1
EXHIBIT 2.1
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EXCHANGE AGREEMENT
BY AND AMONG
PRESIDIO OIL COMPANY,
PRESIDIO EXPLORATION, INC.,
PRESIDIO WEST VIRGINIA, INC.,
PALISADE OIL, INC.,
AND
TOM BROWN, INC.
VOLUME I
Dated August 5, 1996
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2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 References and Titles . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
THE EXCHANGE
------------
2.1 Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Directors and Officers of the Presidio Parties . . . . . . . . . . . 14
2.3 Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 Tom Brown Distributions . . . . . . . . . . . . . . . . . . . . . . 14
2.6 No Further Ownership Rights in Presidio Securities . . . . . . . . . 14
2.7 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . 14
2.9 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.10 Lost, Stolen, or Destroyed Certificates . . . . . . . . . . . . . . 15
2.11 Merger Alternative . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III
CLOSING AND PRE-CLOSING ACTIONS
-------------------------------
3.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . 15
3.2 Adjustment to Common Share Value . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
COVENANTS
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4.1 Access to Assets, Personnel, and Information . . . . . . . . . . . . 16
4.2 Confidentiality Obligations . . . . . . . . . . . . . . . . . . . . 16
4.3 Indemnity Regarding Access . . . . . . . . . . . . . . . . . . . . . 17
4.4 Tom Brown to Vote for Plan of Reorganization . . . . . . . . . . . . 17
4.5 Petition Under the Bankruptcy Code . . . . . . . . . . . . . . . . . 17
4.6 Preparation of Disclosure Statement . . . . . . . . . . . . . . . . 18
4.7 Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . 19
4.8 Solicitation of Presidio Securityholders . . . . . . . . . . . . . . 19
4.9 Cooperation; Notification of Certain Changes . . . . . . . . . . . . 20
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4.10 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . 20
4.11 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . 20
4.12 Agreements of Affiliates . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Amendment to Plan . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.14 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.15 New D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.16 Information Kept Confidential . . . . . . . . . . . . . . . . . . . 22
4.17 Pre-Closing Action . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.18 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . 22
4.19 Conduct of Presidio's Business Pending Closing . . . . . . . . . . . 22
4.20 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.21 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.22 Severance Plan and Agreements . . . . . . . . . . . . . . . . . . . 26
4.23 Presidio ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.24 Presidio 401K . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.25 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.26 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.27 Certain Tom Brown Transactions . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PRESIDIO
------------------------------------------
5.1 Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Authorization and Enforceability . . . . . . . . . . . . . . . . . . 29
5.4 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 Claims and Litigation . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Presidio SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 32
5.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 33
5.11 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.12 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . 34
5.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 34
5.14 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . 36
5.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.16 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . 36
5.17 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . 37
5.18 Presidio's Title . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.19 Reserve Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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5.20 Oil and Gas Operations . . . . . . . . . . . . . . . . . . . . . . . 37
5.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 39
5.22 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.23 Compliance with Law; Governmental Authorizations . . . . . . . . . . 40
5.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.25 Contracts, Agreements, Commitments and Other Matters . . . . . . . . 40
5.26 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TOM BROWN
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6.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2 Authorization and Enforceability . . . . . . . . . . . . . . . . . . 43
6.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 43
6.5 Tom Brown SEC Documents . . . . . . . . . . . . . . . . . . . . . . 43
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 43
6.7 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.8 Claims and Litigation . . . . . . . . . . . . . . . . . . . . . . . 44
6.9 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
NATURE OF REPRESENTATIONS AND WARRANTIES
----------------------------------------
7.1 Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.2 Nonsurvival of Representations, Warranties, Covenants,
and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
CONDITIONS TO CLOSING
---------------------
8.1 Conditions Precedent to the Obligations of Presidio . . . . . . . . 45
8.2 Conditions Precedent to the Obligations of Tom Brown . . . . . . . . 46
ARTICLE IX
TERMINATION
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9.1 Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2 Payment of Termination Expenses and Fee . . . . . . . . . . . . . . 51
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9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE X
MISCELLANEOUS
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10.1 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.4 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.6 Entire Agreement; Third Party Beneficiaries . . . . . . . . . . . . 53
10.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.8 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . 54
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
LIST OF EXHIBITS
Exhibit A -- Leases
Exhibit B -- Wells
Exhibit C -- Form of Plan of Reorganization
Exhibit D -- Form of Disclosure Statement
Exhibit E -- Form of Affiliate Letter
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LIST OF DEFINED TERMS
PAGE
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1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1934 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
401k Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Acreage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Aggregate Common Share Value . . . . . . . . . . . . . . . . . . . . . . 2
Aggregate Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Allocated Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Alternative Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 25
Bank Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Bar Date Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Cash Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CERCLIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Share Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . 3
Confirmation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Confirmation Order . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defensible Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Designated Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 4
Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distributee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 32
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Environmental Material . . . . . . . . . . . . . . . . . . . . . . . . . 5
Environmental Response Action . . . . . . . . . . . . . . . . . . . . . . 5
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 5
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DEFINED TERMS, CONTINUED
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Existing Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . 6
Hart Scott Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Initial Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Major Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
New D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
NRI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Oil and Gas Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Palisade Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Permitted Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . 8
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan Proponents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Presidio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Presidio Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . 10
Presidio Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . 10
Presidio Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Presidio Common Stock Cash Consideration . . . . . . . . . . . . . . . . 11
Presidio Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Presidio Financial Statements . . . . . . . . . . . . . . . . . . . . . . 11
Presidio Options or Warrants . . . . . . . . . . . . . . . . . . . . . . 33
Presidio Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Presidio Representative . . . . . . . . . . . . . . . . . . . . . . . . . 11
Presidio SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . 11
Presidio Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Presidio Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 18
Presidio Tax Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 30
Presidio West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . 11
Released Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Releasing Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Reorganization Cases . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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DEFINED TERMS, CONTINUED
Page
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Reserve Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Schedule and Exhibit Volume . . . . . . . . . . . . . . . . . . . . . . . 11
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SEC Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Senior Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . . . . 12
Senior Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . . . . 3
Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Severance Plan and Agreements . . . . . . . . . . . . . . . . . . . . . . 26
Subordinated Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . 3
Subordinated Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . 12
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Termination Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Third Party Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Tom Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tom Brown Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tom Brown Financial Statements . . . . . . . . . . . . . . . . . . . . . 13
Tom Brown SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tom Brown Trading Value . . . . . . . . . . . . . . . . . . . . . . . . . 13
US Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Wells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
WI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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LIST OF SCHEDULES
PAGE
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Schedule 5.25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule 4.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule 4.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Schedule 4.26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Schedule 5.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Schedule 5.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Schedule 5.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Schedule 5.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Schedule 5.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Schedule 5.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Schedule 5.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule 5.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule 5.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule 5.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Schedule 5.16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Schedule 5.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Schedule 5.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Schedule 5.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Schedule 5.21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Schedule 5.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Schedule 5.23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Schedule 5.24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Schedule 5.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Schedule 6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Schedule 6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Schedule 6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Schedule 6.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-viii-
10
EXCHANGE AGREEMENT
This Exchange Agreement dated August 5, 1996, is entered into by and
among Presidio Oil Company, a Delaware corporation, Presidio Exploration, Inc.,
a Colorado corporation, Presidio West Virginia, Inc., a Delaware corporation,
Palisade Oil, Inc., a Colorado corporation, and Tom Brown, Inc., a Delaware
corporation.
RECITALS:
A. The boards of directors of Presidio and Tom Brown have each
determined that it is in the best interests of their respective constituencies
for Tom Brown to acquire Presidio upon the terms and subject to the conditions
set forth in this Agreement.
B. Presidio and Tom Brown desire to make certain representations,
warranties, covenants, and agreements in connection with such acquisition and
also to prescribe various conditions to such acquisition.
Now, therefore, for and in consideration of the mutual covenants and
agreements set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms, as used herein, have the
following meanings:
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Acreage" means the Leases set forth on Appendix A-1 to Exhibit A
attached hereto.
"Affiliate" of a person means any person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
person. The term "control" including, with correlative meaning, the terms
"controlled by" and "under common control with" as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities, by contract or otherwise.
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11
"Aggregate Common Share Value" means a dollar amount equal to the
difference between the Aggregate Consideration and the Cash Consideration, as
adjusted pursuant to Section 5.09 of the Plan of Reorganization.
"Aggregate Consideration" means $183,000,000 except as such may be
adjusted pursuant to Section 5.09 of the Plan of Reorganization.
"Agreement" means this Exchange Agreement and all Schedules and
Exhibits attached hereto.
"Allocated Value" means (a) the net present value allocated to the
interest of the Presidio Parties in and to each Oil and Gas Asset that is
separately valued on the Reserve Report or (b) the amounts set forth on
Appendix A-1 to Exhibit A in respect of the Leases comprising the Acreage.
"Alternative Transaction" has the meaning set forth in Section
4.20(a).
"Bank Obligations" means the obligations of Presidio and its
Affiliates pursuant to the Amendment and Restatement of Amendment, Restatement
and Consolidation of Credit Agreement dated August 6, 1993, as amended, between
Presidio, Presidio Exploration, each bank which is a signatory thereto or
successor or assign thereof and The Chase Manhattan Bank, N.A., as agent.
"Bankruptcy Code" means Title 11 of the United States Code, as amended
from time to time.
"Bankruptcy Court" means the Bankruptcy Court presiding over the
Presidio Parties' Chapter 11 cases.
"Bankruptcy Event" has the meaning set forth in Section 4.5(a).
"Bar Date Order" has the meaning set forth in Section 4.5(d).
"Cash Consideration" means a cash payment in an amount equal to the
sum of (a) the Presidio Common Stock Cash Consideration, plus (b) the excess of
(i) the sum of (x) $100,193,267, plus (y) the amount of accrued and unpaid
interest on the Bank Obligations allowed by an order of the Bankruptcy Court,
over (ii) all amounts, if any, paid by a Presidio Party in respect of the Bank
Obligations (other than interest paid in respect thereof) or the Senior Secured
Notes from the date of this Agreement through and including the Closing.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System List.
"Closing" has the meaning set forth in Section 3.1(a).
"Closing Date" has the meaning set forth in Section 3.1(b).
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12
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Common Share Value" means a value per share of Tom Brown Common Stock
equal to $16.50, as adjusted pursuant to Section 3.2.
"Confidentiality Agreement" means that certain letter agreement dated
August 15, 1995 between Tom Brown and Presidio, as amended by letters dated
October 30, 1995 and November 10, 1995 and as such may be hereafter amended.
"Confirmation Date" means the date upon which the Confirmation Order
is entered.
"Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan of Reorganization pursuant to Sections 1129 and 1141 of the
Bankruptcy Code.
"Contract" has the meaning set forth in Section 5.4.
"Debt Obligations" means the obligations of Presidio pursuant to the
following:
(a) Indenture dated as of August 6, 1993 among Presidio,
various of its subsidiaries and U.S. Trust Company of New York ("US
Trust") relating to $75,000,000 original aggregate principal amount of
11.5% Senior Secured Notes due 2000 (the "Senior Secured Notes");
(b) Indenture dated as of August 6, 1993 among Presidio,
various of its subsidiaries and US Trust relating to $100,000,000
original aggregate principal amount of Senior Gas Indexed Notes due
2002 (the "Senior Gas Indexed Notes");
(c) Indenture dated as of February 16, 1989 among
Presidio, various of its subsidiaries and US Trust, as amended,
relating to $100,000,000 original aggregate principal amount of Senior
Subordinated Gas Indexed Notes due 1999 (the "Subordinated Gas Indexed
Notes"); and
(d) Indenture dated as of February 14, 1990 among
Presidio and Bank of Montreal Trust Company relating to $50,000,000
original aggregate principal amount of 9% Convertible Subordinated
Debentures Due 2015.
"Defensible Title" with respect to the Major Assets means that title
of a Presidio Party which, subject to Permitted Encumbrances:
(a) is deducible of record (either from the
records of the applicable county clerk and recorder or, in the
case of federal leases, from the records of the applicable
office of the Bureau of Land Management, or in the case of
Indian leases, from the applicable offices of the Bureau of
Indian Affairs, or in the case of state leases, from the
records of the applicable state land office, or from some
combination of the foregoing official records), and is free
from reasonable doubt such that a prudent
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13
person with knowledge of all the facts and their legal bearing
would be willing to accept the same;
(b) entitles a Presidio Party to receive not less
than the net revenue interest (indicated by the letters "NRI")
set forth in Exhibit B attached hereto of all oil, gas and
associated liquid and gaseous hydrocarbons produced, saved and
marketed from each of the Major Assets throughout the life of
such Major Asset, provided, that the provisions of this clause
(b) shall not be applicable to the Leases comprising the
Acreage;
(c) obligates a Presidio Party to bear costs and
expenses relating to the maintenance, development, and
operation of each of the Major Assets in an amount not greater
than the working interest (indicated by the letters "WI") set
forth in Exhibit B attached hereto throughout the life of such
Major Asset except to the extent such increase in working
interest is accompanied by a proportionate increase in the net
revenue interest attributable to such Major Asset, provided,
that the provisions of this clause (c) shall not be applicable
to the Leases comprising the Acreage; and
(d) is free and clear of Liens.
"Designated Contracts" shall mean each of the operating agreements set
forth on Schedule 5.25.
"Directors and Officers"shall have the meaning given such terms in the
New D&O Insurance.
"Disclosure Statement" means the disclosure statement in the form
attached hereto as Exhibit D as such may be amended or supplemented after the
date of this Agreement, together with such other solicitation materials that
may be jointly prepared by the Plan Proponents and filed by Presidio pursuant
to Section 1125 of the Bankruptcy Code in connection with the Plan of
Reorganization.
"Distributee" means a person who is a holder of Bank Obligations, Debt
Obligations or Presidio Common Stock.
"Employee Benefit Plans" has the meaning set forth in Section 5.9(a).
"Environmental Laws" means any and all applicable laws (including, but
not limited to, CERCLA and corresponding state or local acts), statutes,
ordinances, rules, regulations, policies, guidelines, consents, approvals,
licenses, judgments, memoranda of understanding, orders, judicial decrees, or
administrative decrees, treaties, permit conditions, or injunctions of any
Governmental Authority or court of competent jurisdiction pertaining to the
protection of the environment.
"Environmental Material" means (a) any hazardous substance, as defined
by CERCLA, (b) any "hazardous waste," as defined by the Resource Conservation
and Recovery Act, as amended through the date of this Agreement, (c) any
hazardous, dangerous, or toxic chemical, material, waste,
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14
or substance, within the meaning of and regulated by any Environmental Law, (d)
any material emitting radiation in excess of ordinary background conditions,
including any naturally occurring radioactive material, and any source,
special, or byproduct material as defined in 42 U.S.C. Section 2011 et seq. and
any amendments or authorizations thereof, (e) any asbestos-containing materials
in any form or condition, or (f) any polychlorinated biphenyls in any form or
condition.
"Environmental Response Action" means any remedial action, removal
action, remedial investigation and feasibility study, site characterization,
Natural Resource Damage Matters, Brownfield Agreements, or other investigations
whatsoever relating to the presence or suspected presence of Environmental
Materials on or originating from operations of Presidio. The term
Environmental Response Action shall not include customary well plugging,
abandonment, and drill site restoration requirements.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ESOP" has the meaning set forth in Section 4.23.
"Exchange" means the transactions contemplated in Section 2.1.
"Exchange Agent" means a person appointed by Tom Brown and Presidio to
serve as Exchange Agent hereunder or absent such appointment a person appointed
pursuant to the Plan of Reorganization.
"Exchange Common Stock" means a number of shares of Tom Brown Common
Stock (or other securities as may be required under Section 3.2) obtained by
dividing (a) the Aggregate Common Share Value by (b) the Common Share Value,
less the number of shares of Tom Brown Common Stock to which Tom Brown
otherwise would have been entitled pursuant to Section 2.1 in respect of its
ownership of Senior Gas Indexed Notes or any other Presidio Securities it may
acquire hereafter. As of the date of this Agreement, the Exchange Common Stock
is initially established hereunder at 5,003,438 shares of Tom Brown Common
Stock (with such number of shares being calculated without any reduction
thereof in respect of the shares of Tom Brown Common Stock to which Tom Brown
otherwise would be entitled to receive in respect of its ownership of Senior
Gas Indexed Notes).
"Exchange Consideration" means the Cash Consideration and the Exchange
Common Stock and shall also include the net proceeds received from the sale of
fractional shares of Exchange Common Stock pursuant to Section 2.7.
"Existing Plans" means the Employee Benefit Plans and the Severance
Plan and Agreements.
"Final Order" means an order or judgment of the Bankruptcy Court which
shall not have been reversed, stayed, modified, or amended and as to which (a)
the time to appeal from or to seek review, rehearing or certiorari shall have
expired and (b) no appeal or petition for review, rehearing, or certiorari is
pending or if appealed shall have been affirmed, or the appeal dismissed by the
highest court to which such order was appealed, or if review, rehearing or
certiorari was sought, such
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15
review, rehearing, or certiorari has been denied and no further hearing, appeal
or petition for review, rehearing, or certiorari can be taken or granted or as
to which any right to appeal or to seek a review, rehearing, or certiorari has
been waived.
"401k Plan" has the meaning set forth in Section 4.24.
"GAAP" means those generally accepted accounting principles and
practices that are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor).
"Governmental Authority" means any federal, state, local, foreign
government, or political subdivision thereof, exercising competent
jurisdiction.
"Hart Scott Act" has the meaning set forth in Section 4.9.
"Initial Order" has the meaning set forth in Section 4.5(c).
"Knowledge" means actual knowledge as of the date of this Agreement of
each of the officers and employees named in Schedule 4.22 and for the purposes
of Section 5.21, the term Knowledge shall also include the actual knowledge as
of the date of this Agreement of Brant Gimmeson.
"Leases" has the meaning set forth in the definition of Oil and Gas
Assets.
"Liabilities" has the meaning set forth in Section 5.12.
"Lien" means any mortgage, pledge, hypothecation, security interest,
encumbrance, charge or lien (statutory or otherwise) or assignment, deposit
arrangement or other preferential arrangement in respect of an interest in
property intended to secure, support or otherwise assure payment of an
obligation (including any conditional sale or other title retention agreement
and any lease having substantially the same economic effects as any of the
foregoing).
"Major Assets" means (a) each Oil and Gas Asset that is separately
valued on the Reserve Report as having an Allocated Value individually in
excess of $50,000 and (b) the Acreage.
"Material Contracts" has the meaning set forth in Section 5.25.
"Merger" has the meaning set forth in Section 2.11.
"NASDAQ" means the Nasdaq National Market of The Nasdaq Stock Market.
"New D&O Insurance" has the meaning set forth in Section 4.15(a).
"Oil and Gas Assets" means the following:
(a) All right, title, and interest of the Presidio
Parties in and to (i) all oil and gas leases, all oil, gas and mineral
leases or other similar leases, mineral interests, fee estates,
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production payments, net profits interests, carried interests,
royalties, and overriding royalties and all lands subject thereto,
whether producing or non-producing (the "Leases"), including the
leases, mineral interests, overriding royalties and royalties set
forth on Exhibit A attached hereto, and any other oil, gas or other
mineral interests of any type of a Presidio Party wherever situated
and including any and all right, title and interest of a Presidio
Party in and to the oil, gas and other hydrocarbons in, on or under
any of the foregoing, and (ii) all oil and gas wells and injection and
disposal wells located on any of the foregoing, or used or useful in
connection therewith, or on lands pooled or unitized therewith (the
"Wells"), including the wells set forth on Exhibit B attached hereto;
(b) All right, title, and interest of the Presidio
Parties in, to and under or derived from all presently existing or
proposed unitization, pooling and communitization agreements,
declarations and orders, and the properties covered and the units
created or to be created thereby (including all units formed or to be
formed under orders, regulations, rules or other official actions of
any federal, state or other governmental agency having jurisdiction)
to the extent that they relate to or affect the Leases or the Wells;
(c) All right, title, and interest of the Presidio
Parties in, to and under or derived from all presently existing and
effective oil, gas liquids, condensate, casinghead gas and gas sales,
purchase, marketing, exchange, gathering, transportation and
processing contracts, operating agreements, farmout agreements,
exploration agreements, option agreements, joint venture agreements,
partnership agreements, settlement agreements and all other agreements
and instruments to the extent that they relate to the Leases or the
Wells;
(d) All right, title, and interest of the Presidio
Parties in or to all personal property, fixtures, equipment,
improvements and other personal property, whether real, personal or
mixed (including well equipment, casing, tubing, tanks, pumping units,
rods, tank batteries, natural gas, crude oil, condensate or products
placed into storage or into pipelines, buildings, pumps, motors,
machinery, injection facilities, disposal facilities, field separators
and liquid extractors, compressors, pipelines, gathering and flow
lines, roads, field treating facilities, field offices and office
furnishings related thereto, field office leases, storage yards and
off-site inventories, equipment leases, vehicles, trailers, operating
supplies, inventories and all other appurtenances thereunto
belonging), and in and to all easements, permits, licenses,
servitudes, rights-of-way, surface leases and other surface rights to
the extent any of the foregoing is now being used or proposed to be
used in connection with the exploration, development, operation or
maintenance of the Leases or Wells or now being used or proposed to be
used in connection with the producing, treating, processing, storing,
gathering, transporting or marketing of oil and gas attributable to
such properties or interests and other hydrocarbons and products in
association therewith, and all contract rights (including rights under
leases to third parties) related to any of the foregoing; and
(e) All right, title, and interest of the Presidio
Parties in and to all oil, gas, and other minerals owned by a Presidio
Party or any interests credited to the account of a Presidio Party
pursuant to any production imbalances or balancing agreements relating
to any interests owned by a Presidio Party in the Leases or the Wells
or otherwise arising by virtue of the fact
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that a Presidio Party may not have taken or marketed its full share of
oil, gas or other minerals attributable to its ownership in the Leases
or the Wells prior to the Closing Date.
"Palisade Oil" means Palisade Oil, Inc., a Colorado corporation.
"Permitted Claims" means any Liens, Liabilities, claims, or causes of
action arising from any defect adversely affecting a Presidio Party's title to
any Oil and Gas Asset, which defect arises from or is attributable to any
facts, events, or circumstances in existence on or before June 19, 1996. The
term Permitted Claims shall also include all Title Defects in existence on or
before June 19, 1996.
"Permitted Encumbrances" means:
(a) Lessors' royalties, overriding royalties,
reversionary interests and similar burdens as of the date of this
Agreement to the extent that (i) they burden the Leases comprising the
Acreage, or (ii) they do not prevent the Presidio Parties from
receiving the proceeds of production from each of the Major Assets
attributable to the net revenue interests reflected in Exhibit B;
(b) preferential rights to purchase;
(c) Third Party Consents with respect to which on
or before the Closing a waiver, consent or a judicial order or
determination is obtained as contemplated in Section 4.11;
(d) Liens for Taxes not yet delinquent or, if
delinquent, that are being contested in good faith in the normal
course of business;
(e) Materialman's, mechanic's, repairman's,
employee's, contractor's, operator's, and other similar Liens or
charges arising in the ordinary course of business (i) if they have
not been filed pursuant to law, (ii) if so filed, they have not yet
become due and payable or payment is being withheld as provided by
law, or (iii) if their validity is being contested in good faith by
appropriate action;
(f) All rights to consent by, required notices
to, filings with, or other actions by Governmental Authorities in
connection with the sale or conveyance of oil and gas leases or
interests therein if they are customarily obtained subsequent to the
sale or conveyance;
(g) Conventional rights of reassignment upon the
surrender or expiration of any Lease;
(h) Easements, rights-of-way, servitudes,
permits, surface leases, and other rights in respect of surface
operations;
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(i) All other Liens, charges, contracts,
agreements, instruments, obligations, defects, and irregularities
affecting the Leases or Wells which taken individually or together (i)
do not interfere materially with the operation, value or use of any of
the Oil and Gas Assets, (ii) do not prevent a Presidio Party from
receiving the proceeds of production from any of the Major Assets
attributable to the net revenue interests reflected in Exhibit B or
the ownership interests of the Presidio Parties in the Acreage, as may
be applicable, (iii) do not adversely affect the net revenue interest
of a Presidio Party as reflected in Exhibit B or the ownership
interests of the Presidio Parties in the Acreage, as may be
applicable, with respect to its share of the oil and gas produced from
any such Major Asset, or (iv) do not increase the portion of the costs
and expenses that a Presidio Party is obligated to pay above the
working interests reflected in Exhibit B or the ownership interests of
the Presidio Parties in the Acreage, as may be applicable; such Liens,
charges, contracts, agreements, instruments, obligations, defects, and
irregularities include the following:
(A) those created by the terms and
conditions of division orders, sales contracts, and other
existing contracts burdening the Oil and Gas Assets, including
any and all terms and conditions affecting or relating to
production imbalances;
(B) those which have not prevented the
receipt of production proceeds by a Presidio Party or its
predecessors in title without suspense by a production
purchaser and as to which no challenge to title has been
raised on the basis of such defect, so long as it can
reasonably be concluded either that such challenge is highly
unlikely or that such challenge would be unsuccessful by
reason of statutes of limitation, waiver, estoppel, or other
defenses;
(C) those described by an attorney's
title opinion as advisory or waivable as a matter of business
judgment; or
(D) those in the nature of customary
defects expected to be encountered in the area involved and
customarily acceptable to prudent operators and interest
owners in that area, including defects that have been cured by
possession under applicable statutes of limitation, defects in
the early chain of title such as failure to recite marital
status in documents, omission of heirship or succession
proceedings, lack of survey and failure to record releases of
liens, production payments, or mortgages that have expired of
their own terms or which through the passage of time or
statute are no longer enforceable or other defects that either
as a practical matter have not resulted or are not likely to
result in a material claim or are considered waivable under
local bar association-approved title standards or customary
title practices in the area;
(j) All rights reserved to or vested in any
Governmental Authority to control or regulate any of the Leases or
Wells in any manner, and all applicable laws, rules, and orders of
governmental authorities;
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(k) Any Title Defects, Liens or other defects
affecting the Oil and Gas Assets which are to be discharged at or
prior to Closing pursuant to the Plan of Reorganization;
(l) Permitted Claims; and
(m) The Liens securing the Bank Obligations and
certain Debt Obligations which are discharged at or prior to Closing
pursuant to the Plan of Reorganization.
