of ERISA), (ii) a plan described in Section 4975(e)(1) of the Code, or (iii)
any other entity that is treated as a "benefit plan investor," within the
meaning of United States Department of Labor Regulation Section 2510.3-
101(f)(2) other than a government plan wholly exempt from the coverage of
ERISA.
7. Claims.
7.1. Survival. The liability of First Union and Titan under
each of their respective representations, warranties and covenants contained in
this Agreement shall survive the execution and delivery of this Agreement and
the Related Documents, notwithstanding any investigation made by or on behalf
of the other party. Any assertion by First Union that either the Partnership
or the General Partner is liable for the inaccuracy of any representation or
warranty or the breach of any covenant under the terms of this Agreement or the
Related Documents must be made (i) pursuant to the terms of this Section 7 and
(ii) in writing and must be given to the Partnership not later than the first
Business Day after the first anniversary of the date hereof. The notice shall
state the facts known to First Union giving rise to such notice in sufficient
detail to allow the Partnership and the General Partner to evaluate the claim.
7.2. Demands. The parties hereto agree that First Union shall
not have the right to make a claim with respect to, or receive any recovery
for, a breach by the General Partner or the Partnership of a representation,
warranty or covenant hereunder until the aggregate amount of losses suffered
by First Union as a result of all such breaches exceeds $500,000, at which time
the General Partner and the Partnership shall thereafter be jointly and
severally liable for all losses incurred in excess of such amount, subject to
Section 7.3 below. In determining whether First Union has incurred or suffered
a loss for purposes of this Section 7.2, First Union shall combine, without
duplication, (i) all direct losses suffered by First Union as a result of any
claim made pursuant to the terms of this Section 7 and (ii) First Union
proportionate share of any direct losses suffered or incurred by Titan as the
result of any act, event, condition or omission that gives rise to a claim by
First Union pursuant to the terms of Section 7.1. First Union's proportionate
share as referenced in clause (ii) above shall be deemed to be 9.09% with
respect to direct losses incurred by Titan. All payments made to First Union's
pursuant to the terms of this Section 7 shall be grossed up to compensate First
Union for payments it is deemed to be making to itself as a result of its
equity investment in Titan.
7.3. Claim Cap. When First Union has been paid $2,500,000
pursuant to Section 7.2, First Union shall not be entitled to make any
additional claims against or receive any additional payments from Titan with
respect to losses arising as a result of any breaches of representations or
warranties under Sections 4.6., 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15, 4.16, 4.19, 4.20, 4.24 or 4.25. Under no circumstances shall the
aggregate amount paid to First Union pursuant to Section 7.2 exceed $5,000,000.
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8. Miscellaneous.
8.1. Expenses. The Partnership shall reimburse First Union for
all of First Union's legal fees, professional fees and other transaction costs
incurred in the evaluation and negotiation of this Agreement and the Related
Documents; provided, however, that the Partnership's obligations with respect
to such fees and costs shall not exceed $20,000. The Partnership shall
promptly reimburse First Union for such expenses upon presentation to the
Partnership of a statement of such expenses. All expenses of Titan (including
all broker's or finder's fees or commissions) shall be paid by Titan.
8.2. Notices. Any notice, request, instruction, correspondence
or other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to Titan, addressed to:
Titan Resources I, Inc.
000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx Xxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xx. Xxxx Xxxxxx
Xxxxxxxx & Knight
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
If to First Union, addressed to:
First Union Corporation
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxx X. Xxxxxxx
Telecopy: (000) 000-0000
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with a copy to:
Xx. Xxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
0000 Xxxxxxxxxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: (000) 000-0000
Notice given by personal delivery, courier service or mail shall be
effective upon actual receipt. Notice given by telecopier shall be
confirmed by appropriate answer back and shall be effective upon actual
receipt if received during the recipient's normal business hours, or at
the beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours. All Notices by
telecopier shall be confirmed promptly after transmission in writing by
certified mail or personal delivery. Any party may change any address
to which Notice is to be given to it by giving Notice as provided above
of such change of address.
8.3. Amendments. This Agreement may be amended only by an
instrument in writing signed by the parties hereto.
8.4. Remedies. In addition to the remedies available to First
Union under Section 7 with respect to the covenants or agreements of Titan
following the date hereof, such covenants and agreements shall be specifically
enforceable by First Union (to the extent that such covenants and agreements
run in favor of First Union), and Titan and the Subsidiaries agree to waive the
posting of any bond in connection with the issuance of any injunction or other
equitable relief in connection therewith. These remedies shall constitute the
exclusive remedies available to First Union with respect to the covenant or
agreements of Titan hereunder.
8.5. Governing Law. The provisions of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction), except to the extent that same are
mandatorily subject to the laws of another jurisdiction pursuant to the laws of
such other jurisdiction.
8.6. Entire Agreement; Waivers. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. The failure of a
party to exercise any right or remedy shall not be deemed or constitute a
waiver of such right or remedy in the future. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless
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of whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
8.7. Binding Effect and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns; provided, that (1) all rights and
benefits granted to First Union by this Agreement shall be freely assignable by
First Union with the proper transfer of First Union shares of Common Stock or
Units, and (2) this Agreement may not be assigned by Titan except upon the
prior written consent of First Union. Nothing in this Agreement, express or
implied, is intended to confer upon any person or entity other than the parties
hereto and their respective permitted successors and assigns, any rights,
benefits or obligations hereunder.
8.8. Severability. If any provision of the Agreement is
rendered or declared illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by decree of a court of last resort, First
Union and Titan shall promptly meet and negotiate substitute provisions for
those rendered or declared illegal or unenforceable, but all of the remaining
provisions of this Agreement shall remain in full force and effect.
8.9. Headings. The headings of the sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
8.10. Singular and Plural. Words used herein in the singular,
except where the context would otherwise require, shall be deemed to include
the plural and vice versa. The definitions of words in the singular herein
shall apply to such words when used in the plural where the context so permits
and vice versa.
8.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
TITAN RESOURCES I, INC.
By: /s/ XXXX XXXXXXXXX
----------------------------------------
Name: Xxxx Xxxxxxxxx
--------------------------------------
Title: President
-------------------------------------
TITAN RESOURCES, L.P.
by Titan Resources I, Inc.
its General Partner
By: /s/ XXXX XXXXXXXXX
----------------------------------------
Name: Xxxx Xxxxxxxxx
--------------------------------------
Title: President
-------------------------------------
FIRST UNION CORPORATION
By: /s/ XXX X. XXXXXXX
----------------------------------------
Name: Xxx X. Xxxxxxx
--------------------------------------
Title: Senior Vice President
-------------------------------------
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