"person" means an individual, a corporation, a partnership, an
association, a trust, an estate or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan Documents" means all documents and exhibits that aid in
effecting the Plan of Reorganization.
"Plan of Reorganization" means the plan of reorganization in the form
attached hereto as Exhibit C as such may be amended after the date of this
Agreement, which is to be proposed by the Plan Proponents and filed by the
Presidio Parties in accordance with the Bankruptcy Code as a part of the
Reorganization Cases of the Presidio Parties and which upon confirmation
implements the transactions contemplated by this Agreement.
"Plan Proponents" means the Presidio Parties and Tom Brown as the
joint plan proponents of the Plan of Reorganization.
"Presidio" means Presidio Oil Company, a Delaware corporation.
"Presidio Class A Common Stock" means the Class A Common Stock of
Presidio, par value $.10 per share.
"Presidio Class B Common Stock" means the Class B Common Stock of
Presidio, par value $.10 per share.
"Presidio Common Stock" means the Presidio Class A Common Stock and
the Presidio Class B Common Stock.
"Presidio Common Stock Cash Consideration" means a cash payment to be
made pursuant to the Plan of Reorganization in an amount of $250,000 to the
holders of the Presidio Common Stock, as adjusted pursuant to Section 5.09 of
the Plan of Reorganization.
"Presidio Exploration" means Presidio Exploration, Inc., a Colorado
corporation.
"Presidio Financial Statements" means the audited and unaudited
consolidated financial statements of Presidio and its consolidated subsidiaries
(including the related notes) included (or incorporated by reference) in
Presidio's Annual Report on Form 10-K for the year ended December 31, 1995.
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"Presidio Options or Warrants" has the meaning set forth in Section
5.11(b).
"Presidio Parties" means Presidio, Presidio Exploration, Presidio West
Virginia, and Palisade Oil.
"Presidio Representative" means any director, officer, employee,
agent, advisor (including legal, accounting, and financial advisors), or other
representative of a Presidio Party.
"Presidio SEC Documents" means each report, schedule, registration
statement and definitive proxy statement filed by Presidio with the SEC since
January 1, 1995 and prior to the date of this Agreement.
"Presidio Security" means the Presidio Common Stock, the promissory
notes evidencing the Bank Obligations, the Debt Obligations and the Presidio
Options or Warrants.
"Presidio Securityholders" has the meaning set forth in Section
4.6(a).
"Presidio Tax Affiliates" has the meaning set forth in Section 5.8(a).
"Presidio West Virginia" means Presidio West Virginia, Inc., a Delaware
corporation.
"Released Claims" has the meaning set forth in Section 8.2(i).
"Releasing Parties" has the meaning set forth in Section 8.2(i).
"Reorganization Cases" has the meaning set forth in Section 4.5(a).
"Reserve Report" means the engineering report prepared by Presidio
based on an SEC Case as of December 31, 1995 and reviewed by Huddleston & Co.,
Inc. on behalf of Presidio concerning certain of the Oil and Gas Assets.
"Schedule and Exhibit Volume" means the volume containing the
Schedules and Exhibits A and B to this Agreement to which has been attached a
cover page executed by the parties hereto for identification with this
Agreement.
"SEC" means the Securities and Exchange Commission.
"SEC Case" means the present value of estimated future net revenues
from oil and gas properties discounted at ten percent (10%) before taxes and
determined in all material respects in accordance with the rules and
regulations of the SEC using prices and costs in effect on the valuation date.
"Senior Gas Indexed Notes" has the meaning set forth in the definition
of Debt Obligations.
"Senior Secured Notes" has the meaning set forth in the definition of
Debt Obligations.
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"Severance Plan and Agreements" has the meaning set forth in Section
4.22.
"Subordinated Gas Indexed Notes" has the meaning set forth in the
definition of Debt Obligations.
"Tax Returns" means all federal and all material state, local, and
foreign returns, claims for refund, declarations, reports, estimates,
information returns and statements required to be filed with respect to any
Taxes.
"Taxes" means taxes of any kind, levies, or other like assessments,
customs, duties, imposts, charges, or fees, including income, gross receipts,
ad valorem, value added, excise, stamp, environmental (including taxes under
Code Section 59A), alternative or add-on minimum, real or personal property,
asset, sales, use, license, payroll, transaction, capital, net worth and
franchise taxes, estimated taxes, withholding, employment, social security,
workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes,
or other governmental taxes imposed or payable to the United States or any
state, local, or foreign governmental subdivision or agency thereof, and in
each instance such term shall include any interest, penalties, or additions to
tax attributable to any such Tax, including penalties for the failure to file
any Tax Return or report.
"Termination Expenses" has the meaning set forth in Section 9.2(b).
"Termination Fee" has the meaning set forth in Section 9.2(a).
"Third Party Consent" has the meaning set forth in Section 4.11.
"Title Defects" means any defect adversely affecting any Major Asset
which causes a Presidio Party not to have Defensible Title to such Major Asset.
"Tom Brown" means Tom Brown, Inc., a Delaware corporation.
"Tom Brown Common Stock" means the common stock of Tom Brown, par value
$.10 per share.
"Tom Brown Financial Statements" means the audited and unaudited
consolidated financial statements of Tom Brown and its consolidated
subsidiaries (including the related notes) included (or incorporated by
reference) in Tom Brown's Annual Report on Form 10-K for the year ended
December 31, 1995.
"Tom Brown SEC Documents" means each report, schedule, registration
statement, and definitive proxy statement filed by Tom Brown with the SEC since
January 1, 1995 and prior to the date of this Agreement.
"Tom Brown Trading Value" means the average of the closing sales
prices of the Tom Brown Common Stock on the NASDAQ (as reported by The Wall
Street Journal or, if not reported thereby,
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by another authoritative source) over the twenty (20) trading days immediately
preceding the date that is five trading days prior to the Confirmation Date.
"Wells" has the meaning set forth in the definition of Oil and Gas
Assets.
1.2 References and Titles. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Each of the Schedules referenced in this Agreement together with
Exhibits A and B are contained in the Schedule Volume. Titles appearing at the
beginning of any Articles, Sections, subsections, or other subdivisions of this
Agreement are for convenience only, do not constitute any part of such
Articles, Sections, subsections, or other subdivisions, and shall be
disregarded in construing the language contained therein. The words "this
Agreement," "herein," "hereby," "hereunder," and "hereof," and words of similar
import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Section" and "this
subsection," and words of similar import, refer only to the Sections or
subsections hereof in which such words occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine, or neuter genders shall be
construed to state and include any other gender, and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires.
ARTICLE II
THE EXCHANGE
2.1 Exchange. Pursuant to this Agreement and the Plan of
Reorganization as confirmed by the Bankruptcy Court, on the Closing Date,
except to the extent already owned by Tom Brown or cancelled pursuant to the
Plan of Reorganization, all of (a) the Bank Obligations, (b) the Debt
Obligations and (c) the Presidio Common Stock shall be transferred absolutely
and unconditionally to Tom Brown in exchange for that portion and amount of the
Exchange Consideration (if any) allocated to the existing holders of such
claims and interests pursuant to the Plan of Reorganization. No Exchange
Consideration shall be issued or paid to Tom Brown in respect of its ownership
of (i) Senior Gas Indexed Notes or (ii) any other Presidio Securities which it
may acquire hereafter to the extent it would be entitled to receive Exchange
Common Stock in exchange therefor. Upon delivery of the Exchange Consideration
to the Exchange Agent as provided in Section 2.4 hereof, Tom Brown shall be
deemed the sole equity holder, and the sole holder of the Bank Obligations and
Debt Obligations of Presidio, and Presidio's obligations to the holders of the
(a) Bank Obligations, (b) the Debt Obligations and (c) the Presidio Common
Stock under the Plan of Reorganization shall be deemed to be satisfied in full
and discharged. As of the Closing Date, the Presidio Options and Warrants
shall be cancelled pursuant to the Plan of Reorganization. Tom Brown, as the
sole equity owner of Presidio, shall, immediately following the Exchange
described in this Section 2.1, contribute to Presidio all of the Bank
Obligations and Debt Obligations. No additional shares of Presidio capital
stock shall be issued to Tom Brown in exchange therefor. The Bank Obligations
and Debt Obligations shall thereupon be cancelled, terminated, and discharged.
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2.2 Directors and Officers of the Presidio Parties. The directors
and officers of each of the Presidio Parties shall resign as of the Closing.
2.3 Exchange Consideration. At the Closing, Tom Brown shall pay
or issue (in accordance with Section 2.4 hereof) the Exchange Consideration.
2.4 Exchange Fund. At the Closing, Tom Brown shall deposit with
the Exchange Agent, for the benefit of each of the Distributees, the Exchange
Consideration including certificates representing the Exchange Common Stock.
The Cash Consideration shall be tendered and paid to the Exchange Agent in
immediately available funds. The Exchange Agent will distribute to the
Distributees the Exchange Consideration (together with any interest earned
thereon) in accordance with the Plan of Reorganization. The Exchange Agent
shall receive and hold all dividends or other distributions paid or distributed
with respect to the Exchange Common Stock held by it for the account of the
Distributees entitled thereto.
2.5 Tom Brown Distributions. A Distributee shall be entitled to
receive dividends and other distributions with respect to the Exchange Common
Stock to which such Distributee is entitled pursuant to the Plan of
Reorganization.
2.6 No Further Ownership Rights in Presidio Securities. Except
for the contribution to be made by Tom Brown pursuant to Section 2.1, if, after
the Closing, a certificate representing a Presidio Security registered in the
name of a Distributee (other than Tom Brown) is presented to Presidio or the
Exchange Agent for any reason, it shall be cancelled and exchanged for that
portion and amount, if any, of the Exchange Consideration allocated thereto
pursuant to the Plan of Reorganization.
2.7 No Fractional Shares. No fractional shares of the Exchange
Common Stock shall be issued to a Distributee. The Exchange Agent shall, on
behalf of all Distributees otherwise entitled to receive fractional shares of
Exchange Common Stock, promptly following the Closing, aggregate such
fractional shares of Exchange Common Stock and sell the resulting whole shares
of Exchange Common Stock for the account of such Distributees, and such
Distributees shall be entitled to receive their allocable portion of the net
proceeds of the sale thereof.
2.8 Termination of Exchange Fund. Any portion of the Exchange
Consideration held by the Exchange Agent that is not distributed pursuant to
the Plan of Reorganization within ninety (90) days after the Closing shall,
upon Presidio's request, be delivered to Tom Brown. Thereafter, a Distributee
shall look only to Presidio for distribution of that portion and amount of the
Exchange Consideration (including any dividends or distributions made in
respect of Exchange Common Stock) that such Distributee is entitled to receive
pursuant to the Plan of Reorganization. Such amounts shall bear no interest.
2.9 No Liability. None of Presidio, Tom Brown, the Exchange
Agent, or any other person shall be liable to any Distributee for any amount
properly delivered to any public official pursuant to any applicable abandoned
property, escheat, or similar law. Any amounts remaining unclaimed by a
Distributee for a period of two years following the Closing (or such earlier
date immediately prior to the time at which such amounts would otherwise
escheat to or become the property of any
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governmental entity) shall, to the extent permitted by applicable law, become
the property of Tom Brown free and clear of any claims or interest of any such
Distributee or his successors, assigns, or personal representative previously
entitled thereto.
2.10 Lost, Stolen, or Destroyed Certificates. If any certificate
representing a Presidio Security shall have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the Distributee claiming such
certificate to be lost, stolen, or destroyed and, if required by Tom Brown, the
issuance by such Distributee of such reasonable indemnity as Tom Brown may
require against any claim that may be made against it with respect to such
certificate, the Exchange Agent or Tom Brown, as applicable, shall issue in
exchange for such lost, stolen, or destroyed certificate that portion and
amount of the Exchange Consideration allocated to such Presidio Security in
accordance with the Plan of Reorganization.
2.11 Merger Alternative. If Tom Brown shall determine that the
transaction described in this Article II will not have the legal effects
described in the third sentence of Section 2.1, then the Exchange shall be
recast as a merger to be effected under the laws of the State of Delaware (the
"Merger"), pursuant to which a subsidiary of Tom Brown shall be merged with and
into Presidio, with Presidio to be the surviving corporation and a wholly-owned
subsidiary of Tom Brown. In such event, this Agreement shall constitute an
Agreement and Plan of Merger and the parties shall prepare and file all such
documents (including any Certificate of Merger) necessary to effect the Merger.
ARTICLE III
CLOSING AND PRE-CLOSING ACTIONS
3.1 Time and Place of Closing.
(a) Consummation of the Exchange as contemplated by this
Agreement (the "Closing"), shall, unless otherwise agreed to in
writing by Tom Brown and Presidio, take place at the offices of
Andrews & Kurth L.L.P., located at 425 Lexington Avenue, New York, New
York 10017 at 10:00 a.m., New York City time, on the fifth business
day following the date that the conditions specified in Article VIII
have been satisfied, unless another time, date and place is agreed to
by the parties.
(b) The date on which the Closing occurs is herein
referred to as the "Closing Date".
3.2 Adjustment to Common Share Value. If at any time or from time
to time after the date of this Agreement and on or before the Closing Date, Tom
Brown shall (a) pay a dividend in Tom Brown Common Stock or make a distribution
in Tom Brown Common Stock (or in securities convertible into Tom Brown Common
Stock), (b) subdivide the outstanding Tom Brown Common Stock, (c) combine the
outstanding Tom Brown Common Stock into a smaller number of shares of Tom Brown
Common Stock, or (d) issue any shares of its capital stock or other securities
by reclassification of the Tom Brown Common Stock, then the Common Share Value
(or if necessary the securities comprising the Exchange Common Stock) in effect
at the time of the record date for
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such dividend or distribution or as of the effective date of such subdivision,
combination, or reclassification shall be proportionately adjusted so that the
aggregate number and kind of shares of Exchange Common Stock shall be the
aggregate number and kind of shares of Tom Brown Common Stock or other
securities of Tom Brown which, if the Exchange Common Stock had been
outstanding immediately prior to such time, the Exchange Common Stock would
represent by virtue of such dividend, distribution, subdivision, combination or
reclassification.
ARTICLE IV
COVENANTS
4.1 Access to Assets, Personnel, and Information. From the date
of this Agreement until the Closing, Presidio shall afford to Tom Brown and its
representatives, at Tom Brown's sole risk and expense, full access to any of
the assets, books, records (including files, Tax Returns, and accountants'
workpapers), contracts, employees, representatives, and agents (including
attorneys, accountants, and independent engineers) and facilities (including
office facilities) of the Presidio Parties, during normal business hours and
provided that such access does not unreasonably interfere with the ongoing
business or operations of any of the Presidio Parties. Presidio shall upon
request furnish promptly to Tom Brown (at Tom Brown's expense) a copy of any
file, book, record, contract, or other written information concerning a
Presidio Party (or any of their respective assets) that is within the
possession or control of a Presidio Party. During such period, Presidio will
make available to a reasonable number of Tom Brown representatives adequate
office space and facilities at the principal office facility of Presidio in
Denver, Colorado.
4.2 Confidentiality Obligations. Notwithstanding anything in this
Article IV to the contrary, Presidio shall not be obligated under the terms of
this Article IV to disclose to Tom Brown or its representatives, or grant Tom
Brown or its representatives access to, information that is within Presidio's
possession or control but subject to a valid and binding confidentiality
agreement with a third party without first obtaining the consent of such third
party, and Presidio, to the extent reasonably requested by Tom Brown, will use
its reasonable efforts to obtain any such consent.
4.3 Indemnity Regarding Access. Tom Brown agrees to indemnify,
defend, and hold harmless each Presidio Party, their respective directors,
officers, employees, agents, and representatives from and against any and all
claims, liabilities, losses, costs, and expenses (including court costs,
expenses of litigation and reasonable attorneys' fees) in connection with
personal injuries to personnel of Tom Brown or its representatives, including
death or property damage arising out of or relating to the access to the
business, property, and records afforded to Tom Brown.
4.4 Tom Brown to Vote for Plan of Reorganization. Tom Brown shall
vote, or shall cause to be voted, all Presidio Securities beneficially owned by
Tom Brown or any Affiliate thereof in favor of the Plan of Reorganization.
4.5 Petition Under the Bankruptcy Code.
(a) Each of the Presidio Parties (other than Presidio
West Virginia) shall, on or before August 1, 1996, commence their respective
Chapter 11 cases (together with Presidio West
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Virginia's pending Chapter 11 case, collectively, the "Reorganization Cases").
If prior to the voluntary commencement of the Reorganization Cases by the
Presidio Parties (other than Presidio West Virginia) there should be commenced
an involuntary case against Presidio or Presidio Exploration, and such Presidio
Party consents to the entry of an order for relief in such involuntary case,
then each of the Presidio Parties that are not subject to the involuntary case
shall promptly commence a Reorganization Case. Each of the foregoing voluntary
filings or consents by the Presidio Parties (other than Presidio West Virginia)
is hereinafter referred to as a "Bankruptcy Event".
(b) Upon the occurrence of a Bankruptcy Event, the
Presidio Parties will file, or will cause to be filed, all pleadings, requests,
and other items and information required to be filed with the Bankruptcy Court
in a form reasonably acceptable to Tom Brown. The Presidio Parties will use
their reasonable efforts to file the Plan of Reorganization and a Disclosure
Statement by no later than thirty (30) days following the occurrence of a
Bankruptcy Event. The Presidio Parties hereto shall use their reasonable
efforts to cause the Bankruptcy Court to confirm the Plan of Reorganization and
approve the Disclosure Statement and approve, authorize, and order assumption
of this Agreement and all other agreements contemplated by, or related to, this
Agreement.
(c) Not later than three (3) business days after the
occurrence of a Bankruptcy Event, Presidio shall file a motion in form and
substance reasonably acceptable to Tom Brown and seek a prompt hearing thereon
before the Bankruptcy Court for an order reasonably satisfactory in form and
substance to Tom Brown approving the provisions of Section 9.2 of this
Agreement (the "Initial Order").
(d) Not later than three (3) business days after the
occurrence of a Bankruptcy Event, Presidio shall file a motion in form and
substance reasonably acceptable to Tom Brown and seek a prompt hearing thereon
before the Bankruptcy Court for an order establishing a claims bar date setting
the last date for filing prepetition claims and administration claims (in each
case, other than claims in respect of trade obligations for services,
materials, or goods incurred or arising in the ordinary course of business, the
Bank Obligations, the Debt Obligations, or the Presidio Securities), including
claims described in Section 510(b) of the Bankruptcy Code, which date shall not
be less than twenty (20) days prior to the Confirmation Date (the "Bar Date
Order").
(e) The parties acknowledge that Presidio West Virginia
currently has its Reorganization Case pending and that notwithstanding the
execution and delivery of this Agreement by Presidio West Virginia or any
provision contained herein to the contrary, this Agreement shall not be
effective as to Presidio West Virginia until such time as the Bankruptcy Court
shall have entered an order authorizing Presidio West Virginia to execute and
deliver this Agreement. After the date of this Agreement, Presidio shall cause
Presidio West Virginia to promptly seek entry of an order of the Bankruptcy
Court in Presidio West Virginia's Reorganization Case approving Presidio West
Virginia's execution and delivery of this Agreement.
4.6 Preparation of Disclosure Statement.
(a) Prior to the date of this Agreement, the parties
hereto have prepared the Disclosure Statement in a form necessary to
obtain lawful and enforceable acceptances or
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rejections of the Plan of Reorganization from the appropriate impaired
classes of creditors and equity securityholders (the "Presidio
Securityholders") and to implement and to obtain a Final Order
confirming the Plan of Reorganization and to cause the issuance and
distribution of the Exchange Common Stock in accordance with the Plan
of Reorganization to be effected in compliance with all applicable
provisions of the Bankruptcy Code, the 1933 Act, the 1934 Act, and any
other federal or state law relating to the transactions contemplated
by this Agreement.
(b) The solicitation of acceptances or rejections of the
Plan of Reorganization shall be conducted in accordance with the
requirements of Chapter 11 of the Bankruptcy Code (including Sections
1125 and 1145 thereof), the attendant bankruptcy rules of practice,
and those federal or state securities laws which are not preempted or
rendered moot by the applicability of the Bankruptcy Code and
attendant bankruptcy rules of practice.
(c) The parties heretofore have furnished and will
continue to furnish to each other such information with respect to
themselves, their respective associates and Affiliates and their
respective assets and businesses (including such separate financial
information of or relating to each party hereto) as shall be required
for the Disclosure Statement and all additional filings as required by
the Bankruptcy Code, the 1933 Act, the 1934 Act, state securities
laws, the rules and regulations under such laws, and the rules and
regulations of any applicable securities exchanges. All information
that may be hereafter included in the Disclosure Statement and such
additional filings, as applicable, relating to Tom Brown shall be
approved by Tom Brown and all information that may be hereafter
included in the Disclosure Statement and such additional filings, as
applicable, relating to the Presidio Parties shall be approved by
Presidio.
4.7 Disclosure Statement.
(a) Presidio hereby covenants and agrees with Tom Brown
that the Disclosure Statement (at the time it is first mailed to the
Presidio Securityholders and at the Closing) will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein in light of the circumstances under which they are
made, not misleading (provided, however, that this clause shall only
apply to information contained in the Disclosure Statement that was
supplied by Presidio specifically for inclusion therein). If, at any
time prior to the Closing, any event with respect to Presidio, or with
respect to other information supplied by Presidio specifically for
inclusion in the Disclosure Statement occurs and such event is
required by the Bankruptcy Code to be described in an amendment or
supplement to the Disclosure Statement, then Presidio shall promptly
notify Tom Brown of such occurrence and the parties shall cooperate
with each other in the preparation and filing and obtaining Bankruptcy
Court approval of such amendment or supplement, and, after obtaining
Bankruptcy Court approval thereof, its dissemination.
(b) Tom Brown hereby covenants and agrees with Presidio
that the Disclosure Statement (at the time it is first mailed to the
Presidio Securityholders, and at the Closing) will not contain an
untrue statement of a material fact or omit to state a material fact
required
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to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading (provided, however, that this clause shall only apply to
information contained in the Disclosure Statement that was supplied by
Tom Brown specifically for inclusion therein). If, at any time prior
to the Closing, any event with respect to Tom Brown, or with respect
to other information supplied by Tom Brown specifically for inclusion
in the Disclosure Statement occurs and such event is required by the
Bankruptcy Code to be described in an amendment or supplement to the
Disclosure Statement, then Tom Brown shall promptly notify Presidio of
such occurrence and the parties shall cooperate with each other in the
preparation and filing and obtaining Bankruptcy Court approval of such
amendment or supplement, and, after obtaining Bankruptcy Court
approval thereof, its dissemination.
(c) No amendment or supplement to the Disclosure
Statement will be filed or otherwise disseminated to the Presidio
Securityholders without the approval of both Tom Brown and Presidio.
4.8 Solicitation of Presidio Securityholders. Presidio will use
its good faith efforts to cause to be solicited from the Presidio
Securityholders their acceptance of the Plan of Reorganization, and except as
the board of directors of Presidio may otherwise determine appropriate in order
to properly discharge its fiduciary duties, Presidio will recommend acceptance
of the Plan of Reorganization to the Presidio Securityholders; provided,
however, that no solicitation of the Presidio Securityholders with respect to
the Plan of Reorganization shall be made until:
(a) The Bankruptcy Court has entered an order determining
and finding that (i) the Disclosure Statement complies with the
provisions of Section 1125 of the Bankruptcy Code, (ii) the
solicitation of the Presidio Securityholders with respect to their
approval of the Plan of Reorganization may be made by means of the
Disclosure Statement pursuant to Section 1125 of the Bankruptcy Code,
and (iii) each of Tom Brown and Presidio will be afforded the
protection granted by Section 1125(e) of the Bankruptcy Code with
respect to such solicitation; and
(b) The written opinion of Presidio's investment bankers
or financial advisors referred to in Section 5.18 shall have been
reconfirmed and shall not have been withdrawn or revised in any
material respect.
4.9 Cooperation; Notification of Certain Changes. The parties
hereto will cooperate and use their reasonable efforts to (a) obtain (and will
prepare all registrations, filings, applications, requests, and notices
required to obtain) all permits, approvals, and consents of governmental bodies
or third parties which may be necessary to consummate the transactions
contemplated by this Agreement, including but not limited to all filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended from time to time (the "Hart Scott Act"), and the rules and regulations
promulgated thereunder and (b) to cure existing title defects. The parties
hereto will otherwise cooperate and provide each other with such assistance as
may reasonably be required to perform or satisfy all covenants and conditions
required to be performed or satisfied hereunder. Each party will promptly
notify the other parties hereto of any event of which they obtain knowledge
which has or might reasonably be expected to have a material adverse effect on
their respective
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businesses or which, if known on the date of this Agreement, would have been
required to be disclosed pursuant to this Agreement.
4.10 Listing Application. On or before the date of filing of the
Disclosure Statement, Tom Brown will file a listing application with NASDAQ for
the approval of the listing thereon of the Exchange Common Stock.
4.11 Third Party Consents. Promptly after the commencement of a
case under the Bankruptcy Code as contemplated herein, Presidio will use its
reasonable efforts to obtain each Third Party Consent, or if not otherwise
obtained, to file, or cause to be filed, all pleadings, requests, and other
items and information required to be filed with, the Bankruptcy Court (to the
extent applicable), seeking to obtain a Final Order or determination from the
Bankruptcy Court establishing that such Third Party Consent is not applicable
to or necessary in connection with the transactions contemplated by this
Agreement. As used in this Agreement, "Third Party Consent" means any
third-party consents relating to the Oil and Gas Assets that would be required
in respect of the transactions contemplated by this Agreement.
4.12 Agreements of Affiliates. At least thirty (30) days prior to
the Closing Date, Presidio shall cause to be prepared (and updated from time to
time as may be necessary) and delivered to Tom Brown a list identifying all
persons who, at that time, may be deemed to be "affiliates" of Presidio as that
term is used in paragraph (a) of Section 1145 of the Bankruptcy Code and
paragraphs (c) and (d) of Rule 145 under the 1933 Act. Presidio shall use its
reasonable efforts to cause each person who is identified as an affiliate of
Presidio in such list to execute and deliver to Tom Brown, on or prior to the
Closing Date, a written agreement, in the form attached hereto as Exhibit E.
Tom Brown shall be entitled to place legends as specified in such agreements on
the certificates representing any Exchange Common Stock to be distributed to
such persons in the Exchange.
4.13 Amendment to Plan. Without the prior consent of Tom Brown,
which shall not be unreasonably withheld, no Presidio Party shall amend the
terms and provisions of the Plan of Reorganization.
4.14 Costs and Expenses. Except as set forth in Section 9.2(b),
each party to this Agreement will be responsible for and will pay all costs,
fees, and expenses incurred by such party in connection with the preparation,
negotiation, and execution of this Agreement, the Plan of Reorganization, the
Disclosure Statement and all other documents and instruments contemplated
herein, including:
(a) all fees, costs, and expenses of its counsel,
engineers, accountants, financial advisors, and others engaged by such
party; and
(b) all fees, costs and expenses incurred by such party
in connection with filings made by it relating to the transactions
contemplated by this Agreement under the Hart Scott Act, the 1933 Act,
the 1934 Act, the Bankruptcy Code, or any other federal or state laws,
rules, and regulations.
4.15 New D&O Insurance.
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(a) At the Closing, Tom Brown shall take all reasonable
actions necessary to acquire or to cause (which shall include the
payment of the required premium in the amount described in the policy
attached to the letter identified below to the extent not previously
paid) Presidio to acquire for the benefit of each of the Directors and
Officers the policy of directors and officers liability insurance in
the form attached to that certain letter of even date herewith from
Presidio to Tom Brown and identified therein as being provided
pursuant to this Section 4.15 (the "New D&O Insurance"). For the time
period commencing as of the Closing Date and ending as of the sixth
anniversary of the Closing Date, Tom Brown shall take all reasonable
actions required by the terms of the New D&O Insurance policy
necessary to keep in full force and effect the New D&O Insurance.
(b) From and after the Closing neither Tom Brown nor any
Presidio Party shall take any action to modify any provision contained
in the certificate of incorporation or bylaws of any Presidio Party or
any contract or agreement which exculpates, limits, or restricts the
liability of any of the Directors and Officers to any Presidio Party;
any Presidio Securityholder or any other person arising out of or
pertaining to acts or omissions, by such person in his capacity as a
director, officer, employee or agent of a Presidio Party.
(c) On or before the Closing, Presidio shall (i) use its
reasonable efforts to obtain waivers and releases effective as of the
Closing, in form and substance reasonably satisfactory to Tom Brown,
of all rights to indemnity which may exist in favor of any officers or
directors of any of the Presidio Parties (and from any other persons
who may be entitled to indemnity from any of the Presidio Parties)
under the respective charters, by-laws or agreements of any of the
Presidio Parties or under applicable law or (ii) obtain a Final Order
of the Bankruptcy Court which discharges all such obligations of
indemnity.
(d) From and after the Closing, Tom Brown shall use its
best efforts or shall take all actions necessary to cause Presidio to
use its best efforts to give each Director and Officer notice (within
five (5) business days) of the assertion or threatened (in writing)
assertion of any claims, actions, suits, or proceedings that name or
threaten (in writing) to name any Director or Officer as a party or
which relates to acts or omissions by any such person in his capacity
as a director, officer, employee or agent of a Presidio Party.
(e) The provisions of this Section 4.15 are intended to
be for the benefit of, and shall be enforceable by, the parties hereto
and each of the Directors and Officers and their respective heirs and
representatives.
4.16 Information Kept Confidential. Except as otherwise
contemplated in this Agreement, Tom Brown shall hold in strict confidence all
aspects of the transactions contemplated by this Agreement and all information
and data concerning the Oil and Gas Assets which has been obtained from
Presidio in connection with the transactions contemplated by this Agreement in
accordance with the terms and provisions of the Confidentiality Agreement,
which Confidentiality Agreement is hereby ratified and adopted by the parties
hereto and incorporated by reference herein.
4.17 Pre-Closing Action. Presidio and Tom Brown shall use all
reasonable efforts to cause all of the conditions precedent to the consummation
of the transactions contemplated by this
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Agreement applicable to each of them to be met as promptly as possible and to
take all such other actions as may be reasonably necessary to effect the
consummation of the transactions contemplated by this Agreement.
4.18 Public Announcements. Each party hereto shall consult with
the other party hereto prior to any public announcement by such party regarding
the existence of this Agreement, the contents hereof or the transactions
contemplated hereby; provided, however, the foregoing shall not restrict
disclosures by Tom Brown or Presidio made in order to comply with applicable
securities or other laws or made in order to comply with judicial decrees or
orders or existing loan or other agreements binding such party (or its
Affiliates), as determined in such party's discretion.
4.19 Conduct of Presidio's Business Pending Closing. Except as
otherwise contemplated by this Agreement, Presidio covenants and agrees with
Tom Brown that, from the date of this Agreement until the Closing, each
Presidio Party will conduct its business only in the ordinary and usual course
consistent with past practices. Notwithstanding the preceding sentence,
Presidio covenants and agrees with Tom Brown that, except as otherwise
contemplated in this Agreement or the Plan of Reorganization, from the date of
this Agreement until the Closing, without the prior written consent of Tom
Brown:
(a) No Presidio Party will engage in any type of business
in which it is not engaged as of the date of this Agreement;
(b) No Presidio Party will (i) amend its certificate or
articles of incorporation or bylaws, (ii) split, combine, or
reclassify any of its outstanding capital stock or other securities or
make any other changes in its capital structure, (iii) except for
dividends or distributions made to another Presidio Party, declare,
set aside, or pay any dividends or other distributions (whether
payable in cash, property, or securities) with respect to its capital
stock, (iv) issue, sell, or agree to issue or sell any securities,
including its capital stock, any rights, options, or warrants to
acquire its capital stock, or securities convertible into or
exchangeable or exercisable for its capital stock (other than shares
of Presidio Common Stock issued pursuant to the exercise of any
Presidio Options or Warrants), (v) purchase, cancel, retire, redeem,
or otherwise acquire any of its outstanding capital stock or other
securities, (vi) merge or consolidate with, or transfer all or
substantially all of its assets to, another corporation or other
business entity, (vii) liquidate, wind-up, or dissolve (or suffer any
liquidation or dissolution), or (viii) enter into any contract,
agreement, commitment, or arrangement with respect to any of the
foregoing;
(c) Except as set forth in Schedule 4.19, no Presidio
Party will (i) acquire any corporation, partnership, or other business
entity or any interest therein (other than interests in joint
ventures, joint operation or ownership arrangements, or tax
partnerships acquired in the ordinary course of business), (ii) sell,
lease or sublease, transfer, or otherwise dispose of or mortgage,
pledge, or otherwise encumber or grant any rights or interests with
respect to any Oil and Gas Assets that, individually or in the
aggregate, were assigned a value in the Reserve Report of $100,000 or
more or any other assets that, individually or in the aggregate, have
a value at the time of such sale, lease, sublease, transfer, or
disposition of $100,000 or more (except that this clause shall not
apply to the sale of severed oil, gas and other minerals
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produced and sold in the ordinary course of business or the
expenditure of the Presidio Parties' cash and cash items in the
ordinary course of business), (iii) farm-out any Oil and Gas Assets or
interest therein, (iv) sell, transfer, or otherwise dispose of or
mortgage, pledge, or otherwise encumber any securities of any other
person, (v) enter into any agreement requiring a payment or
expenditure thereunder by a Presidio Party in excess of $100,000 and
not terminable by a Presidio Party upon notice of thirty (30) days or
less and without penalty or other obligation, (vi) enter into any
transaction (x) pursuant to which a Presidio Party will make a payment
or incur an expenditure in excess of $100,000 or (y) not in the
ordinary course of business and not contemplated by this Agreement,
(vii) agree with any person to limit or otherwise restrict in any
manner the ability of a Presidio Party to compete or otherwise conduct
its business, or (viii) enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing;
(d) No Presidio Party shall make any payments in respect
of the Debt Obligations; provided, however, that the Presidio Parties
may make interest payments accruing on the Subordinated Gas Indexed
Notes not to exceed $8,000 per quarter;
(e) No Presidio Party will (i) except for loans extended
by another Presidio Party, incur any additional indebtedness for
borrowed money or any other obligation or liability (other than
interest accruing on existing indebtedness and liabilities incurred in
the ordinary course of business and consistent with past practices),
(ii) assume, endorse (other than endorsements of negotiable
instruments in the ordinary course of business), guarantee, or
otherwise become liable or responsible (whether directly,
contingently, or otherwise) for the liabilities or obligations of any
person not a Presidio Party, (iii) make any material loans, advances
or capital contributions to, or investments in any person (other than
loans or advances in the ordinary course of business and consistent
with past practices, advances for business expenses made to officers
and employees of such Presidio Party, short-term investments made
pursuant to customary cash management systems of such Presidio Party
in the ordinary course and consistent with past practices and loans,
advances, capital contributions to, or investments in, another
Presidio Party) or (iv) enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing;
(f) Each Presidio Party will operate, maintain, and
otherwise deal with the Oil and Gas Assets in accordance with good and
prudent oil and gas field practices (including the making of all
appropriate repairs, renewals, and replacements of equipment
associated therewith) and in material compliance with all applicable
oil and gas leases and other contracts or agreements and all
applicable laws, rules, and regulations;
(g) No Presidio Party will pay or incur drilling or other
capital expenditures in excess of $100,000 with respect to any well
(other than in accordance with the expenditures listed in Schedule
4.19 or, under emergency circumstances, expenditures necessary for the
preservation or protection of a Presidio Party's assets or the
preservation or protection of the public safety or health);
(h) No Presidio Party shall voluntarily resign, transfer
or otherwise relinquish any right it has as of the date of this
Agreement, as operator of any of the Oil and Gas Assets;
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(i) No Presidio Party will (i) enter into, or otherwise
become liable or obligated under or pursuant to (x) any employee
benefit, pension, or other plan (whether or nor subject to ERISA), (y)
any stock option, stock purchase, incentive, or deferred compensation
plans or arrangements or fringe benefit plan, or (z) any consulting,
employment, severance, termination, or similar agreement with any
person, except for the Existing Plans, (ii) hire any key employee,
(iii) grant, or otherwise become liable for or obligated to pay, any
severance or termination payments, bonuses, or increases in
compensation or benefits to, or forgive any indebtedness of, any
director, officer, employee, or consultant (other than payments,
bonuses or increases in compensation or benefits or forgiveness of
indebtedness that are required by the terms of the Existing Plans as
in effect as of the date of this Agreement), or (iv) enter into any
contract, agreement, commitment, or arrangement to do any of the
foregoing;
(j) Presidio will keep and maintain accurate consolidated
books, records, and accounts in accordance with GAAP;
(k) Each Presidio Party, as appropriate, will (i) pay all
Taxes, assessments, and other governmental charges imposed upon any of
its assets or with respect to its franchises, business, income, or
assets before any penalty or interest accrues thereon, (ii) pay all
claims (including claims for labor, services, materials, and supplies)
that have become due and payable and which by law have or may become a
Lien upon any of its assets prior to the time when any penalty or fine
shall be incurred with respect thereto or any such Lien shall be
imposed thereon, and (iii) comply in all material respects with the
requirements of all applicable laws, rules, regulations, and orders of
any Governmental Authority (provided, however, that a Presidio Party
may contest the imposition of any Taxes, assessments, and other
governmental charges, any such claim, or the requirements of any
applicable law, rule, regulation, or order if done so in good faith by
appropriate proceedings and if adequate reserves are established in
accordance with GAAP or as may be determined as sufficient by
Presidio's board of directors);
(l) Each Presidio Party will use its reasonable efforts
to maintain in full force and effect the policies or binders of
insurance currently maintained by it and shall promptly notify Tom
Brown if any are not so maintained;
(m) Each Presidio Party will use its reasonable efforts
to preserve intact its assets and business organization and to
preserve the goodwill of those having business relationships with it;
provided, however, that a Presidio Party shall not be required to make
any payments (other than as may be contractually committed and due) or
enter into or amend any contractual arrangements to satisfy the
foregoing obligation; and
(n) Each Presidio Party will at all times preserve and
keep in full force and effect its corporate existence and rights and
franchises material to its performance under this Agreement.
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4.20 No Solicitation.
(a) From and after the date of this Agreement, no
Presidio Party will (and each Presidio Party will use its reasonable
efforts to cause the Presidio Representatives not to), directly or
indirectly, make, solicit, initiate, engage or participate in
discussions or negotiations with or provide information to, any person
(other than Tom Brown or any of its representatives) or enter into any
agreement or agreement in principle, or announce any intention to do
any of the foregoing, with respect to any offer or proposal to acquire
all or any part of the outstanding capital securities of any Presidio
Party or all or any material portion of the assets or business of a
Presidio Party, whether by merger, purchase of assets, tender offer,
exchange offer, business combination, sale of substantial assets, sale
of securities, liquidation, dissolution, or otherwise (an "Alternative
Transaction"), other than the transactions contemplated by this
Agreement.
(b) Promptly following the execution of this Agreement,
each Presidio Party will (and will cause the Presidio Representatives
to) terminate any existing activities, discussions, or negotiations
with third parties (other than Tom Brown) with respect to any possible
Alternative Transaction.
(c) Notwithstanding the provisions of Section 4.20(a) and
Section 4.20(b), (i) a Presidio Party and the Presidio Representatives
may furnish information to and negotiate and have discussions with any
person who has made an unsolicited bona fide proposal in regard to an
Alternative Transaction if the board of directors of Presidio
determines, after consultation with its outside legal counsel, that
the failure to furnish such information to or negotiate or have
discussions with such person conflicts with the proper discharge of
their fiduciary duties and (ii) the board of directors of Presidio
shall not be prohibited from taking and publicly disclosing a position
with respect to an Alternative Transaction if required to do so
pursuant to Rule 14d-9 and Rule 14e-2 under the 1934 Act or from
making such disclosure which, in the judgment of the board of
directors of Presidio, may be required under applicable law. Presidio
will promptly notify Tom Brown in the event of any discussion,
negotiation, proposal or offer of the type referred to above or any
decision to furnish information or take any other action referred to
in this Section 4.20(c).
4.21 Employees. Within sixty (60) days of the date of this
Agreement, Tom Brown shall provide Presidio with a list of the employees of the
Presidio Parties who as of that date, Tom Brown intends not to be employed
after the Closing by either Tom Brown, Presidio, or an Affiliate thereof,
together with the proposed date that each such employee's employment will be
terminated. From and after such date, Tom Brown shall use its reasonable
efforts to provide Presidio with one or more supplements to such list and, at
least thirty (30) days prior to the Closing, Tom Brown shall use its reasonable
efforts to provide Presidio with a final supplement to such list. The
provisions of this Section 4.21 are not intended to create and shall not be
construed as creating any right in favor of any such employee of the Presidio
Parties, including any continuing right of employment on the part of any
employee who is not named on such list or supplement thereto.
4.22 Severance Plan and Agreements. Tom Brown shall take all
actions necessary to cause (which, if necessary, shall include making
additional capital contributions to Presidio consisting of
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cash or shares of Tom Brown Common Stock, as appropriate) Presidio to pay at
the Closing to all employees who are either named in the list or any supplement
thereto to be provided pursuant to Section 4.21 or whose employment is
otherwise terminated at Closing, all amounts which such employees would be due
(at or within thirty (30) days of the time of their termination of employment)
under the Severance Plan and Key Employee Severance Agreements set forth in
Schedule 4.22, including all amendments and modifications thereto
(collectively, the "Severance Plan and Agreements"). From and after the
Closing, Tom Brown shall take all actions necessary to cause (which, if
necessary, shall include making additional capital contributions to Presidio
consisting of cash or shares of Tom Brown Common Stock, as appropriate)
Presidio to assume and make all other payments, and to assume and provide all
benefits, required to be paid or provided to the employees and officers of the
Presidio Parties in accordance with the provisions of the Severance Plan and
Agreements. Tom Brown hereby acknowledges that the obligations under the Key
Employee Severance Agreements set forth in Schedule 4.22 include the obligation
arising under Section 2 thereof to provide the rights and benefits described in
Section 3 thereof to any such employee whose employment is terminated at any
time within two years following the Closing Date. Tom Brown shall take all
actions necessary to cause Presidio to not amend or modify the terms and
provisions of the Severance Plan and Agreements without the prior consent of
the beneficiaries or beneficiary, as applicable, of such Severance Plan and
Agreements. Tom Brown shall take all actions necessary to cause (which, if
necessary, shall include making additional cash capital contributions to
Presidio) Presidio to provide insurance coverage for the time period required
under the Severance Plan and Agreements, under one or more insurance plans
providing substantially comparable benefits to those provided under Presidio's
current insurance plans and at no employee cost, to all employees of Presidio
who are entitled to such benefits under the Severance Plan and Agreements.
Nothing in this Section 4.22 shall be construed to limit the right of any
employee to any benefits under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
4.23 Presidio ESOP. Prior to the Closing, Presidio shall terminate
the Employee Stock Ownership Plan of Presidio Oil Company (the "ESOP"), cause
all current participants in the ESOP to become 100% vested in their accounts
under the ESOP, and file an application for a favorable determination letter
with the Internal Revenue Service that the termination of the ESOP does not
adversely affect the qualification of the ESOP. At the Closing, Presidio shall
cause the ESOP accounts (then consisting of Exchange Common Stock) to be
distributed to the participants and beneficiaries pursuant to the terms of the
ESOP.
4.24 Presidio 401K. Subsequent to the Closing, Tom Brown may cause
Presidio to terminate the Presidio Oil Company 401k Plan (the "401k Plan") or
merge the 401k Plan into another qualified plan of Tom Brown. From and after
the Closing, Tom Brown shall take all actions necessary to cause Presidio to
cause each employee of a Presidio Party who is not employed by Tom Brown or an
Affiliate thereof after the Closing or any such employee who is employed by Tom
Brown or an Affiliate thereof after the Closing but whose employment is
subsequently terminated to receive a distribution of all benefits under the
401k Plan of such person as soon after such termination of employment as is
administratively possible.
4.25 Other Plans. Except to the extent already provided in Section
4.22, at the Closing, Tom Brown shall take all actions necessary to cause
(which, if necessary, shall include making additional cash contributions to
Presidio) Presidio to pay at the Closing to the employees and officers
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of the Presidio Parties all amounts which such employees and officers would be
due (at or within thirty (30) days of the time of their termination of
employment) in accordance with the provisions of the Employee Benefit Plans.
Except to the extent already provided in Sections 4.22, 4.23 and 4.24, from and
after the Closing, Tom Brown shall take all actions necessary to cause (which,
if necessary, shall include making additional cash capital contributions to
Presidio) Presidio to assume and make all vested payments, and provide all
benefits, required to be paid or provided to the employees and officers of the
Presidio Parties in accordance with the provisions of the Employee Benefit
Plans.
4.26 Letters of Credit. At the Closing, Tom Brown shall or shall
cause Presidio to have issued by a commercial bank or banks a substitute letter
of credit for each of the letters of credit set forth in Schedule 4.26 in form
and substance acceptable to each of the beneficiaries of each such letter of
credit.
4.27 Certain Tom Brown Transactions. Except as otherwise
contemplated by this Agreement, Tom Brown covenants and agrees with Presidio
that, from the date of this Agreement until the Closing, Tom Brown and its
Affiliates who are controlled by it will, taken as a whole, remain primarily
engaged in the businesses relating to the exploration and production of oil,
gas and other minerals and the treatment, processing, storage, transportation
and marketing of oil, gas and other minerals. Prior to the Exchange and until
the Closing or termination of this Agreement, Tom Brown shall not and it shall
not allow any Affiliate thereof to directly or indirectly sell, transfer, or
otherwise dispose of (except to an Affiliate) any Presidio Securities
beneficially owned as of the date of this Agreement by Tom Brown or any
Affiliate thereof or any Presidio Securities hereafter acquired by Tom Brown or
any Affiliate thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PRESIDIO
5.1 Disclaimers.
(a) Prior to the execution of this Agreement, Tom Brown
has been afforded the opportunity to inspect the Oil and Gas Assets
and to examine the records of Presidio at Presidio's offices with
respect to the Oil and Gas Assets, and has been afforded access to all
information in Presidio's possession with respect to the Oil and Gas
Assets. TOM BROWN ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN
THIS ARTICLE V, PRESIDIO, ITS OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES AND AGENTS HAVE MADE NO, AND PRESIDIO HEREBY EXPRESSLY
DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION, AS TO A PRESIDIO PARTY'S TITLE TO
THE OIL AND GAS ASSETS, OR AS TO ANY OTHER INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED TO TOM BROWN BY OR ON BEHALF OF
PRESIDIO (INCLUDING THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER
MINERAL RESERVES, THE RECOVERABILITY OF OR THE COST OF RECOVERING ANY
SUCH RESERVES, THE VALUE OF SUCH RESERVES, ANY PRODUCTION PRICING
ASSUMPTIONS, PRESENT OR PAST PRODUCTION RATES,
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COMPLIANCE WITH LEASE TERMS, THE CONDITION OF ANY WELL, AND THE
ABILITY TO SELL OIL OR GAS PRODUCTION AFTER CLOSING).
(b) PRESIDIO EXPRESSLY DISCLAIMS ANY WARRANTY AS TO THE
CONDITION OF ANY PERSONAL PROPERTY, FIXTURES AND ITEMS OF MOVABLE
PROPERTY COMPRISING ANY PART OF THE OIL AND GAS ASSETS INCLUDING (i)
ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii) ANY IMPLIED
OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, (iv) ANY RIGHTS OF TOM BROWN UNDER APPLICABLE STATUTES TO
CLAIM DIMINUTION OF CONSIDERATION, AND (v) ANY CLAIM BY TOM BROWN FOR
DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING
EXPRESSLY UNDERSTOOD BY TOM BROWN THAT THE PERSONAL PROPERTY, FIXTURES
AND ITEMS ARE TO BE ACCEPTED AS IS, WHERE IS, WITH ALL FAULTS, AND IN
THEIR PRESENT CONDITION AND STATE OF REPAIR AND THAT TOM BROWN HAS
MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS TOM BROWN DEEMS
APPROPRIATE.
(c) NOTWITHSTANDING ANY PROVISIONS CONTAINED HEREIN TO
THE CONTRARY, NO REPRESENTATION AND WARRANTY CONTAINED IN THIS ARTICLE
V MAY BE BREACHED BY REASON OF ANY PERMITTED CLAIM.
(d) All information and data set forth in each of the
separately numbered Schedules hereto shall be deemed by this reference
to be set forth in all such other Schedules delivered pursuant to this
Agreement; provided, that the information and data set forth in
Schedule 5.25 shall not be deemed pursuant to this Section 5.1(d) to
be set forth in Schedule 5.12. Except as otherwise provided in this
Section 5.1(d), it is the intent of the parties that once particular
information and data is disclosed in a Schedule hereto, that the same
information and data need not be contained in another Schedule hereto.
(e) Subject to this Section 5.1, and the information and
data disclosed on any Schedule hereto, Presidio hereby makes the
representations and warranties contained in the remaining Sections of
this Article V.
5.2 Existence. Each of Presidio Exploration and Palisade Oil is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado and each of Presidio and Presidio West Virginia
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Each Presidio Party is duly qualified to do
business as a foreign corporation in the state(s) where the character of the
properties owned or leased by such Presidio Party or the nature of its
activities make such qualification necessary. Each of the Presidio Parties has
full corporate power and authority to own its properties and assets and to
carry on its business as now being conducted.
5.3 Authorization and Enforceability. Each Presidio Party has the
corporate power and authority to enter into and, subject to the requisite
approval of the Bankruptcy Court and the Presidio
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Securityholders and the issuance of the Confirmation Order, perform this
Agreement and the transactions contemplated by this Agreement. The execution,
delivery, and performance of this Agreement, and the transactions contemplated
hereby, have been duly and validly authorized by all necessary corporate action
on the part of each Presidio Party except for the requisite approval of the
Presidio Securityholders. This Agreement constitutes the valid and binding
obligation of Presidio enforceable in accordance with its terms.
5.4 No Violations. Subject to the requisite approval of the
Presidio Securityholders and the issuance of the Confirmation Order, the
execution, delivery and performance of this Agreement by each Presidio Party
and the consummation of the transactions contemplated by this Agreement, will
not (a) violate, conflict with or result in a breach of any provision of the
certificates of incorporation or bylaws of any Presidio Party, (b) violate,
conflict with or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation of any Lien upon any of
the assets of any Presidio Party under, any contract, agreement, note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, lease, plan,
instrument or other document ("Contract") binding on any Presidio Party, (c)
violate any judgment, injunction, order, ruling, or decree applicable to any
Presidio Party as a party in interest, or the assets of any Presidio Party, or
(d) violate any law, rule, or regulation applicable to any Presidio Party or
relating to its assets.
5.5 Claims and Litigation. Except for the claims, actions, suits,
or proceedings expressly set forth in the Presidio SEC Documents or in Schedule
5.5, there are no claims, actions, suits, or proceedings pending (including
claims described in Section 510(b) of the Bankruptcy Code and new claims
asserted or new actions arising after the date of this Agreement that form a
part of suits or proceedings set forth in Schedule 5.5), or to the Knowledge of
Presidio, threatened against a Presidio Party.
5.6 Consents and Approvals. No consent, approval, order, or
authorization of, registration, declaration, or filing with, or permit (other
than filings required under the 1933 Act, the 1934 Act, the Hart Scott Act and
filings required by and the approval of the Bankruptcy Court) from any
Governmental Authority is required by or with respect to the Presidio Parties
in connection with the execution and delivery of this Agreement by the Presidio
Parties or the consummation by the Presidio Parties of the transactions
contemplated hereby, except for the approval of the Presidio Securityholders
and those otherwise expressly contemplated herein.
5.7 Presidio SEC Documents. Presidio has made available to Tom
Brown a true and complete copy of the Presidio SEC Documents, which are all the
documents (other than preliminary material) that Presidio was required to file
with the SEC since January 1, 1995. As of their respective dates, the Presidio
SEC Documents complied in all material respects with the requirements of the
1933 Act or the 1934 Act, as the case may be, and the rules and regulations of
the SEC promulgated thereunder applicable to such Presidio SEC Documents, and
none of the Presidio SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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5.8 Taxes.
(a) Each Presidio Party and any affiliated, combined, or
unitary group of which any such corporation is or was a member
("Presidio Tax Affiliates") has timely filed all Tax Returns that are
required to be filed by it. All such Tax Returns were correct and
complete in all material respects.
(b) Each Presidio Party and each Presidio Tax Affiliate
has timely paid all Taxes that are due and payable (except for Taxes
that are being contested in good faith by appropriate proceedings as
of the date of this Agreement and for which reserves, which are
adequate under GAAP, have been established in the Presidio Financial
Statements).
(c) Each Presidio Party and each Presidio Tax Affiliate
has complied in all material respects with all applicable laws, rules,
and regulations relating to the withholding and payment of Taxes and
has in all material respects timely withheld and paid to the proper
governmental authorities all amounts required to have been withheld
and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, or stockholder.
(d) Except as set forth in Schedule 5.8, (i) no audits or
other administrative or court proceedings are currently pending
against a Presidio Party with regard to any Taxes for which a Presidio
Party could be liable, (ii) no dispute or claim concerning any Taxes
for which a Presidio Party could be liable either (A) has been claimed
or raised by any taxing authority in writing or (B) is known by the
directors and officers (and employees responsible for Tax matters) of
a Presidio Party, (iii) with respect to each Presidio Party, there are
no pending requests for rulings from any taxing authority with respect
to any Taxes, (iv) with respect to each Presidio Party, there are no
proposed reassessments by any taxing authority of any of the assets of
a Presidio Party, (v) with respect to each Presidio Party, there are
no agreements in effect to extend the time to file any material Tax
Return or to extend or waive the period of limitations for the
assessment or collection of any Taxes for which a Presidio Party may
be liable, and (vi) to the Knowledge of each Presidio Party, no claim
has been made by any taxing authority in a jurisdiction where a
Presidio Party does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction.
(e) Except as set forth in Schedule 5.8, none of the
Presidio Parties has made any payments, is obligated to make any
payments or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G.
(f) Each of the Presidio Parties has disclosed on its
federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662.
(g) No Presidio Party (i) is a party to any Tax
allocation or sharing agreement with any member of an Affiliated Group
filing a consolidated federal income Tax Return with such Presidio
Party, (ii) has been a member of an Affiliated Group filing a
consolidated
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federal income Tax Return other than the group of which Presidio is
the parent or (iii) has liability for the federal income taxes of any
Person under Treas. Reg. Section 1.1502-6, as a transferee or
successor, by contract, or otherwise.
(h) Prior to the Closing, no material election with
respect to future Taxes will be made after the date of this Agreement
without the written consent of Tom Brown.
(i) The Presidio Parties have not filed a consent
pursuant to the collapsible corporation provisions of Section 341(f)
of the Code (or any corresponding provisions of state, local, or
foreign income tax law) or agreed to have Section 341(f)(2) of the
Code (or any corresponding provision of state, local, or foreign
income tax law) apply to any disposition of any asset owned by it.
(j) None of the Major Assets is property that the
Presidio Parties are required to treat as being owned by any other
person pursuant to the "safe harbor lease" provisions of former
Section 168(f)(8) of the Code.
(k) None of the Major Assets directly or indirectly
secures any debt the interest on which is tax-exempt under Section
103(a) of the Code.
(l) None of the Major Assets is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(m) No Presidio Party has agreed to make nor to the
Knowledge of any of the Presidio Parties is it required to make any
adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
(n) The Presidio Parties have not participated in and
will not participate in any international boycott within the meaning
of Section 999 of the Code.
(o) The Presidio Parties are not and have not been a
United States real property holding corporation as defined in Section
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(p) The Presidio Parties do not have and have not had a
permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and such
foreign country.
(q) The Presidio Parties have not made or will not make a
consent dividend election under Section 565 of the Code.
5.9 Employee Benefit Plans.
(a) Notwithstanding any other provision of this Agreement
to the contrary, this Section 5.9 contains the exclusive
representations and warranties of Presidio with respect to matters
governed by ERISA. Except for the Severance Plan and Agreements,
Schedule 5.9
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sets forth a complete and accurate list of all "employee benefit
plans," as defined in Section 3(3) of ERISA, and any other material
employee compensation or benefit arrangement, including severance pay,
sick leave, vacation pay, salary continuation for disability,
consulting, or other compensation agreements, retirement, supplemental
executive retirement agreements, deferred compensation, bonus,
long-term incentive, stock option, stock purchase, hospitalization,
medical insurance, dental insurance, life insurance, and educational
assistance programs maintained by a Presidio Party or to which a
Presidio Party is obligated to contribute, or with respect to which
any Presidio Party has any liability, and each employment related
agreement under which a Presidio Party is obligated (the "Employee
Benefit Plans"). Except for the Employee Benefit Plans and the
Severance Plan and Agreements, no Presidio Party maintains or has any
obligation under any other compensation based or related arrangement.
Copies of each Employee Benefit Plan have been furnished to Tom Brown.
(b) There is no material violation of ERISA with respect
to any of the Employee Benefit Plans.
(c) The Employee Benefit Plans have been maintained, in
all material respects, in accordance with their terms and with all
applicable federal and state law, each Employee Benefit Plan intended
to be qualified under Section 401(a) of the Code is so qualified, and
no Presidio Party nor any "party in interest" or "disqualified person"
with respect to the Employee Benefit Plans has engaged in any
"prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA for which there is no exemption.
(d) No Employee Benefit Plan is subject to Title IV of
ERISA and no Presidio Party has any obligation, including any
contingent liability, to contribute to a "multiemployer plan" within
the meaning of Section 3(37) of ERISA.
(e) Except as set forth in Schedule 5.9, no Presidio
Party has any liability under any group health plan with respect to
any current or former employees beyond their termination of
employment, other than as required by Section 4980B of the Code or
pursuant to the Severance Plan and Agreements.
5.10 Financial Statements. The Presidio Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present in accordance with applicable requirements of GAAP
(subject, in the case of the unaudited statements, to normal, recurring
adjustments, none or which will be material) the consolidated financial
position of Presidio and its consolidated subsidiaries as of their respective
dates and the consolidated results of operations and the consolidated cash
flows of Presidio and its consolidated subsidiaries for the periods presented
therein.
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5.11 Capital Structure.
(a) As of the date of this Agreement, the authorized
capital stock of each Presidio Party is as set forth in Schedule 5.11.
(b) As of the close of business on June 30, 1996, there
were issued and outstanding (i) 25,318,085 shares of Presidio Class A
Common Stock and 3,216,585 shares of Presidio Class B Common Stock and
(ii) options and warrants relating to 1,268,000 shares of Presidio
Class A Common Stock and 1,025,981 shares of Presidio Class B Common
Stock as set forth in Schedule 5.11 (the "Presidio Options or
Warrants"). Except as set forth in this Section 5.11(b) or as
otherwise disclosed in the Presidio SEC Documents, there are
outstanding as of the date of this Agreement (i) no shares of capital
stock or other equity securities of Presidio, (ii) no securities of
Presidio or any other person convertible into or exchangeable or
exercisable for shares of capital stock or other equity securities of
Presidio, and (iii) no subscriptions, options, warrants, calls, rights
(including preemptive rights), commitments, understandings, or
agreements to which Presidio is a party or by which it is bound
obligating Presidio to issue, deliver, sell, purchase, redeem, or
acquire shares of capital stock or other equity securities of Presidio
(or securities convertible into or exchangeable or exercisable for
shares of capital stock or other equity securities of Presidio) or
obligating Presidio to grant, extend, or enter into any such
subscription, option, warrant, call, right, commitment, understanding,
or agreement.
(c) All outstanding shares of Presidio Common Stock are
validly issued, fully paid, and nonassessable and not subject to any
preemptive right.
(d) Presidio directly or indirectly owns all outstanding
shares of capital stock and other equity securities of each of the
other Presidio Parties, free and clear of all liens, claims, and
options of any nature (except for Permitted Encumbrances set forth in
clause (m) of the definition thereof). Except as set forth in
Schedule 5.11, there are outstanding as of the date of this Agreement
(i) no securities of a Presidio Party, or any other person convertible
into or exchangeable or exercisable for shares of capital stock or
other equity securities of a Presidio Party and (ii) no subscriptions,
options, warrants, calls, rights (including preemptive rights),
commitments, understandings, or agreements to which either a Presidio
Party is a party or by which it is bound obligating a Presidio Party
to issue, deliver, sell, purchase, redeem, or acquire shares of
capital stock or other equity securities of a Presidio Party or
securities convertible into or exchangeable or exercisable for shares
of capital stock or other equity securities of a Presidio Party or
obligating a Presidio Party to grant, extend, or enter into any such
subscription, option, warrant, call, right, commitment, understanding,
or agreement.
5.12 No Undisclosed Liabilities. No Presidio Party has any direct
or indirect liabilities, indebtedness, obligations, expenses, claims (including
claims as defined in Section 101(5) of the Bankruptcy Code, and disputed
claims, obligations or liens as defined in Section 101(37) of the Bankruptcy
Code), deficiencies, guarantees or endorsements of or by any person (other than
endorsements of notes, bills and checks presented to banks for collection or
deposit in the ordinary course of business) of any kind whatsoever, whether
accrued, contingent, absolute, determined,
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determinable, or otherwise ("Liabilities"), other than (a) Liabilities
reflected in the Presidio Financial Statements in accordance with GAAP or
disclosed in the Presidio SEC Documents, (b) Liabilities incurred in the
ordinary course of business subsequent to December 31, 1995, (c) Liabilities
arising under or otherwise disclosed in this Agreement (except for disclosures
made pursuant to Section 5.25), (d) Liabilities set forth in Schedule 5.12, (e)
Liabilities that have been reimbursed or paid under insurance coverage
maintained by the Presidio Parties or any other person or as to which an
insurance company or other insuring entity has acknowledged its obligation to
reimburse or pay such Liabilities, and (f) Liabilities arising from any
agreement, fact, event, or action that is the subject matter of any other
representation and warranty contained in this Article V (other than Section
5.25).
5.13 Absence of Certain Changes or Events. Except as otherwise set
forth in either Schedule 5.13, or the Presidio SEC Documents, or as
contemplated by this Agreement, since December 31, 1995, the Presidio Parties
have used all reasonable efforts to preserve and retain the business,
employees, properties, suppliers, and goodwill of the Presidio Parties and have
operated their respective operations and conducted business generally only in
the ordinary and usual course consistent with past practice, and no Presidio
Party has done any of the following:
(a) Discharged or satisfied any Lien or paid any
obligation or liability, absolute or contingent, other than current
liabilities incurred and paid in the ordinary course of business and
consistent with past practices;
(b) Except for transactions between the Presidio Parties,
paid or declared any dividends or distributions, purchased, redeemed,
acquired, or retired any indebtedness, stock, or other securities from
its stockholders or other securityholders, made any loans or advances
or guaranteed any loans or advances to any person, or otherwise
incurred any liabilities (other than current liabilities incurred in
the ordinary course of business and consistent with past practices);
(c) Except for Permitted Encumbrances and Permitted
Claims, suffered or permitted any Lien to arise or be granted or
created against or upon any of its assets;
(d) Cancelled, waived, or released any rights or claims
against, or indebtedness owed by, third parties;
(e) Amended its certificate or articles of incorporation
or by-laws;
(f) Made or permitted any amendment, supplement,
modification, or termination of any material agreement;
(g) Paid or made any agreement to pay any bonuses,
severance or termination payment to any employee or consultant;
(h) (i) Sold, leased or subleased, transferred, or
otherwise disposed of or mortgaged, pledged, or otherwise encumbered
or granted any rights or interests with respect to any Oil and Gas
Assets that, individually or in the aggregate, were assigned a value
in the
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Reserve Report of $100,000 or more or any other assets that,
individually or in the aggregate, have a value at the time of such
sale, lease, sublease, transfer, or disposition of $100,000 or more
(except that this clause shall not apply to the sale of severed oil,
gas and other minerals produced and sold in the ordinary course of
business or the expenditure of the Presidio Parties' cash and cash
items in the ordinary course of business), (ii) farmed-out any Oil and
Gas Assets or interest therein, (iii) sold, transferred, or otherwise
disposed of or mortgaged, pledged, or otherwise encumbered any
securities of any other person, (iv) made any material loans,
advances, or capital contributions to, or investments in, any person
(other than loans or advances in the ordinary course of business and
consistent with past practices or loans, advances or capital
contributions to, or investments in, another Presidio Party), (v)
entered into any agreement requiring a payment or expenditure
thereunder by a Presidio Party in excess of $100,000 and not
terminable upon notice of thirty (30) days or less and without penalty
or other obligation (other than agreements entered into in the
ordinary course of business and consistent with past practices), (vi)
entered into any transaction (x) pursuant to which a Presidio Party
will make a payment or incur an expenditure in excess of $100,000 or
(y) which is not in the ordinary course of business and not
contemplated by this Agreement, (vii) other than areas of mutual
interest commonly set forth in operating agreements, agreed with any
person to limit or otherwise restrict in any manner the ability of a
Presidio Party to compete or otherwise conduct its business, or (viii)
entered into any contract, agreement, commitment, or arrangement with
respect to any of the foregoing;
(i) Made any investment in or contribution, payment, or
advance to any person (other than investments, contributions,
payments, or advances made in the ordinary course of business and
consistent with past practices);
(j) (i) entered into or amended any material employment,
compensation or severance agreements, (ii) changed or established any
new bonuses, (iii) increased the level of compensation or benefits,
including under any Employee Benefit Plans, of any officer, director,
or other executive personnel or any consultant, (iv) established,
entered into or amended in any material respect any pension, employee
benefit or health plans or any other plans, policies, programs,
practices, or arrangements relating to employee benefits or
compensation other than to maintain compliance with any applicable law
or regulation or (v) paid any bonuses to any officer, director, or
other executive personnel or any consultant; provided, however,
Presidio shall terminate its Employee Stock Ownership Plan as provided
in Section 4.23; or
(k) Made any change in any of the accounting principles
followed by it or the method of applying such principles other than in
accordance with GAAP.
5.14 Governmental Regulation. No Presidio Party is subject to
regulation under the Public Utility Holding Company Act of 1935 or the
Investment Company Act of 1940.
5.15 Labor Matters.
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(a) No employees of a Presidio Party are represented by
any labor organization. To the Knowledge of Presidio, there are no
organizing activities involving a Presidio Party pending with any
labor organization or group of employees of a Presidio Party.
(b) Except as set forth in Schedule 5.15, each Presidio
Party is in material compliance with all laws, rules, regulations, and
orders relating to the employment of labor, including all such laws,
rules, regulations, and orders relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation, and the collection and payment of withholding or Social
Security Taxes and similar Taxes.
5.16 Accounts Receivable. Except as otherwise set forth in
Schedule 5.16, all of the accounts, notes, and loans receivable that have been
recorded on the Presidio Financial Statements are bona fide and represent
accounts, notes, and loans receivable validly due for goods sold or services
rendered and are reasonably expected to be collected in full within ninety (90)
days after the applicable invoice or note maturity date (other than to the
extent of the allowance or reserve for uncollectible accounts, notes, and loan
receivables contained in the Presidio Financial Statements). Except for
Permitted Encumbrances set forth in clause (m) of the definition thereof, all
of such accounts, notes, and loans receivable are free and clear of any and all
Liens. None of the obligors on such accounts, notes, or loans receivable has
given notice to a Presidio Party that it will or may refuse to pay the full
amount or any portion thereof.
5.17 Intangible Property. There are no material trademarks, trade
names, patents, service marks, brand marks, brand names, computer programs,
databases, industrial designs, copyrights, or other intangible property that
are necessary for the operation, or continued operation, of the business of a
Presidio Party or the ownership and operation, or continued ownership and
operation, of any of their assets, for which such Presidio Party does not hold
valid and continuing authority and consent in connection with the use thereof.
5.18 Presidio's Title. The Presidio Parties have Defensible Title
to the Major Assets.
5.19 Reserve Report. The historical production and operating cost
data in respect of the Wells provided in the lease operating statements and
historical oil and gas price information provided in the data room were true
and correct in all material respects. To the Knowledge of Presidio, the
Reserve Report was prepared in accordance with generally accepted engineering
and evaluation principles and is true and correct as of such date in all
respects to the extent applicable to the business of the Presidio Parties.
Except as set forth in Schedule 5.19, to the Knowledge of Presidio, no fact or
circumstance has occurred since the date of the Reserve Report that results in
any material adverse change, determined in the aggregate and after
consideration of all favorable changes, in the reserves of Presidio as set
forth in the Reserve Report, other than changes attributable to normal
depletion by subsequent production, general economic conditions in the oil and
gas industry or subsequent drilling, reworking or recompletion activities.
Except as set forth in Schedule 5.19, in all respects, the net revenue
interests and the working interests of the Presidio Parties shown on Exhibit B
hereto are the same net revenue interests and working interests used in the
preparation of the Reserve Report, and the information contained in Exhibit B
regarding payout and similar events that cause adjustments to said net revenue
interests and working interests is the information used in the preparation of
the Reserve Report. OTHER THAN AS EXPRESSLY SET
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FORTH ABOVE IN THIS SECTION 5.19, PRESIDIO MAKES NO WARRANTY AND HEREBY
DISCLAIMS ANY WARRANTY THAT THE RESERVE ESTIMATES, CASH FLOW ESTIMATES, PRICE
ESTIMATES, OR PRODUCTION OR FLOW RATE ESTIMATES CONTAINED IN THE RESERVE REPORT
OR IN ANY SUPPLEMENT THERETO OR UPDATE THEREOF ARE IN ANY WAY COMPLETE,
ACCURATE OR NOT MISLEADING, THE SAME BEING PREDICTIONS AS TO FUTURE EVENTS
WHICH ARE INHERENTLY SUBJECT TO INCOMPLETENESS AND INACCURACY.
5.20 Oil and Gas Operations. Except as otherwise set forth in
Schedule 5.20:
(a) None of the Wells has been overproduced such that it
is subject or liable to being shut-in or to any other overproduction
penalty;
(b) There have been no changes proposed in the production
allowables for any Wells;
(c) All Wells have been drilled and (if completed)
completed, operated, and produced in accordance with good oil and gas
field practices and in compliance in all material respects with
applicable oil and gas leases and applicable laws, rules, and
regulations except where permit applications or requests for
exceptions are pending;
(d) Proceeds from the sale of oil, gas and other minerals
produced from the Oil and Gas Assets are being received by the
applicable Presidio Party in a timely manner and are not being held in
suspense for any reason, except for (i) amounts held in suspense as of
the date of this Agreement that individually or in the aggregate are
not in excess of $100,000, (ii) amounts held in suspense in the
ordinary course of business after the date of this Agreement, and
(iii) amounts held in suspense after the date of this Agreement
because of the occurrence of a Bankruptcy Event or because of concerns
regarding the financial condition of a Presidio Party;
(e) Except as may be required under any "non-consent"
penalty, none of the Leases or Wells is subject to any production
payment or prepayment arrangement arising under any contract for the
purchase or sale of oil, gas or other minerals to deliver, or to
suffer the delivery of, any oil, gas or other minerals at some future
time without then or thereafter receiving full payment therefor;
(f) No person has any call upon, option to purchase or
similar right to obtain oil, gas or other hydrocarbons production from
the Oil and Gas Assets other than rights contained in existing
production sales contracts, call contracts, farmouts, assignments or
similar contracts;
(g) None of the Presidio Parties are obligated to deliver
a material quantity of gas to any pipeline or other party as make-up
for any net under-deliveries of gas from the Oil and Gas Assets for
transportation, nor is any Presidio Party liable for any material
scheduling or imbalance penalties or charges imposed by any pipeline
or other party for transportation of gas produced from any of the Oil
and Gas Assets;
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(h) Subject to Permitted Encumbrances, each of the
Presidio Parties has the necessary easements and rights-of-way to
install, maintain, and operate the gathering systems that are owned by
such Presidio Party as of the date of this Agreement;
(i) As of June 30, 1996, none of the Presidio Parties is
obligated to deliver any quantity of gas or make any payment by virtue
of any common law, statutory or contractual balancing arrangement with
respect to the Oil and Gas Assets; and
(j) Except for monies properly held in suspense, paid
into escrow, or paid to a Governmental Authority in accordance with
applicable laws, all royalties, shut-in royalties and similar payments
payable in connection with the Oil and Gas Assets have been timely
paid and in the correct amount. All delay rental payments payable in
connection with the Leases have been timely paid and in the correct
amount, except to the extent that a Presidio Party has determined, in
the ordinary course of business, not to make such payment.
5.21 Environmental Matters. Notwithstanding any other provision of
this Agreement to the contrary, this Section 5.21 contains the exclusive
representations and warranties of Presidio with respect to "Environmental
Matters." Except as set forth in Schedule 5.21:
(a) Each Presidio Party has conducted its business and
operated its assets, and is conducting its business and operating its
assets, in material compliance with all applicable Environmental Laws;
(b) To the Knowledge of Presidio, no Presidio Party and
none of the operations or assets of any Presidio Party are the subject
of any pending investigation or inquiry by any governmental authority
evaluating whether any material Environmental Response Action is
needed to respond to a release of any Environmental Material or to the
improper storage, generation, transportation, treatment, or disposal
of any Environmental Material;
(c) No Presidio Party has filed any notice under federal,
state, or local law indicating that a Presidio Party is responsible
for the improper release into the environment or the improper storage,
generation, transportation, treatment, or disposal of any
Environmental Material;
(d) No Presidio Party has received any claim, complaint,
notice, inquiry, or request for information, which remains unresolved,
with respect to any alleged violation of any applicable Environmental
Law or regarding potential liability under any applicable
Environmental Law or under any common law theories relating to
operations or conditions of any facilities or property owned, leased,
or operated by a Presidio Party;
(e) To the Knowledge of Presidio, no property now or
previously owned, leased, or operated by a Presidio Party is listed on
the National Priorities List pursuant to CERCLA or on the CERCLIS or
on any other similar federal or state list as a site requiring an
Environmental Response Action;
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(f) To the Knowledge of Presidio, there are no sites,
locations, or operations at which a Presidio Party is now required to
undertake any material Environmental Response Action under any
applicable Environmental Law;
(g) To the Knowledge of Presidio, all underground and
aboveground storage tanks and solid waste disposal facilities owned or
operated by a Presidio Party are used and operated in material
compliance with applicable Environmental Laws;
(h) To the Knowledge of Presidio, there are no existing
financial assurances given by any Presidio Party under any
Environmental Law that would require monetary funding by a Presidio
Party after the date of Closing; and
(i) To the Knowledge of Presidio, there are no claims,
complaints, notices, inquiries, requests for information, or
Environmental Response Actions for which the Presidio Parties may be
responsible that relate to properties, assets, or entities previously
owned by the Presidio Parties.
5.22 Brokers. Except as set forth in Schedule 5.22, no broker,
finder, investment banker, or other similar person is or will be, in connection
with the transactions contemplated by this Agreement, entitled to any
brokerage, finder's, or other similar fee or compensation based on any
arrangement or agreement made by or on behalf of a Presidio Party.
5.23 Compliance with Law; Governmental Authorizations. Except as
set forth in Schedule 5.23, the Presidio Parties are not in violation of any
order, injunction, judgment, ruling, law, or regulation of any Governmental
Authority applicable to the property or business of the Presidio Parties. The
licenses, permits, and other governmental authorizations held by the Presidio
Parties are valid and sufficient for the conduct of the Presidio Parties'
businesses as currently conducted.
5.24 Insurance. Schedule 5.24 lists all material insurance
policies covering the Oil and Gas Assets, employees and operations of the
Presidio Parties as of the date of this Agreement. Such policies are in full
force and effect and except for the bankruptcy proceeding contemplated herein,
to the Knowledge of Presidio, as of the date of this Agreement, there does not
exist any event that, with the giving of notice or the lapse of time, or both,
would constitute a default by a Presidio Party under any such policies.
5.25 Contracts, Agreements, Commitments and Other Matters.
(a) Schedule 5.25 is a true, correct, and complete list
of all of the following described items (whether written or oral),
including all amendments thereto, existing as of the date of this
Agreement to which any Presidio Party is a party ("Material
Contracts"):
(i) any note, agreement, mortgage, indenture,
security agreement, and other instruments relating to the
borrowing of money or evidence of credit for the deferred
purchase price of property, or the direct or indirect
guarantee by a Presidio Party of any such indebtedness or
deferred purchase price in excess of $50,000, in each case
other than the Bank Obligations and the Debt Obligations;
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(ii) any lease of real property and material
personal property providing for annual payments by a Presidio
Party under any such lease or group of related leases in
excess of $25,000, other than the Oil and Gas Assets;
(iii) any partnership agreement requiring a
Presidio Party to make capital contributions or expenditures
at an annual rate in excess of $100,000;
(iv) any management, employment, and consulting
agreement or other contract for personal services that is not
terminable on not more than one month's notice without
penalty, in each case other than the Severance Plan and
Agreements;
(v) any agreement providing for severance pay,
collective bargaining agreements, labor contracts, or labor or
personnel policies, in each case other than the Employee
Benefit Plans and the Severance Plan and Agreements;
(vi) any surety, performance and maintenance bond
in excess of $50,000;
(vii) any agreement or commitment requiring a
Presidio Party to make capital expenditures in excess of
$100,000 for any single project, other than customary
operating agreements;
(viii) any plan, contract, or arrangement providing
for bonuses, pensions, deferred compensation, retirement plan
payments, profit sharing, incentive pay, or for any other
employee benefit plan, in each case other than the Employee
Benefit Plans and the Severance Plan and Agreements;
(ix) other than as set forth in Schedule 5.22, any
brokerage or finder's agreement obligating a Presidio Party to
make a payment thereunder in excess of $50,000;
(x) any noncompetition agreement (other than
areas of mutual interest commonly set forth in operating
agreements) that restricts the right of any Presidio Party to
engage in any place in any line of business;
(xi) any contract, commitment, or agreement
between any of the Presidio Parties or between any Presidio
Party and any Affiliate thereof involving a payment thereunder
in excess of $100,000, in each case other than the Bank
Obligations, the Debt Obligations, the Employee Benefit Plans
and Severance Plan and Agreements;
(xii) any contract (x) for the sale of oil or other
liquid hydrocarbons produced or to be produced from the Oil
and Gas Assets that is not terminable by a Presidio Party
thereto or its respective successor without penalty on no more
than ninety (90) days' notice or (y) for the sale of gas
produced or to be produced from the Oil and Gas Assets that
has a term exceeding six (6) months;
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(xiii) any advance payment agreement or any oil and
gas balancing agreement, or any other similar agreements,
under which a Presidio Party has a net obligation, as of the
most recent date available, which shall be no more than ninety
(90) days prior to the date of this Agreement, in excess of
$50,000 in cash or market value in oil or gas;
(xiv) other than the Bank Obligations and the Debt
Obligations, any contract or agreement relating to the Oil and
Gas Assets under which a Presidio Party has outstanding
indebtedness, obligations or liability for borrowed money, or
liability for the deferred purchase price of property,
excluding normal trade payables due in less than ninety (90)
days, or has the obligation to incur any such indebtedness,
obligation or liability;
(xv) any contract, commitment, or agreement that
involves commodity or interest rate swaps, floors, caps,
collars, futures, options, or other similar transactions; and
(xvi) any contract, commitment or agreement that
involves the disposition of any assets of any Presidio Party
having a value of $50,000 or more not entered into in the
ordinary course of business consistent with past practice.
(b) Presidio has provided Tom Brown with access to true,
correct and complete copies of all written Material Contracts and has
provided Tom Brown with accurate descriptions of all oral Material
Contracts.
(c) Except with respect to past due accounts payable or
outstanding indebtedness to the suppliers disclosed in Schedule 5.25
and as such may be affected by the Reorganization Cases, to the
Knowledge of Presidio, as of the date of this Agreement, the Presidio
Parties' relationships are generally satisfactory with their
respective suppliers who are material to the conducting of their
respective businesses.
(d) Other than as set forth in Schedule 5.25, as of the
date of this Agreement, the Presidio Parties do not have outstanding
any powers of attorney with any person who is not as of the date of
this Agreement an employee of a Presidio Party, including powers of
attorney with respect to representation before Governmental Agencies,
customers, agents, and brokers or given in connection with
qualification to conduct business in any jurisdiction.
(e) Except as set forth in Schedule 5.25 and as such may
be affected by the Reorganization Cases, each of the Material
Contracts to which a Presidio Party is a signatory thereto has been
duly executed by the applicable Presidio Party thereto and is in full
force and effect and to the Knowledge of Presidio, as of the date of
this Agreement, except in respect of the Bank Obligations and the Debt
Obligations, no Presidio Party is in breach of any such Material
Contract.
5.26 Fairness Opinion. Presidio has received a written opinion
from Jefferies & Company, Inc., a financial advisor to Presidio, to the effect
that the Exchange Consideration to be received
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pursuant to the Plan of Reorganization is fair to the Presidio Securityholders,
in the aggregate, from a financial point of view and as of the date of this
Agreement such opinion has not been withdrawn, revoked, or modified.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TOM BROWN
Tom Brown represents and warrants to Presidio the following:
6.1 Existence. Tom Brown is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified to do business as a foreign corporation in the states where the
properties owned or leased by it or the nature of its activities make such
qualification necessary.
6.2 Authorization and Enforceability. Tom Brown has the
corporate power to enter into and perform this Agreement and the transactions
contemplated by this Agreement, including the necessary corporate power
regarding the issuance and payment of the Exchange Consideration as
contemplated herein. The execution, delivery and performance of this
Agreement, and the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Tom Brown. This
Agreement constitutes the valid and binding obligations of Tom Brown,
enforceable in accordance with its terms.
6.3 No Violations. The execution, delivery and performance of
this Agreement by Tom Brown, and the transactions contemplated by this
Agreement, will not violate (a) any provision of the certificate of
incorporation or bylaws of Tom Brown, (b) any material agreement or instrument
to which Tom Brown is a party or by which Tom Brown or any of its properties
are bound, (c) any judgment, order, ruling, or decree applicable to Tom Brown
as a party in interest, or (d) any law, rule, or regulation applicable to Tom
Brown.
6.4 Consents and Approvals. No consent, approval, order, or
authorization of, registration, declaration, or filing with, or permit (other
than any filings required under the 1933 Act, the 1934 Act or the Hart Scott
Act) from any Governmental Authority is required other than Bankruptcy Court
approval by or with respect to Tom Brown in connection with the execution and
delivery of this Agreement by Tom Brown or the consummation by Tom Brown of the
transactions contemplated hereby, except for those expressly contemplated
herein.
6.5 Tom Brown SEC Documents. Tom Brown has made available to
Presidio a true and complete copy of the Tom Brown SEC Documents, which are all
the documents (other than preliminary material) that Tom Brown was required to
file with the SEC since January 1, 1995. As of their respective dates, the Tom
Brown SEC Documents complied in all material respects with the requirements of
the 1933 Act or the 1934 Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Tom Brown SEC Documents,
and none of the Tom Brown SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
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6.6 Financial Statements. The Tom Brown Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present in accordance with applicable requirements of GAAP
(subject, in the case of the unaudited statements, to normal, recurring
adjustments, none of which will be material) the consolidated financial
position of Tom Brown and its consolidated subsidiaries as of their respective
dates and the consolidated results of operations and the consolidated cash
flows of Tom Brown and its consolidated subsidiaries for the periods presented
therein.
6.7 Capital Structure.
(a) The authorized capital stock of Tom Brown is as set
forth in Schedule 6.7.
(b) At the close of business on June 30, 1996, (i) there
were issued and outstanding 21,124,694 shares of Tom Brown Common
Stock and (ii) no shares of Tom Brown Common Stock were held by Tom
Brown as treasury stock. Except as set forth in this Section 6.7(b)
or as otherwise disclosed in the Tom Brown SEC Documents or set forth
in Schedule 6.7, and except for 1,000,000 issued and outstanding
shares of preferred stock of Tom Brown and options to acquire shares
of common stock of Tom Brown issued to officers, directors and
employees of Tom Brown or its subsidiaries (covering not more than
1,924,800 shares of Tom Brown Common Stock), there are outstanding as
of the date of this Agreement (i) no shares of capital stock or other
equity securities of Tom Brown, (ii) no securities of Tom Brown or any
other person convertible into or exchangeable or exercisable for
shares of capital stock or other equity securities of Tom Brown, and
(iii) no subscriptions, options, warrants, calls, or rights (including
preemptive rights, commitments, understandings, or agreements) to
which Tom Brown is a party or by which it is bound obligating Tom
Brown to issue, deliver, sell, purchase, redeem, or acquire shares of
capital stock or other equity securities of Tom Brown (or securities
convertible into or exchangeable or exercisable for shares of capital
stock or other equity securities of Tom Brown) or obligating Tom Brown
to grant, extend, or enter into any such subscription, option,
warrant, call, right, commitment, understanding, or agreement.
(c) All outstanding shares of Tom Brown capital stock
are, and (when issued) the Exchange Common Stock will be, validly
issued, fully paid, and nonassessable and not subject to any
preemptive right.
(d) As of the date of this Agreement, there is no
stockholder agreement, voting trust, or other agreement or
understanding to which Tom Brown is a party or by which it is bound
relating to the voting of any shares of the capital stock of Tom Brown
except as set forth in Schedule 6.7.
6.8 Claims and Litigation. Except as set forth in the Tom Brown
SEC Documents or in Schedule 6.8, there is no suit, action, claim, or inquiry
by any person or entity or by any administrative agency or governmental body
and no legal, administrative or arbitration proceeding pending or, to Tom
Brown's knowledge, threatened against Tom Brown or any affiliate of Tom
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Brown which has or will materially affect Tom Brown's ability to consummate the
transactions contemplated by this Agreement.
6.9 Financing. Tom Brown has, or has obtained commitments to
obtain, funds or other consideration, as required, sufficient to pay the Cash
Consideration in accordance with this Agreement. True and complete copies of
such commitments have been furnished to Presidio.
ARTICLE VII
NATURE OF REPRESENTATIONS AND WARRANTIES
7.1 Limited Recourse. If prior to the Closing, there is
discovered a breach of any of the representations and warranties contained in
Articles V and VI of this Agreement, then the only recourse that a party shall
have for such breach is an exercise of the rights provided in Article X.
7.2 Nonsurvival of Representations, Warranties, Covenants, and
Agreements. None of the representations, warranties, covenants, and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing, except for the agreements contained in
Sections 4.15, 4.22, 4.23, 4.24, and 4.25 and the agreements delivered pursuant
to Section 4.12.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions Precedent to the Obligations of Presidio. The
obligations of Presidio to consummate the transactions contemplated by this
Agreement are subject to satisfaction at or prior to Closing of each of the
following conditions (any one or more of which may be waived in writing by
Presidio):
(a) The Confirmation Order, in form and substance
reasonably acceptable to Presidio, confirming the Plan of
Reorganization shall have been entered by the Bankruptcy Court and the
Confirmation Order shall have become a Final Order.
(b) The Confirmation Order shall recognize and declare
Tom Brown as a "successor" to Presidio pursuant to Sections 1125(e)
and 1145(a)(1) of the Bankruptcy Code.
(c) All Plan Documents and other applicable corporate
documents necessary or appropriate to the implementation of the Plan
of Reorganization shall have been executed, delivered, and where
applicable, filed with the appropriate Governmental Authorities.
(d) On the Closing Date, each of the representations and
warranties of Tom Brown contained in this Agreement shall be true and
correct in all material respects at and as of such time; and on the
Closing Date Tom Brown shall deliver to Presidio a certificate
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to such effect signed by an authorized officer of Tom Brown, except
that such certificate may state that the information provided therein
is given to the best information, knowledge, and belief of the
authorized representative signing the same.
(e) Each of the obligations of Tom Brown to be performed
on or before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed in all material respects on the Closing
Date; and on the Closing Date Tom Brown shall have delivered to
Presidio a certificate to such effect signed by an authorized officer
of Tom Brown, except that such certificate may state that the
information provided therein is given to the best information,
knowledge, and belief of the authorized representative signing the
same.
(f) The necessary and material consents and approvals of
all Governmental Authorities and others shall have been obtained and
remain in effect, and all required waiting periods under the Hart
Scott Act and the rules and regulations promulgated thereunder
relating to this Agreement and the transactions contemplated hereby
shall have expired.
(g) No Governmental Authority shall have issued an
injunction, order, decree, or ruling or taken any other action
restraining or preventing the consummation of the transactions
contemplated hereby that shall not have been vacated, withdrawn,
cancelled, or otherwise voided.
(h) The Exchange Common Stock shall have been authorized
for listing on NASDAQ, subject only to official notice of issuance.
(i) The written opinion of Presidio's financial advisors
referred to in Section 5.26 shall have been reconfirmed in writing as
of the Closing Date as if given as of such date and shall not have
been withdrawn or revoked or modified in any material respect.
(j) The New D&O Insurance shall be in full force and
effect.
8.2 Conditions Precedent to the Obligations of Tom Brown. The
obligations of Tom Brown to consummate the transactions contemplated by this
Agreement are subject to satisfaction at or prior to Closing of the following
conditions (any one or more of which may be waived in writing by Tom Brown):
(a) The Confirmation Order, in form and substance
reasonably acceptable to Tom Brown, confirming the Plan of
Reorganization shall have been entered by the Bankruptcy Court and the
Confirmation Order shall have become a Final Order.
(b) The Confirmation Order shall recognize and declare
Tom Brown as a "successor" to Presidio pursuant to Sections 1125(e)
and 1145(a)(1) of the Bankruptcy Code.
(c) All Plan Documents and other applicable corporate
documents necessary or appropriate to the implementation of the Plan
of Reorganization shall have been executed, delivered, and where
applicable, filed with the appropriate Governmental Authorities.
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(d) On the Closing Date, each of the representations and
warranties of Presidio contained in this Agreement shall be true and
correct in all material respects at and as of such time and each of
the obligations of Presidio to be performed on or before the Closing
Date pursuant to the terms of this Agreement shall have been duly
performed in all material respects on the Closing Date, except to the
extent that any such breach or failure to perform does not give rise
to the right of Tom Brown to terminate this Agreement pursuant to
clause (iii) of Section 9.1(c). On the Closing Date Presidio shall
have delivered to Tom Brown a certificate regarding such
representations, warranties and obligations signed by an authorized
representative of Presidio, except that such certificate may state
that the information provided therein is given to the best
information, knowledge, and belief of the authorized representative
signing the same.
(e) The necessary and material consents and approvals of
all Governmental Authorities, the Presidio Securityholders (to the
extent required under the Plan of Reorganization or applicable law)
and others shall have been obtained and remain in effect, and all
required waiting periods under the Hart Scott Act and the rules and
regulations promulgated thereunder relating to this Agreement and the
transactions contemplated hereby shall have expired.
(f) No Governmental Authority shall have issued an
injunction, order, decree, or ruling or taken any other action
restraining or preventing the consummation of the transactions
contemplated hereby, that shall not have been vacated, withdrawn,
cancelled, or otherwise voided.
(g) This Agreement and all other agreements and letter
agreements contemplated under this Agreement or otherwise entered into
between Tom Brown or any Affiliate of Tom Brown and Presidio or any
Affiliate of Presidio in connection with the transactions contemplated
by this Agreement shall have been assumed in their entirety and
without modification thereto (except to the extent such modification
shall have been consented to in writing by Tom Brown) pursuant to
Section 365 or Section 1123(b)(2), as applicable, of the Bankruptcy
Code on or before the Confirmation Date.
(h) On the Closing Date, none of the Major Assets shall
be subject to any Liens other than (i) Permitted Encumbrances and (ii)
Liens arising through Tom Brown or as a result of Tom Brown's actions.
(i) The Plan of Reorganization and the Confirmation Order
shall provide that as of the Closing Date each of the Presidio Parties
and their respective creditors and holders of equity interests (the
"Releasing Parties") will be deemed to forever release, waive and
discharge, and to be enjoined from asserting, to the fullest extent
permitted under applicable law, all claims (as defined in Section
101(5) of the Bankruptcy Code), demands, debts, rights, causes of
action, and liabilities (collectively, the "Released Claims") in
connection with or related to this Agreement, the Reorganization
Cases, the Presidio Parties, or the Plan of Reorganization whether
such Released Claims are liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising, that are based in
whole or in part on any act, omission, or other
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occurrence taking place on or prior to the Closing Date and that may
be asserted by or on behalf of the Releasing Parties against Tom Brown
or its respective agents, advisors, attorneys and representatives
(including current and former directors, officers, employees, members
and professionals) acting in such capacity.
(j) Presidio shall, upon application or motion therefor
filed with the Bankruptcy Court, have obtained a Final Order (which
may be a part of the Confirmation Order) authorizing the assumption by
the applicable Presidio Party under Section 365 or Section 1123(b)(2)
of the Bankruptcy Code of the Designated Contracts and such Final
Order shall provide (as contemplated in the Plan of Reorganization)
that (i) the mere occurrence of a Bankruptcy Event (which for purposes
of this Section 8.2(j) shall include Presidio West Virginia) and (ii)
the insolvency or financial condition of a Presidio Party prior to the
Closing, shall not constitute a basis for the removal of a Presidio
Party as operator under any of the Designated Contracts.
(k) The Bar Date Order, in a form and substance
reasonably acceptable to Tom Brown, shall have been entered by the
Bankruptcy Court and shall have become a Final Order.
ARTICLE IX
TERMINATION
9.1 Termination Rights. This Agreement may be terminated and the
Exchange may be abandoned at any time prior to the Closing (provided that the
right of Tom Brown to terminate pursuant to clause (iii) of Section 9.1(c)
shall not be exercisable by Tom Brown subsequent to the fifth day following the
date on which the Confirmation Order becomes a Final Order), whether before or
after the approval of the Exchange or Plan of Reorganization by the Presidio
Securityholders as follows:
(a) By mutual written consent of Tom Brown and Presidio;
(b) By either Tom Brown or Presidio if:
(i) the Closing has not occurred on or before the
first anniversary of the commencement of Presidio's
Reorganization Case (provided, however, that the right to
terminate this Agreement pursuant to this clause (i) shall not
be available to any party whose breach of this Agreement has
been the cause of or resulted in the failure of the Closing to
occur on or before such date); or
(ii) any Governmental Authority shall have issued
an injunction, order, decree, or ruling or taken any other
action restraining or preventing the consummation of the
transactions contemplated by this Agreement and such order,
decree, ruling, or other action shall have become final and
non-appealable;
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(c) By Tom Brown if:
(i) the board of directors of Presidio shall fail
to recommend approval of the Exchange at the time the
Disclosure Statement is first mailed to the Presidio
Securityholders or if such recommendation of approval, if
made, is amended in a manner adverse to Tom Brown or withdrawn
thereafter or if Presidio elects not to consummate the
Exchange as a result of the condition set forth in Section
8.1(i) not having been satisfied;
(ii) Presidio has notified Tom Brown that it is
prepared to enter into a binding agreement to effect an
Alternative Transaction described in Section 4.20(c);
(iii) (x) there has been one or more breaches of
the representations and warranties made by Presidio in Article
V of this Agreement or a failure of Presidio to perform or
comply with one or more covenants or agreements contained in
this Agreement, (y) Tom Brown has given Presidio written
notice of the existence of each such breach or failure at
least ten (10) business days prior to the then scheduled
Confirmation Date and such breach or failure is not resolved
or cured on or before the Confirmation Date and (z) if the
Exchange were to be consummated without such breaches or
failures (individually or together with any other breaches or
failures) being so resolved or cured and, as a result thereof,
such breach or failure would cause Tom Brown to suffer or
sustain damages in an amount greater than $3,000,000, (for
purposes of this clause (iii), the amount of damages that
would be suffered or sustained by Tom Brown shall be
calculated (1) after taking into consideration and reducing
(to the extent that such have not previously been considered
in determining the existence of such breach or failure) such
damages for (A) amounts that have been reimbursed or paid
under insurance coverage maintained by the Presidio Parties or
any other person or amounts as to which an insurance company
or other insuring entity has acknowledged its obligation to
reimburse or pay and (B) the amount of any reserves
established in the Presidio Financial Statements for the
Liability or event giving rise to damages and (2) by netting
against the aggregate of all such damages (A) the amount by
which (I) the actual recovery (through the date of any such
determination of aggregate damages) of accounts receivable
reflected on the balance sheet forming a part of the Presidio
Financial Statements exceeds (II) the stated value of such
accounts receivable on such balance sheet, and (B) the amount
by which (I) any Liability reflected on such balance sheet
exceeds (II) the amount for which such Liability is liquidated
prior to the date of any such determination of aggregate
damages);
(iv) INTENTIONALLY LEFT BLANK;
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(v) the Tom Brown Trading Value is more than 120%
of the Common Share Value; provided, however, Tom Brown shall
not have the right to terminate this Agreement pursuant to
this clause (v) if prior to the Closing Date Presidio elects
to reduce the number of shares of Exchange Common Stock to a
number of shares equal to the quotient obtained by dividing
(A) the Aggregate Common Share Value by (B) 120% of the Common
Share Value;
(vi) the Initial Order (A) shall not have been
entered within fifteen (15) business days after the occurrence
of a Bankruptcy Event and (B) shall not have become a Final
Order within twenty-five (25) business days after a Bankruptcy
Event; or
(vii) the Confirmation Order, in form and substance
reasonably acceptable to Tom Brown and confirming the Plan of
Reorganization, shall not have been entered by the Bankruptcy
Court on or before November 15, 1996 or the Confirmation Order
shall not have become a Final Order on or before December 13,
1996 (as either of such dates shall be extended by the number
of days, if any, that Presidio's solicitation of the
acceptance by the Presidio Securityholders of the Plan of
Reorganization may be delayed or extended by reason of (x) any
material change in or material events regarding Tom Brown and
which occur after the date of this Agreement and which are
required to be disclosed in the Disclosure Statement or in any
amendment or supplement to the Disclosure Statement or (y) the
providing of any additional disclosure concerning Tom Brown or
concerning the post-Closing business or financial condition of
any Presidio Party); provided, that Tom Brown shall not be
entitled to terminate this Agreement pursuant to this clause
(vii) unless Tom Brown has given Presidio prior written notice
of its intention to terminate this Agreement pursuant to this
clause (vii) within thirty (30) days after the above
applicable described date; or
(viii) the Reorganization Cases shall not have been
commenced on or before August 6, 1996.
(d) By Presidio if:
(i) there has been a breach of the
representations and warranties made by Tom Brown in Article VI
of this Agreement which is material to the financial condition
of Tom Brown or its ability to perform its obligations under
this Agreement or which adversely affects the benefits to be
received by Presidio under this Agreement at Closing or a
failure to perform or comply with any covenant or agreement
contained in this Agreement which adversely affects Presidio
or its ability to obtain the benefits contemplated by this
Agreement or which adversely affects the benefits to be
received by Presidio under this Agreement at Closing; provided
that Presidio shall not be entitled to terminate this
Agreement pursuant to this clause (i) unless (A) Presidio has
given Tom Brown written notice of the existence of such
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breach or failure and (B) Tom Brown has not resolved or cured
such breach or failure within ten (10) days of such notice;
(ii) Presidio has notified Tom Brown that Presidio
is prepared to enter into a binding definitive agreement to
effect an Alternative Transaction described in Section
4.20(c);
(iii) the Tom Brown Trading Value is less than 80%
of the Common Share Value; provided, however, Presidio shall
not have the right to terminate this Agreement pursuant to
this clause (iii) if prior to the Closing Date Tom Brown
elects to increase the number of shares of Exchange Common
Stock to a number of shares equal to the quotient obtained by
dividing (A) the Aggregate Common Share Value by (B) 80% of
the Common Share Value; or
(iv) Presidio has notified Tom Brown that the
board of directors of Presidio, in the exercise of their
fiduciary duties, has determined not to recommend or to
withdraw their prior recommendation of the Exchange to the
Presidio Securityholders or if Presidio elects not to
consummate the Exchange as a result of the condition set forth
in Section 8.1(i) not having been satisfied.
9.2 Payment of Termination Expenses and Fee.
(a) If this Agreement is terminated pursuant to either
clause (i) or (ii) of Section 9.1(c) or clauses (ii) or (iv) of
Section 9.1(d), then Presidio shall pay Tom Brown an amount equal to
$6,000,000 (the "Termination Fee").
(b) If this Agreement is terminated pursuant to either
clauses (i), (ii), (iii) or (vi) of Section 9.1(c) or clauses (ii) or
(iv) of Section 9.1(d), then Presidio shall pay Tom Brown an amount
equal to the documented out-of-pocket costs and expenses (including
attorneys', financial advisors', accountants', engineers' and other
consultants' fees) incurred by Tom Brown from and after November 15,
1995 (the "Termination Expenses") in connection with (x) the
preparation, negotiation of the Plan of Reorganization, the Disclosure
Statement and this Agreement, (y) the due diligence efforts of Tom
Brown and their professionals and advisors in connection with the
contemplated transactions and (z) the pursuit of the transactions
contemplated hereby and thereby; provided, however, that the
aggregated amount of Termination Expenses that Tom Brown shall be
entitled to recoup herein shall not exceed $3,000,000.
(c) Subject to the approval of the Bankruptcy Court, the
Termination Expenses and Termination Fee shall constitute first
priority administrative expenses of Presidio pursuant to section
364(c)(1) of the Bankruptcy Code and shall be secured by a lien on
property of the Presidio estate pursuant to section 364(c)(2) of the
Bankruptcy Code and shall be paid upon the earlier of (i) the closing
of the transactions contemplated by an accepted Alternative
Transaction and (ii) entry of any order of the Bankruptcy Court
directing payment by Presidio of such amounts. From and after a
termination by Presidio pursuant to Section 9.1(d)(ii) until payment
in full of the Termination Fee and the Termination Expenses,
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interest shall accrue on any unpaid portion of the Termination Fee and
the Termination Expenses at a rate per annum equal to the prime
commercial lending rate announced from time to time by the Chase
Manhattan Bank, N.A.
(d) If the Initial Order has not been entered by the
Bankruptcy Court as contemplated in Section 4.5(c), then Tom Brown
shall be entitled to assert as liquidated damages the Termination Fee
and the Termination Expenses as a claim under section 502 and/or
503(b) of the Bankruptcy Code.
9.3 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no further
force or effect (except for the provisions of Sections 4.14 and 9.2 which shall
continue in full force and effect).
ARTICLE X
MISCELLANEOUS
10.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original instrument, but all
such counterparts together shall constitute but one agreement.
10.2 Notice. All notices which are required or may be given
pursuant to this Agreement shall be sufficient in all respects if given in
writing and delivered personally, by telecopy or by registered or certified
mail, postage prepaid, as follows:
IF TO PRESIDIO PARTIES:
Presidio Oil Company
5613 DTC Parkway, Suite 750
P.O. Box 6525
Englewood, Colorado 80155-6525
Attention: Robert L. Smith
Telephone: (303) 773-0100
Fax: (303) 850-1111
IF TO TOM BROWN:
Tom Brown, Inc.
508 West Wall, Suite 500
Midland, Texas 79702
Attention: Donald L. Evans
Telephone: (915) 682-9715
Fax: (915) 683-9327
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All notices shall be deemed to have been duly given at the time of receipt by
the party to which such notice is addressed.
10.3 Governing Law. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.
10.4 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
10.5 Assignment. No party shall assign all or any part of this
Agreement, nor shall any party assign or delegate any of its rights or duties
hereunder, without the prior written consent of the other party and any
assignment made without such consent shall be void. Subject to the preceding
sentence, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
10.6 Entire Agreement; Third Party Beneficiaries. This Agreement
(together with the Confidentiality Agreement and the documents and instruments
delivered by the parties in connection with this Agreement) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written or oral, among the parties with respect to the subject matter
hereof and (b) except for Sections 4.15, 4.22, 4.24 and 4.25, is solely for the
benefit of the parties hereto and their respective successors, legal
representatives, and assigns and does not confer on any other person any rights
or remedies hereunder. The provisions of Sections 4.15, 4.22, 4.24 and 4.25
are intended to be for the benefit of, and shall be enforceable by, the parties
hereto and each of the other parties who are beneficiaries of the rights and
obligations arising thereunder and their respective heirs and representatives.
10.7 Amendment.
(a) At any time prior to the Closing Date this Agreement
may be amended or modified in any respect by the parties by an
agreement in writing executed in the same manner as this Agreement.
(b) No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party
to be bound thereby.
10.8 Exhibits and Schedules. All Exhibits and Schedules attached
to or referred to in this Agreement are incorporated into and made a part of
this Agreement.
10.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so
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broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
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IN WITNESS WHEREO, this Agreement has been signed by each of the
parties hereto, all as of the date above written.
PRESIDIO OIL COMPANY
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
Name: George P. Giard, Jr.
---------------------------------
Title: Chairman of the Board
--------------------------------
and Chief Executive Officer
--------------------------------
PRESIDIO EXPLORATION, INC.
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
Name: George P. Giard, Jr.
---------------------------------
Title: Chairman of the Board
--------------------------------
and Chief Executive Officer
--------------------------------
PRESIDIO WEST VIRGINIA, INC.
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
Name: George P. Giard, Jr.
---------------------------------
Title: Chairman of the Board
--------------------------------
and Chief Executive Officer
--------------------------------
PALISADE OIL, INC.
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
Name: George P. Giard, Jr.
---------------------------------
Title: Chairman of the Board
--------------------------------
and Chief Executive Officer
--------------------------------
TOM BROWN, INC.
By: /s/ DONALD L. EVANS
-----------------------------------
Name: Donald L. Evans
---------------------------------
Title: Chairman of the Board and
--------------------------------
Chief Executive Officer
--------------------------------
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EXHIBIT C
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- -----------------------------------------------
) Chapter 11
In re: )
) Case No. 96-1208(HSB)
) ------------
PRESIDIO OIL COMPANY, )
PRESIDIO EXPLORATION, INC., ) (Jointly Administered)
PALISADE OIL, INC., and )
PRESIDIO WEST VIRGINIA, INC., )
)
Debtors and )
Debtors-in-Possession. )
- -----------------------------------------------
JOINT PLAN OF REORGANIZATION
Presidio Oil Company, Presidio Exploration, Inc., Palisade Oil, Inc.,
and Presidio West Virginia, Inc. (collectively, the "Debtors"), together with
Tom Brown, Inc. ("Tom Brown"), jointly propose, except with respect to Article
V ("Identification and Treatment of Classes Impaired Under the Plan"), which
Article V is proposed solely by the Debtors, the following plan of
reorganization (the "Plan") for each of the above-captioned Debtors pursuant to
the provisions of Chapter 11 of title 11, United States Code (the "Bankruptcy
Code").
ARTICLE I
DEFINITIONS
Capitalized terms have the respective meanings specified below. For
purposes of the Plan: (a) whenever from the context it is appropriate, each
term, whether stated in the singular or the plural, will include both the
singular and the plural; (b) unless otherwise specified herein, any reference
to an entity as a holder of a Claim or Equity Interest (each as defined below)
includes that entity's predecessors, successors, assigns and affiliates; (c)
unless otherwise specified herein, all references in the Plan to sections,
articles, and appendices are references to sections, articles, and appendices
of or to the Plan; (d) the words "herein" and "hereto" refer to the Plan in its
entirety rather than to a particular portion of the Plan; (e) captions and
headings to articles and sections are inserted for convenience of reference
only and are not intended to be a part of or to affect the interpretation of
the Plan; and (f) the rules of construction of the Bankruptcy Code will apply.
65
1.01 ADMINISTRATIVE BAR DATE ORDER means the Order(s) of the
Bankruptcy Court establishing the last date by which requests for payment of
Administrative Expense Claims must be filed and which Order(s) shall provide
the mechanism for establishing the maximum entitlement to Fee Claims prior to
the Confirmation Date in accordance with Section 3.05 of the Plan.
1.02 ADMINISTRATIVE EXPENSE CLAIM means a Claim for any cost or
expense of administration of the Chapter 11 Cases allowed under sections 503(b)
and 507(a)(1) of the Bankruptcy Code, including, without limitation, any actual
and necessary expenses of preserving the Debtors' respective Estates, any
actual and necessary expenses of operating the Debtors' businesses, Fee Claims,
and any fees or charges assessed against the respective Debtors under section
1930 of title 28, United States Code.
1.03 AGGREGATE COMMON SHARE VALUE shall have the meaning set forth
in the Exchange Agreement.
1.04 AGENT BANK means The Chase Manhattan Bank (National
Association), or its successor, as agent for the Banks under the Bank Credit
Agreement.
1.05 ALLOWED CLAIM, or the term ALLOWED used conjunctively with the
term Claim, or with respect to any class or subcategory of Claims, means a
Claim (or, if and to the extent permitted, a class of Claims), proof of which
was properly filed on or before the Claims Bar Date or, if no proof of claim
was filed, which has been or hereafter is listed by the respective Debtors on
their Schedules as liquidated in amount and not disputed or contingent, and, in
either case, as to which no objection to the allowance thereof has been
interposed on or before the Effective Date or such other applicable period of
limitation fixed by the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy
Court, or as to which any objection has been determined by a Final Order to the
extent such objection is determined in favor of the respective holder. Unless
otherwise specified herein or by order of the Bankruptcy Court, an "Allowed
Claim" shall not for purposes of computation of distributions under the Plan
include interest on such Claim from the Petition Date.
1.06 ALLOWED EQUITY INTEREST, or the term ALLOWED used
conjunctively with the term Equity Interest, or with respect to any class or
subcategory of Equity Interests, means an Equity Interest (or, if and to the
extent permitted, a class of Equity Interests) in Presidio, proof of which was
properly filed or, if no proof of interest was filed, which has been or
hereafter is listed by Presidio on its Schedules as liquidated in amount and
not disputed or contingent, and, in either case, as to which no objection to
the allowance thereof has been interposed on or before the Effective Date or
such other applicable period of limitation fixed by the Bankruptcy Code, the
Bankruptcy Rules or the Bankruptcy Court, or as to which any objection has been
determined by a Final Order to the extent such objection is determined in favor
of the respective holder.
1.07 BANKS means the lenders who are parties to the Bank Credit
Agreement.
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1.08 BANK CLAIMS means the Claims of the Banks and the Agent Bank
against any of the Debtors pursuant to or arising under the Bank Credit
Agreement and any Subsidiary Guaranty thereon, including any Claim for
principal, unpaid interest and any related fees, charges or attorneys' fees
payable in accordance with the instruments evidencing and governing the Bank
Claims, and any liens and security interests granted to secure repayment of or
relating to the foregoing.
1.09 BANK CREDIT AGREEMENT means the Amendment and Restatement of
Amendment, Restatement and Consolidation of Credit Agreement, dated August 6,
1993, as amended, between Presidio, Presidio Exploration, the Banks and each
other bank which is a signatory thereto or a successor or assign thereof and
the Agent Bank.
1.10 BANKRUPTCY CODE means the Bankruptcy Code, Title 11, United
States Code, as amended.
1.11 BANKRUPTCY COURT means the United States Bankruptcy Court for
the District of Delaware, or such other court that exercises jurisdiction over
the Chapter 11 Cases.
1.12 BANKRUPTCY EVENT shall have the meaning set forth in the
Exchange Agreement.
1.13 BANKRUPTCY RULES means the Federal Rules of Bankruptcy
Procedure, as amended, promulgated under 28 U.S.C. Section 2075, and the local
rules of the Bankruptcy Court as applicable to the Chapter 11 Cases.
1.14 BUSINESS DAY means any day except Saturday, Sunday or any
other day on which commercial banks in Wilmington, Delaware are required or
authorized by law to be closed for business.
1.15 CASH means cash or cash equivalents in immediately available
funds.
1.16 CASH CONSIDERATION shall have the meaning set forth in the
Exchange Agreement.
1.17 CHAPTER 11 CASES means the cases filed by the respective
Debtors under Chapter 11 of the Bankruptcy Code.
1.18 CLAIM or CLAIMS means, as to each Debtor: (i) any right to
payment from the respective Debtors, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) any right
to an equitable remedy for breach of performance if such breach gives rise to a
right of payment from the respective Debtors, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured, and including, without limitation,
any Claim for attorneys' fees, other professional fees, or court costs incurred
in connection with collection thereof or in connection with the Chapter 11
Cases.
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1.19 CLAIMS BAR DATE means the date the Bankruptcy Court sets as
the date by which all proofs of Claims must be filed.
1.20 CLASS A COMMON STOCK, when used in connection with Presidio
Common Stock, means the Class A common stock, $.10 par value per share, issued
by Presidio.
1.21 CLASS B COMMON STOCK, when used in connection with Presidio
Common Stock, means the Class B Common Stock, $.10 par value per share, issued
by Presidio.
1.22 CLOSING shall have the meaning set forth in the Exchange
Agreement.
1.23 CLOSING DATE shall have the meaning set forth in the Exchange
Agreement.
1.24 CONFIRMATION DATE shall have the meaning set forth in the
Exchange Agreement.
1.25 CONFIRMATION HEARING means the hearing conducted by the
Bankruptcy Court to consider confirmation of the Plan.
1.26 CONFIRMATION ORDER shall have the meaning set forth in the
Exchange Agreement.
1.27 DGCL means the General Corporation Law of the State of
Delaware, as amended from time to time.
1.28 DEBT OBLIGATIONS means the Senior Secured Note Claims, Senior
GIN Claims and Subordinated Debenture Claims, together with all Claims arising
directly or indirectly under the instruments governing same, and any guaranty
or Subsidiary Guaranty of any such Claims.
1.29 DEBTORS OR DEBTOR(S), means, individually or collectively as
the context requires, Presidio, Presidio Exploration, Palisade Oil, Presidio
West, or each of them.
1.30 DESIGNATED CONTRACTS shall have the meaning set forth in the
Exchange Agreement.
1.31 DESIGNATED CONTRACT ORDER means a Final Order of the
Bankruptcy Court (which may be the Confirmation Order) authorizing the
assumption by the applicable Debtor under Sections 365 or 1123(b)(2) of the
Bankruptcy Code of the Designated Contracts, which order shall provide that (i)
the occurrence of a Bankruptcy Event and (ii) the insolvency or financial
condition of any Debtor prior to the Effective Date shall not constitute a
basis for the removal of any Debtor as operator under any Designated Contract.
1.32 DISCLOSURE STATEMENT shall have the meaning set forth in the
Exchange Agreement.
1.33 DISPUTED CLAIM means any Claim (i) listed on the Schedules as
unliquidated, disputed or contingent or (ii) as to which the respective Debtor,
Tom Brown or any other party in
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interest has interposed a timely objection or request for estimation in
accordance with the Bankruptcy Code and the Bankruptcy Rules, which objection
or request for estimation has not been withdrawn or determined by Final Order.
1.34 DISPUTED EQUITY INTEREST means any Equity Interest as to which
the respective Debtor, Tom Brown or any other party in interest has interposed
a timely objection or request for estimation in accordance with the Bankruptcy
Code and the Bankruptcy Rules, which objection or request for estimation has
not been withdrawn or determined by Final Order.
1.35 DISTRIBUTEE means a holder of a Bank Claim, Debt Obligation or
Presidio Common Stock.
1.36 EFFECTIVE DATE means the Closing Date.
1.37 EQUITY INTEREST means any equity interest in Presidio, which
shall include any common stock, preferred stock, and any security which is
exercisable for or convertible into shares of common stock or preferred stock
of Presidio.
1.38 ESTATE means, as to each Debtor, the estate created for such
Debtor in its Chapter 11 Case pursuant to Section 541 of the Bankruptcy Code.
1.39 EXCHANGE AGENT means either (i) such person or entity as may
be designated in and pursuant to the Exchange Agreement, or (ii) in the absence
of such designation, or if such person or entity as designated has ceased to be
the Exchange Agent and no other person or entity has been designated, a person
designated by Tom Brown and Presidio and approved by the Bankruptcy Court in
the Confirmation Order.
1.40 EXCHANGE AGREEMENT means that Exchange Agreement dated August
5, 1996 by and among the Debtors and Tom Brown, and all Schedules and Exhibits
attached thereto, a copy of which is attached to the Plan as Exhibit "A", and
as such Exchange Agreement may be amended from time to time.
1.41 EXCHANGE COMMON STOCK shall have the meaning set forth in the
Exchange Agreement; provided, however, that solely for the purposes of
computing the amount of Exchange Common Stock to be distributed to holders of
Allowed Class 5 Claims under section 5.03 of the Plan, the term Exchange Common
Stock shall mean the amount of shares that would exist, without regard to any
adjustments or reductions to the Aggregate Common Share Value and the amount of
Exchange Common Stock that may be made, (i) under the Exchange Agreement in
respect of the shares of Tom Brown Common Stock which otherwise would be
distributable to Tom Brown in respect of its Class 5 Claims and (ii) pursuant
to Section 5.09 of the Plan.
1.42 EXCHANGE CONSIDERATION shall have the meaning set forth in the
Exchange Agreement.
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1.43 EXISTING PLANS shall have the meaning set forth in the
Exchange Agreement.
1.44 FEE CLAIM means a claim for compensation and reimbursement of
expenses pursuant to Sections 327, 328, 330, 331, 503(b) and 1103 of the
Bankruptcy Code for services rendered or expenses incurred prior to the
Effective Date.
1.45 FINAL ORDER shall have the meaning set forth in the Exchange
Agreement.
1.46 GENERAL UNSECURED CLAIM means (i) a Claim for goods, materials
or services provided to the respective Debtor or rendered to such Debtor in the
ordinary course of business prior to the commencement of its Chapter 11 Case,
(ii) damage Claims arising from the rejection, if any, of executory contracts
or unexpired leases pursuant to a Final Order of the Bankruptcy Court or the
Plan, (iii) Litigation Claims, and (iv) any Miscellaneous Unsecured Claims.
Without limiting the foregoing, (x) in the case of damages for the rejection of
an unexpired lease, General Unsecured Claim shall mean the Allowed Claim as
determined by operation of subsections 502(b)(6) and 502(g) of the Bankruptcy
Code, and (y) in the case of any unsecured claim for reimbursement or
contribution of an entity which is liable with the respective Debtor or has
secured the claim of a creditor, General Unsecured Claim shall mean the Allowed
Claim as determined by operation of Section 502(e) of the Bankruptcy Code.
General Unsecured Claim shall not include any Administrative Expense Claim,
Priority Tax Claim, Priority Claim, Bank Claim, Senior Secured Note Claim,
Miscellaneous Secured Claim, Intercompany Claim, Senior GIN Claim, Subordinated
GIN Claim, Indemnity Claim, or Subordinated Debenture Claim.
1.47 INTERCOMPANY CLAIM means any Claim by one or more of the
Debtors against any other of the Debtors, whether based upon an account (as
reflected in one or more intercompany book entries), or as otherwise recorded,
evidenced, or held.
1.48 INDEMNITY CLAIM means any Claim relating to or arising from
the obligations of any Debtor to indemnify, hold harmless, or reimburse the
past or present directors, officers, and any former directors and officers of
any of the Debtors, whether or not such service terminated prior to the
Petition Date or extended beyond the Petition Date, against any obligation
pursuant to, related to, or arising under their respective articles of
incorporation, certificates of incorporation, or bylaws (whether in their form
as of the Petition Date or as amended on or before the Effective Date), by any
other contract of employment or other agreement, or pursuant to state laws or
any agreements, or any combination of the foregoing, and including, without
limitation, all such obligations as may arise or which may have arisen on,
before, or in connection with the Effective Date and the Closing.
1.49 LITIGATION CLAIMS means the Claims against the Debtors listed
in Schedule 5.5 of the Exchange Agreement.
1.50 MISCELLANEOUS SECURED CLAIM means a Claim, to the extent of
the value, as determined by the Bankruptcy Court pursuant to subsection 506(a)
of the Bankruptcy Code, of any interest in property of the Estate securing such
Claim, including, without limitation, Claims secured
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by mortgages or trust deeds of real property, mechanics' or materialmen's
liens, artisans' liens or security deposits, or by miscellaneous personal
property such as office furniture, telephone systems, copiers and mailing
equipment, including any Claim for principal, unpaid interest thereon, and any
related fees, charges or attorneys' fees (including those incurred before the
Petition Date in accordance with the instruments evidencing and governing such
obligations and those incurred from and after the Petition Date as may be
allowed pursuant to section 506(b) of the Bankruptcy Code), and any liens or
security interests granted to secure the foregoing. Miscellaneous Secured
Claims shall not include any Bank Claim or Senior Secured Note Claim.
1.51 MISCELLANEOUS UNSECURED CLAIMS means an unsecured claim not
entitled to priority under Section 507(a) of the Bankruptcy Code that is not an
Administrative Claim, Priority Tax Claim, Priority Claim, Bank Claim, Senior
Secured Note Claim, Miscellaneous Secured Claim, Senior GIN Claim, Subordinated
GIN Claim, Indemnity Claim, or Subordinated Debenture Claim and which is not
included in clauses (i), (ii), or (iii) of Section 1.46 in the definition of
General Unsecured Claims. Without limiting the foregoing, in the case of an
unsecured claim for reimbursement or contribution of any entity which is liable
with the respective Debtor or has secured the claim of a creditor,
Miscellaneous Unsecured Claim shall mean the Allowed Claim as determined by
operation of Section 502(e) of the Bankruptcy Code.
1.52 NEW D&O INSURANCE means the policies of directors and officers
liability insurance identified in the Exchange Agreement, including those
policies, endorsements, or riders to be obtained pursuant to the Exchange
Agreement.
1.53 PALISADE OIL means Palisade Oil, Inc., a Colorado corporation,
a wholly-owned subsidiary of Presidio.
1.54 PETITION DATE or PETITION DATES means the respective dates on
which each Debtor, respectively, files or has filed its petition for relief
commencing its Chapter 11 Case; provided, however, that in the case of Presidio
West only, Petition Date means March 15, 1996.
1.55 PLAN means this plan of reorganization, as it may be amended,
modified or supplemented from time to time in accordance herewith, the Exchange
Agreement, the Bankruptcy Code and the Bankruptcy Rules.
1.56 PRESIDIO means Presidio Oil Company, a Delaware corporation,
at all times before, during and after the filing of the Chapter 11 Cases.
1.57 PRESIDIO COMMON STOCK means all outstanding shares of Class A
Common Stock and all outstanding shares of Class B Common Stock in each case
determined as of the Record Date.
1.58 PRESIDIO COMMON STOCK CASH CONSIDERATION shall have the
meaning set forth in the Exchange Agreement.
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1.59 PRESIDIO EXPLORATION means Presidio Exploration, Inc., a
Colorado corporation, a wholly-owned subsidiary of Presidio.
1.60 PRESIDIO STOCK OPTIONS means any and all options or other
rights arising under any stock option plan of Presidio in effect as of the
Petition Date and which remain unexercised as of the Confirmation Date.
1.61 PRESIDIO WARRANTS means any and all warrants or other rights
arising under any warrant agreement of Presidio in effect as of the Petition
Date and which remain unexercised as of the Confirmation Date.
1.62 PRESIDIO WEST means Presidio West Virginia, Inc., a Delaware
corporation, a wholly-owned subsidiary of Presidio Exploration.
1.63 PRIORITY CLAIM means a Claim for an amount entitled to
priority under subsection 507(a) of the Bankruptcy Code, other than an
Administrative Expense Claim or a Priority Tax Claim.
1.64 PRIORITY TAX CLAIM means a Claim entitled to priority under
subsection 507(a)(8) of the Bankruptcy Code.
1.65 PRO RATA SHARE means, with respect to any distribution of
property to a class under the Plan, proportionate sharing pursuant to which the
ratio of the amount of property distributed on account of an Allowed Claim or
Allowed Equity Interest in Presidio Common Stock to the amount of such Allowed
Claim or Allowed Equity Interest is the same as the ratio of the total amount
of property distributed to such class to the total amount of all Allowed Claims
or Allowed Equity Interests in such class.
1.66 PROPOSED AMENDMENTS means the proposed amendments to the
articles or certificate of incorporation of each Debtor, which shall be
effective from and after the Effective Date, and which shall be substantially
in the form set forth in an Appendix to the Disclosure Statement or as
otherwise filed with the Bankruptcy Court prior to the Confirmation Hearing.
1.67 RECORD DATE means, in accordance with Bankruptcy Rule 3018(a),
the date upon which the Bankruptcy Court's order approving the Disclosure
Statement is or has been entered, which date shall thereafter govern the
eligibility of any holder to vote either to accept or reject the Plan.
1.68 REMAINING EXCHANGE COMMON STOCK means the number of shares of
Exchange Common Stock remaining after (i) deducting the amount of distributions
to be made to holders of Allowed Class 5 Claims pursuant to Section 5.03 of the
Plan and (ii) the reduction to the Aggregate Common Share Value and the amount
of Exchange Common Stock in the amount (A) which would
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otherwise be distributable to Tom Brown in respect of its Class 5 Claims and
(B) that is made pursuant to clause (iii) of Section 5.09 of the Plan.
1.69 REORGANIZED DEBTOR(S) means, individually or collectively, as
the context requires, the Debtors on and after the Effective Date.
1.70 REORGANIZED PRESIDIO means Presidio on and after the Effective
Date.
1.71 SCHEDULES means the schedules of assets and liabilities and
the statement of financial affairs filed by the respective Debtor as required
by Section 521 of the Bankruptcy Code and the Bankruptcy Rules.
1.72 SENIOR GAS INDEXED NOTES means the $100,000,000 original
principal amount of Senior Gas Indexed Notes due 2002 issued under the Senior
GIN Indenture and any Claim arising thereunder or relating thereto.
1.73 SENIOR GIN CLAIM means a Claim against any of the Debtors
arising under or relating to the Senior Gas Indexed Notes or the Senior GIN
Indenture, including, without limitation, (x) any Claim for principal, unpaid
interest thereon, and any related fees, charges or attorneys' fees incurred
before the Petition Date, and any liens granted to secure the foregoing and (y)
a Claim against any Debtor for any guaranty, including any applicable
Subsidiary Guaranty, of the Senior Gas Indexed Notes and any liens or security
interests granted to secure the foregoing or relating thereto.
1.74 SENIOR GIN INDENTURE means the Indenture, dated as of August
6, 1993, among Presidio, various of its subsidiaries and U.S. Trust Company of
New York, as Indenture Trustee, relating to the Senior Gas Indexed Notes.
1.75 SENIOR SECURED NOTES means the $75,000,000 original principal
amount of 11.5% Senior Secured Notes due 2000 issued under the Senior Secured
Note Indenture and any Claim arising thereunder or relating thereto.
1.76 SENIOR SECURED NOTE CLAIM means a Claim against any of the
Debtors arising under or relating to the Senior Secured Notes or the Senior
Secured Note Indenture, including, without limitation, (x) any Claim for
principal, unpaid interest thereon, and any related fees, charges or attorneys'
fees, and any liens granted to secure the foregoing and (y) any Claim against a
Debtor for any guaranty, including any applicable Subsidiary Guaranty, of the
Senior Secured Notes and any liens or security interests granted to secure the
foregoing or relating thereto.
1.77 SENIOR SECURED NOTE INDENTURE means the Indenture, dated as of
August 6, 1993, among Presidio, various of its subsidiaries and U.S. Trust
Company of New York, as Indenture Trustee, relating to the Senior Secured
Notes.
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1.78 SUBORDINATED DEBENTURES means the $50,000,000 original
principal amount of 9% Convertible Subordinated Debentures due 2015 issued
under the Subordinated Debenture Indenture and any Claim arising thereunder or
relating thereto.
1.79 SUBORDINATED DEBENTURE CLAIM means a Claim against any of the
Debtors arising under or relating to the Subordinated Debentures or the
Subordinated Debenture Indenture, including (x) any Claim for principal, unpaid
interest thereon, and any related fees, charges or attorneys' fees, and any
liens granted to secure the foregoing and (y) a Claim against any Debtor for
any guaranty, including any applicable Subsidiary Guaranty, of the Subordinated
Debentures, including any liens or security interests granted to secure the
foregoing or relating thereto.
1.80 SUBORDINATED DEBENTURE INDENTURE means the Indenture, dated as
of February 14, 1990, among Presidio and the Bank of Montreal Trust Company, as
Indenture Trustee, relating to the Subordinated Debentures.
1.81 SUBORDINATED GAS INDEXED NOTES means the $100,000,000 original
principal amount of Senior Subordinated Gas Indexed Notes due 1999 issued under
the Subordinated GIN Indenture and any Claim arising thereunder or relating
thereto.
1.82 SUBORDINATED GIN CONVENIENCE CLAIM means a Claim against any
of the Debtors arising under or relating to the Senior Subordinated Gas Indexed
Notes or the Subordinated GIN Indenture, including, without limitation, (x) any
Claim for principal, unpaid interest thereon, and any related fees, charges or
attorneys' fees, and any liens granted to secure the foregoing and (y) a Claim
against any Debtor for any guaranty, including any applicable Subsidiary
Guaranty, of the Subordinated Gas Indexed Notes and any liens or security
interests granted to secure the foregoing or relating thereto.
1.83 SUBORDINATED GIN INDENTURE means the Indenture, dated as of
February 16, 1989, among Presidio, various of its subsidiaries and U.S. Trust
Company of New York, as Indenture Trustee, relating to the Subordinated Gas
Indexed Notes.
1.84 SUBSIDIARY GUARANTY means any guaranty or other agreement
whereby any Debtor is, has become, or may be liable with, or has secured or may
secure a Claim against any other Debtor, including, without limitation, any
guaranty of collection, payment, or performance.
1.85 TOM BROWN means Tom Brown, Inc., a Delaware corporation.
1.86 TOM BROWN COMMON STOCK shall have the meaning set forth in the
Exchange Agreement.
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ARTICLE II
CLASSES OF CLAIMS AND INTERESTS
2.01 The Plan constitutes a separate plan of reorganization for
each Debtor, and each class of Claims and Equity Interests identified below
constitutes a separate class for each Debtor unless otherwise indicated. All
Claims and Equity Interests, except Administrative Expense Claims and Priority
Tax Claims, are placed in the following classes for each of the Debtors. The
following are the respective classes of Claims against and Equity Interests in
the respective Debtors, without any substantive consolidation of the Debtors.
Joint references to classes of more than one Debtor herein are for convenience
and ease of reference only, and do not indicate the assumption of liabilities
of any of the Debtors by any of the other Debtors.
(a) Class 1 -- Priority Claims.
(b) Class 2 -- Bank Claims.
(c) Class 3 -- Senior Secured Note Claims.
(d) Class 4 -- Miscellaneous Secured Claims.
(e) Class 5 -- Senior GIN Claims.
(f) Class 6 -- General Unsecured Claims.
(g) Class 7 -- Subordinated GIN Convenience Claims.
(h) Class 8 -- Indemnity Claims.
(i) Class 9 -- Subordinated Debenture Claims.
(j) Class 10 -- Intercompany Claims.
(k) Class 11 -- Intercompany Equity Interests.
(l) Class 12 -- Presidio Common Stock.
(m) Class 13 -- Presidio Stock Options.
(n) Class 14 -- Presidio Warrants.
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ARTICLE III
TREATMENT OF UNCLASSIFIED CLAIMS
3.01 UNCLASSIFIED CLAIMS. In accordance with subsection 1123(a)(1)
of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims
are not classified herein.
3.02 ADMINISTRATIVE EXPENSE CLAIMS GENERALLY. Subject to the
Administrative Bar Date and except as otherwise provided herein, unless
otherwise agreed by the holder of an Administrative Expense Claim and the
applicable Debtor, each holder of an Allowed Administrative Expense Claim will
receive, in full satisfaction of its Claim, Cash equal to the amount of such
Administrative Expense Claim on the later of fifteen (15) Days after the
Effective Date or the date such Claim is due and payable by its terms or, if
such Administrative Expense Claim does not become an Allowed Claim as of the
Effective Date, thirty (30) Business Days after the date the order allowing
such Claim becomes a Final Order.
3.03 STATUTORY FEES. On or before the Effective Date, all fees
payable pursuant to section 1930 of title 28, United States Code, will be paid
in Cash.
3.04 ADMINISTRATIVE EXPENSE CLAIMS FOR GOODS, MATERIALS AND
SERVICES INCURRED IN THE ORDINARY COURSE OF BUSINESS. Administrative Expense
Claims based on liabilities incurred by one or more of the Debtors for goods,
materials, and services delivered, obtained, or received in the ordinary course
of business (which includes, without limitation, such expenses as they relate
to the ordinary course of drilling, operation or maintenance of any oil or gas
well, property or prospect and in carrying out such Debtor's general and
administrative operations) will be assumed and paid by the applicable Debtor
pursuant to the terms and conditions of the particular transaction giving rise
to such Administrative Expense Claims, and, unless the Bankruptcy Court orders
otherwise, holders of Administrative Expense Claims based on liabilities
incurred by one or more of the Debtors for goods, materials, and services
delivered, obtained, or received in the ordinary course of business (which
includes, without limitation, such expenses as they relate to the ordinary
course of drilling, operation or maintenance of any oil or gas well, property
or prospect and in carrying out such Debtor's general and administrative
operations) will not be required to file or serve a request for payment of such
Claim, and will not be subject to the Administrative Bar Date referenced in
Section 3.05(a) of the Plan.
3.05 BAR DATES FOR ADMINISTRATIVE EXPENSE CLAIMS.
(a) GENERAL BAR DATE PROVISIONS. Holders of Administrative
Expense Claims that are required to file and serve a request for payment of
such Claims and that do not file and serve a request by the applicable
Administrative Bar Date will be forever barred from asserting such Claims
against the Debtors, as reorganized, or their respective property; and
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(b) PROCEDURES AND LIMITATIONS APPLICABLE TO FEE CLAIMS. (i) At
least ten days prior to the actual commencement of the Confirmation Hearing,
entities intending to assert and request payment of Fee Claims shall file with
the Bankruptcy Court a written estimate of the maximum amount of compensation
and reimbursement of expenses to be requested for the period through the
Effective Date. Unless the Bankruptcy Court orders otherwise, and subject to
subsection (iii) below, such estimates shall thereafter establish the maximum
amounts which may thereafter be Allowed with respect to such entity, and any
Fee Claims for which such a written maximum estimate is not timely filed shall
be forever barred. (ii) Subject to the immediately foregoing subsection (i),
entities asserting and requesting payment of Fee Claims must file and serve on
Presidio, Tom Brown, and their respective counsel, and on such other entities
who are designated by the Bankruptcy Rules, the Confirmation Order, or by other
order of the Bankruptcy Court a fee application within the later of fifteen
(15) Business Days after the Effective Date and twenty (20) Business Days after
the entry of the Confirmation Order or such other date as the Bankruptcy Court
may fix after motion and a hearing, and any and all objections to any such fee
applications shall be filed within ten (10) Business Days after such filing
deadline. The Bankruptcy Court shall retain jurisdiction to determine all such
fee applications and Fee Claims. (iii) In any event, unless the Debtors and
Tom Brown agree otherwise, the maximum amount of Allowed Fee Claims shall be
determined prior to Closing.
3.06 PAYMENT OF PRIORITY TAX CLAIM. (a) Pursuant to subsection
1129(a)(9)(C) of the Bankruptcy Code, unless otherwise agreed by the holder of
a Priority Tax Claim and the applicable Debtor or Reorganized Debtor, each
holder of a Priority Tax Claim will receive, in full satisfaction of its
Allowed Priority Tax Claim, deferred Cash payments over a period not exceeding
six years from the date of assessment of such Allowed Priority Tax Claim.
Payments will be made in equal annual installments of principal, plus simple
interest accruing from the Effective Date at seven percent (7%) per annum on
the unpaid portion of each Allowed Priority Tax Claim (or upon such other terms
determined by the Bankruptcy Court to provide the holders of Allowed Priority
Tax Claims with deferred cash payments having a value, as of the Effective
Date, equal to such Claim). Unless otherwise agreed by the holder of such
Claim and the applicable Debtor or Reorganized Debtor, the first payment will
be payable one year after the Effective Date or, if the Allowed Priority Tax
Claim is not Allowed within one year after the Effective Date, a date which is
not later than thirty (30) days after the date on which an order allowing such
Claim becomes a Final Order;
(b) Notwithstanding anything to the contrary in Section 3.06(a) of
the Plan, the Reorganized Debtors may pay any Allowed Priority Tax Claim, or
any remaining balance of such Claim, in full, at any time on or after the
Effective Date, without premium or penalty.
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ARTICLE IV
IDENTIFICATION AND TREATMENT OF
CLASSES NOT IMPAIRED UNDER PLAN
The following treatment shall be provided for the enumerated classes
of the respective Debtors, without any substantive consolidation of the
Debtors. Joint references to classes of more than one Debtor herein are for
convenience and ease of reference only, and do not indicate the assumption of
liabilities of any of the Debtors by any other Debtor. The treatment and the
consideration received by holders of allowed Claims or Equity Interests
pursuant to this Article IV shall be in full satisfaction, release and
discharge of such holders' Claims against each of the Debtors and any other
Claims, obligations, rights, causes of action and liabilities which such holder
may be entitled to assert against any of the Debtors, whether known or unknown,
foreseen or unforeseen, then existing or thereafter arising or based in whole
or in part upon any act, omission or other occurrence taking place on or prior
to the Effective Date.
4.01 CLASS 1 - PRIORITY CLAIMS. Unless otherwise agreed, each
Priority Claim that becomes an Allowed Claim against any of the Debtors shall,
at the applicable Reorganized Debtor's sole option, either (a) be paid the
Allowed amount of such Priority Claim in full, in Cash, by the Debtor or
Debtors obligated on such Claim on or promptly after the later of the Effective
Date and the date such Claim becomes an Allowed Claim; or (b) be paid or
performed in accordance with the terms and conditions of each agreement
relating thereto in the ordinary course of such Reorganized Debtor's business.
4.02 CLASS 4 - MISCELLANEOUS SECURED CLAIMS. Unless otherwise
agreed, each holder of an Allowed Miscellaneous Secured Claim shall be treated,
at the sole option of the respective Reorganized Debtor obligated thereon,
notwithstanding any contractual provision or applicable law that entitles the
holder of such Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, in one of the following three ways: (i) the
applicable Debtor will, on or promptly after the Effective Date, (A) cure any
such default that occurred before or after the Petition Date, other than a
default of a kind specified in subsection 365(b)(2) of the Bankruptcy Code, (B)
reinstate the maturity of such Claim as such maturity existed before such
default, (C) compensate the holder of such Claim for any damages incurred as a
result of any reasonable reliance by such holder on such contractual provision
or such applicable law and (D) execute a written undertaking in favor of such
holder, whereby the respective Debtor assumes such Claim and, except as
permitted in clauses (A), (B) and (C) hereof, does not otherwise alter the
legal, equitable or contractual rights of such holder with respect to such
Claim; (ii) the respective Reorganized Debtor will, on or promptly after the
Effective Date, pay Cash equal to such holder's Allowed Claim; or (iii) the
respective Debtor will, on or promptly after the Effective Date, distribute to
the holder of the Claim the property securing such Claim.
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4.03 CLASS 6 - GENERAL UNSECURED CLAIMS. Each General Unsecured
Claim that becomes an Allowed Claim shall be assumed by, and become a liability
of, the Reorganized Debtor obligated on such Allowed Claim and shall (a) be
paid in full by the Debtor or Debtors obligated on such Claim on or promptly
after the later of the Effective Date and, if such Claim is a Disputed Claim,
the date such Claim becomes an Allowed Claim or, (b) if such Claim is not due
and payable by the Effective Date, be paid or performed in accordance with the
terms and conditions of each agreement relating thereto in the ordinary course
of such Reorganized Debtor's business; provided, that no payment shall be made
on a date later than that required in the Exchange Agreement.
4.04 CLASS 7 - SUBORDINATED GIN CONVENIENCE CLAIMS. Allowed
Subordinated GIN Convenience Claims will, on or promptly after the Effective
Date, be paid in full in Cash so that such Claims are deemed redeemed in
accordance with the terms of the Subordinated GIN Indenture. On the Effective
Date, the Subordinated Gas Indexed Notes and any Subsidiary Guaranty thereon
shall be canceled, and the Debtors shall each be relieved of any further
obligations thereunder.
4.05 CLASS 10 - INTERCOMPANY CLAIMS. Intercompany Claims are not
impaired.
4.06 CLASS 11 - INTERCOMPANY EQUITY INTERESTS. Intercompany Equity
Interests are not impaired.
ARTICLE V
IDENTIFICATION AND TREATMENT OF
CLASSES IMPAIRED UNDER PLAN
Article V is proposed solely by the Debtors and not by Tom Brown. The
following treatment shall be provided for the enumerated Classes of the
respective Debtors, without any substantive consolidation of the other Debtors.
Joint references to more than one Debtor herein are for convenience and ease of
reference only, and do not indicate the assumption of liabilities of any of the
Debtors by any other Debtor. The treatment and the consideration received by
the holders of Allowed Claims or Equity Interests pursuant to this Article V
shall be in full satisfaction, release and discharge of such holders' Claims
against each and all of the Debtors, any other Claims, obligations, rights,
causes of action, liabilities, or interests (including Equity Interests) which
such holder may be entitled to assert against or with respect to any of the
Debtors, whether known or unknown, foreseen or unforeseen, then existing or
thereafter arising, whether based in whole or in part upon any act, omission or
other occurrence taking place or accruing on or prior to the Effective Date.
5.01 CLASS 2 - BANK CLAIMS. In full satisfaction, discharge and
release of the Bank Claims, the Agent Bank, on behalf of the Banks, shall
receive from the Exchange Agent on or promptly after the Effective Date, Cash
equal to the Allowed Bank Claim; provided, however, that any letters of credit
issued under or in connection with the Bank Claims shall be substituted in
accordance with Section 4.26 of the Exchange Agreement; and, further provided,
however, that the Allowed Bank Claim shall include post-petition interest
computed at the contractual non-default rate
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contained in the Bank Credit Agreement but in any event shall not include (x)
interest on any outstanding letters of credit which have not been drawn upon by
the beneficiaries thereof and (y) post-petition interest computed in excess of
the contractual non-default rate contained in the Bank Credit Agreement. On
the Effective Date, but in any event contemporaneously with and not before the
payments to the Agent Bank contemplated in this Section, the Bank Claims, all
Subsidiary Guaranties thereon and all liens and security interests which secure
repayment of the Bank Claims or the Subsidiary Guarantees shall be transferred
absolutely and unconditionally to Tom Brown in accordance with the Exchange
Agreement and Section 8.05 of the Plan. Subject to the limitations of Section
5.09(b)(iii) of the Plan, the Agent Bank, on behalf of the Banks, may also
receive on or promptly after the Effective Date the additional increment of
Exchange Consideration specified therein, but distribution of this additional
consideration need not be contemporaneous with and may occur after the transfer
of liens, security interests and Subsidiary Guarantees to Tom Brown.
5.02 CLASS 3 - SENIOR SECURED NOTE CLAIMS. In full satisfaction,
discharge and release of all Claims against each of the Debtors, each holder of
Allowed Claims in Class 3 shall receive from the Exchange Agent on or promptly
after the Effective Date, the sum of $1,050.40 for each $1,000 principal amount
of Senior Secured Notes. On the Effective Date, the Senior Secured Notes, all
Subsidiary Guaranties thereon and all liens and security interests arising
thereunder which secure repayment of the Senior Secured Claims shall be
transferred absolutely and unconditionally to Tom Brown in accordance with the
Exchange Agreement and Section 8.05 of the Plan. Subject to the limitations of
Section 5.09(b) of the Plan, Class 3 may also receive on or promptly after the
Effective Date the additional increment of Exchange Consideration specified
therein.
5.03 CLASS 5 - SENIOR GIN CLAIMS. In full satisfaction, discharge
and release of all Claims against each of the Debtors, each holder of an
Allowed Senior GIN Claim shall receive from the Exchange Agent on or promptly
after the Effective Date (i) in the event that Class 5 accepts the Plan, its
Pro Rata Share of 83% of the Exchange Common Stock, or (ii) in the event that
Class 5 rejects the Plan, its Pro Rata Share of 78.85% of the Exchange Common
Stock. No distributions of Exchange Common Stock will be made to Tom Brown on
account of its Class 5 Claims, and, after making the above calculation of the
allocation of Exchange Common Stock contemplated by this Section 5.03, the
amount of Exchange Common Stock and Aggregate Common Share Value will be
reduced by such amounts otherwise allocable or distributable to Tom Brown's
Class 5 Claims. On the Effective Date, the Senior Gas Indexed Notes and all
Subsidiary Guaranties thereon shall be transferred absolutely and
unconditionally to Tom Brown in accordance with the Exchange Agreement and
Section 8.05 of the Plan. Subject to the limitations of Section 5.09(b)(i)
and (ii) of the Plan, Class 5 may also receive on or promptly after the
Effective Date the additional increment of Exchange Consideration specified
therein.
5.04 CLASS 8 - INDEMNITY CLAIMS. Indemnity Claims shall receive no
distributions under the Plan and shall be discharged against each of the
Debtors, except that, pursuant to Section 4.15 of the Exchange Agreement, Tom
Brown shall use its reasonable efforts to obtain and maintain or cause the
Reorganized Debtors to obtain and maintain in effect the New D&O Insurance.
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5.05 CLASS 9 - SUBORDINATED DEBENTURE CLAIMS. In full
satisfaction, discharge and release of all Claims against each of the Debtors,
each holder of an Allowed Subordinated Debenture Claim shall receive (i) in the
event that Classes 5 and 9 accept the Plan, from the Exchange Agent, on or
promptly after the Effective Date, its Pro Rata Share of 83.25% of the
Remaining Exchange Common Stock or (ii) in the event that either of Classes 5
or 9 rejects the Plan, no distributions. On the Effective Date, all outstanding
Subordinated Debentures and Subsidiary Guaranties thereof shall be transferred
absolutely and unconditionally to Tom Brown in accordance with the Exchange
Agreement and Section 8.05 of the Plan. Subject to the limitations of Section
5.09(b)(i) of the Plan, Class 9 may also receive on or promptly after the
Effective Date the additional increment of Exchange Consideration specified
therein.
5.06 CLASS 12 - PRESIDIO COMMON STOCK. In full satisfaction,
discharge, release of all Presidio Common Stock, each holder of an Allowed
Equity Interest in Presidio Common Stock shall receive (i) in the event that
each of Classes 5, 9 and 12 accepts the Plan, from the Exchange Agent, on or
promptly after the Effective Date, its Pro Rata Share of (x) 16.75% of the
Remaining Exchange Common Stock and (y) the Presidio Common Stock Cash
Consideration or (ii) if any of Classes 5, 9 or 12 rejects the Plan, no
distributions. On the Effective Date, all certificates evidencing Presidio
Common Stock shall be transferred absolutely and unconditionally to Tom Brown
in accordance with the Exchange Agreement and Section 8.05 of the Plan.
5.07 CLASS 13 -- PRESIDIO STOCK OPTIONS. Holders of Presidio Stock
Options shall receive and retain nothing under the Plan, and are deemed to
reject the Plan. From and after entry of the Confirmation Order, holders of
Presidio Stock Options may not exercise such Presidio Stock Options in any
manner, and all instruments evidencing such Presidio Stock Options shall, upon
the Effective Date, be canceled and thereafter deemed null and void.
5.08 CLASS 14 -- PRESIDIO WARRANTS. Holders of Presidio Warrants
shall receive and retain nothing under the Plan, and are deemed to reject the
Plan. From and after entry of the Confirmation Order, holders of Presidio
Warrants may not exercise such Presidio Warrants in any manner, and all
instruments evidencing such Presidio Warrants shall, upon the Effective Date,
be canceled and thereafter deemed null and void.
5.09 REALLOCATION OF AND REDUCTION IN AGGREGATE COMMON SHARE VALUE
AND NUMBER OF SHARES OF EXCHANGE COMMON STOCK ISSUED. (a) If: (i) any of
Class 5, Class 9, or Class 12 rejects the Plan, then Class 12 shall receive no
distributions under the Plan; (ii) either Class 5 or Class 9 rejects the Plan,
then Class 9 shall receive no distributions under the Plan; and, (iii) Class 5
rejects the Plan, then Class 5 shall receive the distribution provided for in
Clause (ii) of Section 5.03 of the Plan.
(b) If (i) Class 12 rejects the Plan but the Plan is accepted by
Classes 5 and 9, then the Exchange Consideration that otherwise would have been
distributed to Class 12 had it accepted the Plan shall be reallocated to
Classes 3, 5, and 9 ratably, according to the ratio of the Exchange
Consideration which would otherwise have been distributed to each of Classes 3,
5 and 9 compared
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to the total amount of the Exchange Consideration which would otherwise have
been distributed to Classes 3, 5, and 9, and distributed Pro Rata as additional
Exchange Consideration within each of Classes 3, 5, and 9; (ii) Class 9 rejects
the Plan but the Plan is accepted by Class 5 (and without regard to whether
Class 12 votes to accept or reject the Plan), then the Exchange Consideration
that otherwise would have been distributed to Classes 9 and 12 had each such
Class accepted the Plan shall be reallocated to Classes 3 and 5 ratably,
according to the ratio of the Exchange Consideration which would otherwise have
been distributed to each of Classes 3 and 5 compared to the total amount of the
Exchange Consideration which would otherwise have been distributed to Classes 3
and 5, and distributed Pro Rata as additional Exchange Consideration within
each of Classes 3 and 5; and (iii) Class 5 rejects the Plan (and without regard
to whether Classes 9 or 12 vote to accept or reject the Plan), then the
Exchange Consideration that otherwise would have been distributable to Classes
5 (as if Clause (i) of Section 5.03 of the Plan were applicable and less the
Exchange Consideration actually distributable to Class 5 by operation of Clause
(ii) of Section 5.03 of the Plan), 9, and 12 had each such Class accepted the
Plan shall be reallocated to and distributed as additional Exchange
Consideration in the following order of priority:
FIRST, Pro Rata within Class 3 unless and until each Allowed Claim in
Class 3 is paid in full with interest in accordance with the terms of
the Senior Secured Notes without reference to any limitation on
payment otherwise applicable pursuant to Section 5.02 of the Plan;
SECOND, Pro Rata within Class 2 until each Allowed Claim in Class 2 is
paid in full with interest in accordance with the terms of the Bank
Credit Agreement and without reference to any limitation on payment
otherwise applicable pursuant to Section 5.01 of the Plan; and
THIRD, Pro Rata within Class 5 until each Allowed Claim in Class 5 is
paid in full with interest in accordance with the terms of the Senior
Gas Indexed Notes without reference to any limitation on payment
otherwise applicable pursuant to Section 5.03 of the Plan.
ARTICLE VI
ACCEPTANCE OR REJECTION OF PLAN
6.01 VOTING CLASSES. Each holder of an Allowed Claim in Classes 2,
3, 5, 8 and 9 or an Allowed Equity Interest in Class 12, respectively, shall be
entitled to vote to accept or reject the Plan as to all Debtors.
6.02 DEEMED ACCEPTANCE OF PLAN. Classes 1, 4, 6, 7, 10 and 11
respectively, are unimpaired under the Plan and, therefore are also
conclusively presumed to accept the Plan as to all Debtors.
6.03 DEEMED REJECTION OF PLAN. Classes 13 and 14 shall receive and
retain nothing under the Plan and, accordingly, are deemed to reject the Plan.
Confirmation of the Plan as to such Classes shall be pursuant to subsection
1129(b)(2)(C)(ii) of the Bankruptcy Code. In the event that Classes
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9 or 12 receive and retain no distributions by virtue of a rejection of the
Plan by Classes 5, 9, or 12, then Classes 9 or 12, respectively, will also be
deemed to reject the Plan.
6.04 NONCONSENSUAL CONFIRMATION. The Debtors and Tom Brown reserve
the right to request that the Bankruptcy Court confirm the Plan in accordance
with subsection 1129(b) of the Bankruptcy Code as to any impaired Class
notwithstanding the actual or deemed rejection by such impaired classes, in
addition to Classes 13 and 14. In the event that Classes 9 or 12 receive and
retain no distributions by virtue of a rejection of the Plan by Classes 5, 9,
or 12, or if Class 5 receives a reduced distribution by virtue of a rejection
of the Plan by Class 5, the Debtors and Tom Brown also reserve the right to
request confirmation of the Plan in accordance with subsection 1129(b) of the
Bankruptcy Code as to Classes, 5, 9, or 12, respectively, and as appropriate.
6.05 ONE VOTE PER HOLDER. If a holder of a Claim holds more than
one Claim in any one class, all Claims of such holder in such class shall be
aggregated and deemed to be one Claim for purposes of determining the number of
Claims and claimants voting for or against the Plan.
ARTICLE VII
PROCEDURES FOR DISTRIBUTIONS AND
TREATMENT OF DISPUTED CLAIMS
7.01 EXCHANGE CONSIDERATION AND THE EXCHANGE FUND. (a) PAYMENT ON
CLOSING. At the Closing, Tom Brown shall pay or issue (in accordance with
Section 2.4 of the Exchange Agreement) the Exchange Consideration.
(b) DEPOSIT OF EXCHANGE CONSIDERATION. At the Closing,
Tom Brown shall deposit with the Exchange Agent, the Exchange Consideration,
including certificates representing the Exchange Common Stock. The Cash
Consideration shall be tendered and paid to the Exchange Agent in immediately
available funds. The Exchange Agent shall hold and distribute the Exchange
Consideration in accordance with the Plan.
(c) DELIVERY TO REORGANIZED PRESIDIO. Any portion of the
Exchange Consideration held by the Exchange Agent that is not distributed
pursuant to the Plan within ninety (90) days after the Closing Date shall, upon
Reorganized Presidio's request, be delivered to Reorganized Presidio.
Thereafter, a Distributee shall look only to the Reorganized Presidio for
distribution of that portion and amount of the Exchange Consideration
(including any dividends or distributions made in respect of Exchange Common
Stock but excluding interest on such amount) that such Distributee is entitled
to receive pursuant to the Plan.
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7.02 PROCEDURES FOR THE EXCHANGE AND SURRENDER OF INSTRUMENTS.
(a) DEBT INSTRUMENTS. No distribution shall be made to
or on behalf of a holder of a Claim in Classes 2, 3, 5, 7, or 9 under the Plan
unless and until such holder, in accordance with written instructions to such
holder from Presidio, shall have surrendered to the Exchange Agent, as may be
applicable, the promissory notes and any other instruments representing such
holder's Allowed Bank Claims in the case of Class 2 Claims, all certificates
and any other instruments representing such holder's Allowed Senior Secured
Note Claims in the case of Class 3 Claims, all certificates and any other
instruments representing such holder's Allowed Senior GIN Claims in the case of
Class 5 Claims, all certificates and other instruments representing such
holder's Allowed Subordinated GIN Convenience Claims in the case of Class 7
Claims, and all certificates and other instruments representing such holder's
Allowed Subordinated Debenture Claims in the case of Class 9 Claims;
(b) PRESIDIO COMMON STOCK. Distributions, if any, to be made to
or on behalf of a holder of a Class 12 Equity Interest under the Plan shall not
be made unless and until such holder, in accordance with written instructions
to such holder from Presidio, shall have surrendered to the Exchange Agent all
certificates and other instruments representing its Presidio Common Stock
certificate;
(c) LOST OR STOLEN INSTRUMENTS. Any holder of a Claim or Equity
Interest in Classes 2, 3, 5, 7, 9 or 12 whose instruments or certificates
evidencing such Claims or Equity Interests have been lost, stolen, mutilated,
or destroyed shall, in lieu of surrendering such instruments, deliver to the
Exchange Agent (i) evidence satisfactory to Presidio and the Exchange Agent of
the loss, theft, mutilation, or destruction of such instruments or certificates
and (ii) such security or indemnity as may be reasonably required by Presidio
and the Exchange Agent to hold Presidio and the Exchange Agent harmless with
respect thereto; and,
(d) LIMITATION PERIOD FOR THE SURRENDER OF INSTRUMENTS. Any
holder of a Claim or Equity Interest in Classes 2, 3, 5, 7, 9 or 12 that has
not satisfied the applicable requirements of this Section 7.02 of the Plan
within two (2) years after the Effective Date shall receive no distribution on
account of such Claims or Equity Interests, and shall be forever barred from
asserting such Claim or Equity Interest. To the extent permitted by applicable
law, any Exchange Consideration which has not been distributed from and after
the second anniversary of the Effective Date (other than Exchange Consideration
reserved in connection with disputed Claims or Equity Interests) shall become
the property of Reorganized Presidio, free and clear of any Claims or Equity
Interests.
7.03 CASH DISTRIBUTIONS UNDER PLAN.
(a) IN GENERAL. Any cash distributions to Classes 2, 3, 7, and 12
provided for herein, or to Classes 5 or 9 if and to the extent provided in
Section 5.09(b), if applicable, shall be made by the Exchange Agent from the
Exchange Consideration. All cash distributions to other Classes shall
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be made by the respective Reorganized Debtors obligated thereon from their
respective cash balances and operations; provided, however, that the Debtors
and the Reorganized Debtors will be entitled to transfer funds between and
among themselves as they determine to be necessary or appropriate to enable
each Reorganized Debtor to satisfy its obligations under the Plan.
(b) TIMING. Except as otherwise provided (and subject to the
provisions herein relating to the surrender and exchange of instruments), the
Exchange Agent or the respective Debtors, as the case may be, shall make all
distributions of cash and property pursuant to the Plan on or within fifteen
(15) Business Days (x) after the Effective Date or (y) in the case of Disputed
Claims or Disputed Equity Interests, after a Claim or Equity Interest becomes
an Allowed Claim or Allowed Equity Interest.
(c) INVESTMENT IN CASH. Cash held by the Exchange Agent or
otherwise held by the Debtors for distribution hereunder shall be invested by
the Exchange Agent in United States Treasury Bills, interest-bearing
certificates of deposit, interest-bearing savings accounts and investments
permitted by Section 345 of the Bankruptcy Code.
(d) MANNER OF PAYMENT UNDER PLAN. Any payment of Cash made by the
Exchange Agent or Debtors, respectively, pursuant to the Plan may be made
either by check drawn on a domestic bank or by wire transfer from a domestic
bank, at the option of the Exchange Agent or Debtors, respectively.
(e) FRACTIONAL DOLLARS/SHARES. No fractional shares of the
Exchange Common Stock shall be issued to a Distributee. The Exchange Agent
shall, on behalf of all Distributees otherwise entitled to receive fractional
shares of Exchange Common Stock, promptly following the Closing, aggregate such
fractional shares of Exchange Common Stock and sell the resulting whole shares
of Exchange Common Stock for the account of such Distributees, and such
Distributees shall be entitled to receive their allocable portion of the net
proceeds of the sale thereof.
(f) DE MINIMIS DISTRIBUTIONS. Except for distributions pursuant
to Sections 5.06 or 7.03(e) of the Plan, no cash payment of less than $5.00
shall be made by the Exchange Agent or the Debtors, respectively, to any holder
of a Claim unless a request therefor is made in writing to the party, including
the Exchange Agent or Debtors, respectively, responsible hereunder for making
such payment.
7.04 RESERVE OF CASH FOR DISPUTED ADMINISTRATIVE EXPENSE CLAIMS,
PRIORITY TAX CLAIMS, PRIORITY CLAIMS, MISCELLANEOUS SECURED CLAIMS, AND GENERAL
UNSECURED CLAIMS. In the sole discretion of each Reorganized Debtor, such
Reorganized Debtor may segregate from its available cash an amount of cash
equal to such Debtor's estimate of its disputed Administrative Expense Claims,
Priority Tax Claims, Priority Claims, Miscellaneous Secured Claims, and General
Unsecured Claims allegedly owed by such Debtor. Cash, if any, so segregated
shall be held in interest bearing accounts for the benefit of holders of such
Disputed Claims pending determination of their entitlement thereto. Such
Reorganized Debtor shall have the right to seek an order of the
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Bankruptcy Court, after notice and a hearing, estimating or limiting the amount
of any Disputed Claim for purposes of such discretionary reserves.
7.05 DISTRIBUTION OF SEGREGATED CASH FUND. Cash segregated
pursuant to Section 7.04 hereof shall be distributed by the respective
Reorganized Debtor to the holder of a disputed Administrative Expense Claim,
Priority Tax Claim, Priority Claim, Miscellaneous Secured Claim or General
Unsecured Claim, respectively, when, and to the extent that, (i) such Disputed
Claim becomes an Allowed Claim pursuant to a Final Order or (ii) the respective
Debtor otherwise compromises and settles any such Disputed Claim subject to the
approval of the Bankruptcy Court. Such distribution shall be made to the
holder of such Claim in accordance with the terms of the Plan to the extent
such Disputed Claim becomes an Allowed Claim. To the extent that such a
Disputed Claim ultimately becomes an Allowed Claim in an amount less than the
amount of the Disputed Claim, the resulting surplus shall be released to the
respective Debtor for its unrestricted use.
7.06 ACCRUED DISTRIBUTIONS ON ACCOUNT OF ALLOWED CLAIMS AND ALLOWED
EQUITY INTERESTS. The holder of an Allowed Claim or Allowed Equity Interest in
Classes 5, 9 and 12, and in Classes 2 and 3 if and to the extent provided in
Section 5.09(b), if applicable, otherwise entitled to a distribution under the
Plan shall be entitled to receive dividends and other distributions with
respect to the Exchange Common Stock to be distributed to such Distributee
pursuant to the Plan upon such holder's compliance with the requirements of
Section 7.02(a) or (b) of the Plan, as applicable.
7.07 VOTING OF EXCHANGE COMMON STOCK BY HOLDERS OF ALLOWED CLAIMS
AND ALLOWED EQUITY INTERESTS. Prior to full compliance by a holder of an
Allowed Claim or Allowed Equity Interest in Classes 5, 9 or 12, or in Classes 2
and 3 if and to the extent provided in Section 5.09(b), if applicable, with the
exchange and surrender requirements set forth in Section 7.02(a) or (b) of the
Plan, as applicable, and the actual distribution by the Exchange Agent to such
holder of any shares of Exchange Common Stock to such holder in accordance with
the Plan, such holder shall have no right to vote such shares of Exchange
Common Stock or to direct or request the Exchange Agent, Reorganized Presidio,
or any other person to vote or to refrain from voting such shares.
7.08 RESOLUTION OF DISPUTED CLAIMS. The Debtors, Tom Brown, or
Reorganized Presidio, as the case may be, shall determine whether any Claim is
disputed. After such determination, the respective Debtor, Tom Brown, or
Reorganized Presidio shall file an objection to each such Disputed Claim and
shall serve a copy of the objection on the holder thereof as soon as
practicable. Unless otherwise provided by the Plan or ordered by the
Bankruptcy Court, all objections by any Debtor, Tom Brown, Reorganized
Presidio, or any other party in interest to any Claims must be filed and served
upon the holders of such Claims (and upon counsel for the Debtors and Tom Brown
if filed by another party in interest) on or before 180 days after the
Effective Date.
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ARTICLE VIII
MEANS FOR EXECUTION OF PLAN
8.01 GENERAL. Subject to the provisions of the Plan and the
Exchange Agreement, on the Effective Date, Tom Brown shall be the holder of one
hundred percent (100%) of the then-issued and outstanding stock of Reorganized
Presidio. The Bank Claims and the Debt Obligations shall be discharged.
8.02 CORPORATE ACTION. (a) Upon entry of the Confirmation Order,
all actions reasonably required in and by virtue of the Exchange Agreement and
the Plan, including, without limitation, the items expressly enumerated in
either the Exchange Agreement or in the Plan, shall be authorized and approved
in all respects and will occur and be effective without further action,
authorization, or approval by the Debtors, any of the Debtors' shareholders,
officers, or directors, or, except as enumerated herein or in the Bankruptcy
Code, by the Bankruptcy Court.
(b) On or before the Effective Date, or as soon thereafter as is
practicable, Presidio shall file with the Secretary of State of the State of
Delaware in accordance with section 303 of the DGCL the Proposed Amendment that
shall, among other things, prohibit each Debtor from creating, designating,
authorizing or causing to be issued any class or series of nonvoting stock. On
the Effective Date, the Proposed Amendments to the articles or certificate of
incorporation of each Debtor shall automatically become effective, and all
other matters provided under the Plan involving the corporate structure of any
of the Debtors or Reorganized Presidio, or corporate action by any of these,
shall be deemed to have occurred and shall be in effect from and after the
Effective Date pursuant to section 303 of the DGCL without any requirement of
further action by the stockholders, the directors of Reorganized Presidio, or
Reorganized Presidio.
(c) On and after the Confirmation Date, the appropriate officers
of each of the Debtors are authorized and directed to execute and deliver, in
the name and on behalf of each Debtor, all agreements, documents and
instruments contemplated by the Plan and the Disclosure Statement.
(d) The Exchange Agreement; the adoption of new or amended and
restated certificates or articles of incorporation and by-laws or regulations
or similar constituent documents for the Reorganized Debtors; the initial
selection of directors and officers for the Reorganized Debtors; the
distribution of cash pursuant to the Exchange Agreement; the issuance and
distribution of Exchange Common Stock pursuant to the Exchange Agreement; the
grant of mortgages, deeds of trust, liens and other security interests; the
adoption, execution, delivery and implementation of all contracts, leases,
instruments, releases, indentures and other agreements or documents related to
any of the foregoing; the adoption, execution and implementation of employment,
retirement and indemnification agreements, incentive compensation programs,
retirement income plans, welfare benefit plans and other employee plans and
related agreements; and the other matters provided for under the Plan or the
Exchange Agreement involving the corporate structure of any Debtor or
Reorganized Debtor or corporate action to be taken by or required of any Debtor
or Reorganized
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Debtor will occur and be effective as provided herein and/or in the Exchange
Agreement, and will be authorized and approved in all respects and for all
purposes without any requirement of further action by stockholders or directors
of any of the Debtors or the Reorganized Debtors.
(e) In the event that, notwithstanding Article II of the Exchange
Agreement and Section 8.05 of the Plan, the Presidio Common Stock held by Class
12 is canceled (rather than transferred to Tom Brown as contemplated by Section
8.05 of the Plan), upon the Effective Date, 1000 shares of Presidio Common
Stock will then be transferred to Tom Brown upon the Effective Date and upon
Tom Brown paying $100 to Presidio in cash.
8.03 STATUS OF TOM BROWN, INC. Tom Brown shall be deemed an
affiliate or successor to the Debtors for the purposes of subsections 1125(e)
and 1145(a) of the Bankruptcy Code incident to the issuance and distribution of
the Exchange Common Stock and any shares of Tom Brown Common Stock issued
pursuant to Section 4.22 of the Exchange Agreement, and not to be an
underwriter thereof for any purpose. However, Tom Brown shall have no
obligation to the Debtors except as specified in the Exchange Agreement and
does not otherwise assume any liabilities of any of the Debtors. No holder of
any Claim or Equity Interest in or against any of the Debtors (other than
Presidio and Tom Brown or as otherwise provided in Sections 4.15, 4.22, 4.24,
4.25, and 10.06 of the Exchange Agreement) shall have any standing to enforce
the Exchange Agreement or to seek any remedy thereunder whatsoever.
8.04 IMPLEMENTATION OF THE EXCHANGE AGREEMENT. From and after the
Confirmation Date, the Debtors shall take all actions contemplated in the
Exchange Agreement in anticipation of and in preparation for Closing and shall
take all actions as and when contemplated in the Exchange Agreement to
implement the Exchange Agreement.
8.05 ASSIGNMENT TO TOM BROWN OF BANK CLAIMS, GUARANTIES OF THE BANK
CLAIMS, SENIOR SECURED NOTES, SENIOR GAS INDEXED NOTES, SUBORDINATED GAS
INDEXED NOTES, SUBORDINATED DEBENTURES, SUBSIDIARY GUARANTIES THEREOF, PRESIDIO
COMMON STOCK, PRESIDIO STOCK OPTIONS, AND PRESIDIO WARRANTS, AND CANCELLATION
OF CERTAIN OTHER AGREEMENTS. On the Effective Date, except to the extent
already owned by Tom Brown or canceled pursuant to the Plan of Reorganization,
all of (a) the Bank Claims, (b) the Debt Obligations and (c) the Presidio
Common Stock shall be transferred absolutely and unconditionally to Tom Brown
in exchange for that portion and amount of the Exchange Consideration (if any)
allocated to the existing holders of such Claims and Equity Interests as are
Allowed Claims or Allowed Equity Interests, pursuant to the Plan. Upon
delivery of the Exchange Consideration to the Exchange Agent as provided in
Section 2.4 of the Exchange Agreement, Tom Brown shall be deemed the sole
equity holder, and the sole holder of the Bank Claims (subject to the
provisions of Section 5.01 of the Plan requiring contemporaneous payment to the
Agent Bank) and Debt Obligations, and Presidio's obligations to the holders of
the (a) Bank Claims, (b) the Debt Obligations and (c) the Presidio Common Stock
under the Plan shall be deemed to be satisfied in full and discharged. As of
the Closing Date, the Presidio Stock Options and Presidio Warrants shall be
canceled pursuant to the Plan. Tom Brown, as the sole stockholder of Presidio,
shall, immediately following the Exchange described in Section
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2.1 of the Exchange Agreement, contribute to Presidio all of the Bank Claims
and Debt Obligations. No additional shares of Presidio capital stock shall be
issued to Tom Brown in exchange therefor. The Bank Claims and Debt Obligations
shall thereupon be canceled, terminated, and discharged.
8.06 EXECUTORY CONTRACTS AND UNEXPIRED LEASES GENERALLY.
(a) On the Effective Date, to the extent permitted by
applicable law and subject to Section 8.07 hereof, all executory contracts and
unexpired leases of the respective Debtors will be assumed in accordance with
the provisions of Section 365 of the Bankruptcy Code concurrently with and by
virtue of entry of the Confirmation Order (or at the option of Tom Brown, by
separate order(s) at such time) other than (i) any and all executory contracts
and unexpired leases which are the subject of separate motions filed pursuant
to Section 365 of the Bankruptcy Code by any of the Debtors prior to the
Confirmation Date, and (ii) any and all executory contracts and unexpired
leases rejected prior to entry of the Confirmation Order.
(b) All proofs of claim evidencing any Claims arising out
of the rejection of contracts or leases at or concurrently with entry of the
Confirmation Order under subsection (a) of this Section 8.06 must be filed with
the Bankruptcy Court within thirty (30) days after the Confirmation Date or be
forever barred. Any Claims arising out of a contract or lease rejected after
the Confirmation Date shall be filed within thirty (30) days of entry of the
order permitting such rejection unless a different bar date is established in
such order.
8.07 DESIGNATED CONTRACTS. On or before the Effective Date, the
Designated Contracts shall be assumed by the applicable Debtors pursuant to
Section 365 of the Bankruptcy Code in accordance with the provisions of the
Designated Contract Order.
8.08 EXEMPTION FROM CERTAIN TRANSFER TAXES. The designated
officers of each Debtor or Reorganized Debtor or such other persons as the
Bankruptcy Court may designate will be authorized to execute, deliver, file or
record such contracts, instruments, releases, indentures and other agreements
or documents and take such actions as may be necessary or appropriate to
effectuate and implement the provisions of the Plan. The Secretary or any
Assistant Secretary of each Debtor or Reorganized Debtor or such other persons
as the Bankruptcy Court may designate will be authorized, pursuant to
subsection 1146(c) of the Bankruptcy Code, to certify or attest to any of the
foregoing actions. Neither (a) the issuance, transfer or exchange of the
Exchange Common Stock; (b) the creation of any mortgage, deed of trust or other
security interest; (c) the making or assignment of any lease or sublease; nor
(d) the making or delivery of any deed or other instrument of transfer under,
in furtherance of, or in connection with, the Plan, will be subject to any
stamp tax, real estate transfer tax or similar tax.
8.09 RESIGNATION OF DEBTORS' DIRECTORS AND OFFICERS AND ELECTION OF
NEW DIRECTORS AND OFFICERS. The directors and officers of each of the Debtors
immediately prior to the Effective Date shall resign as of the Closing Date,
and shall thereupon be replaced by designees of Tom Brown who shall be
identified at or prior to the conclusion of the Confirmation Hearing.
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8.10 EFFECT OF TERMINATION OF THE EXCHANGE AGREEMENT PRIOR TO
CLOSING. If the Exchange Agreement is terminated after the Confirmation Date
but prior to Closing, (a) any cancellation of instruments otherwise effected by
any provision of this Plan shall be rendered null and void, (b) any instruments
surrendered by or on behalf of the previous holders thereof pursuant to any
provision of this Plan shall be returned to the party who surrendered same, and
the rights and privileges of the holders thereof shall be reinstated subject to
the Chapter 11 Cases of the Debtors, (c) the automatic stay shall be
reinstated, (d) the Confirmation Order shall, upon request of the Debtors, be
vacated so that another plan of reorganization may be subsequently confirmed
and, in the event of such termination and vacatur, (i) each of the Debtors
shall continue in their Chapter 11 Cases as debtors-in-possession as if the
Confirmation Order had not been entered, (ii) any unexpired lease or executory
contract assumed or rejected solely by virtue of entry of the Confirmation
Order (and not assumed or rejected by a separate order or by operation of law)
shall be treated as if it had neither been assumed nor rejected and shall
remain subject to rejection, assumption, and assignment, (iii) the Debtors'
corporate structure shall be restored as it existed immediately prior to entry
of the Confirmation Order, and (iv) all rights, privileges, powers, and duties
incident to the Chapter 11 Cases shall be restored to the Debtors as if the
Plan had not been confirmed.
8.11 SUBORDINATION. The provisions of the Plan, including, without
limitation, the distribution provisions hereof, take into account the relative
priority of the Claims and Equity Interests in each class in connection with
any contractual subordination provisions relating thereto, together with other
factors such as concessions or tentative concessions by one or more of the
classes entitled to assert subordination rights, the costs of an extended
bankruptcy proceeding, and the costs of a contested confirmation proceeding.
Accordingly, except as to Classes 9 and 12 if Classes 5, 9, or 12 shall have
rejected the Plan (so that receipt of a distribution by Classes 9 or 12 is
eliminated), the distributions to the holders of any Claim or Equity Interest
in Presidio Common Stock shall not be subject to levy, garnishment, attachment
or other legal process by any holder of any other Claim or Equity Interest or
class of Claims or Equity Interests by reason of claimed contractual
subordination rights, and on the Effective Date, all holders of impaired Claims
and impaired Equity Interests will be deemed to have waived any and all
contractual subordination rights which they may have with respect to such
distributions. In such case, the Confirmation Order shall permanently enjoin,
as of the Effective Date, all holders of impaired Claims and impaired Equity
Interests from enforcing or attempting to enforce any such rights with respect
to the distributions under the Plan to the holders of any other Claim or Equity
Interest.
8.12 RETIREE AND OTHER BENEFITS. Pursuant to subsection
1129(a)(13) of the Bankruptcy Code, each Debtor will continue to pay retiree
benefits (as that term is defined in Section 1114 of the Bankruptcy Code) on
which it is obligated at the level established pursuant to subsection (e)(1)(B)
or (g) of Section 1114, at any time prior to confirmation of the Plan, for the
duration of the period such Debtor, as the case may be, has obligated itself to
provide such benefits. All obligations of any Debtor with respect to the
Existing Plans shall be performed in accordance with the Exchange Agreement and
to the extent not required thereunder to be so performed at the Closing all
such obligations shall be treated as Miscellaneous Unsecured Claims.
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8.13 NO SUBSTANTIVE CONSOLIDATION. The Debtors are not
substantively consolidated in or by virtue of the Plan. Except as otherwise
expressly provided herein, no Debtor is assuming the pre-Effective Date
obligations of any other Debtor. Joint references to or groupings of classes
of more than one Debtor in any article, section, subsection, or paragraph of
the Plan are for convenience and ease of reference only, and do not indicate
the assumption of liabilities of any of the Debtors by any of the other
Debtors.
ARTICLE VIV
CONDITIONS PRECEDENT
9.01 CONDITIONS PRECEDENT TO ENTRY OF THE CONFIRMATION ORDER. The
Confirmation Order shall not be entered by the Bankruptcy Court:
(a) unless the Bankruptcy Court shall have entered the
Administrative Bar Date Order in accordance with Section 3.05 of the Plan; or,
(b) if Tom Brown has previously exercised its right to
terminate the Exchange Agreement pursuant to Section 9.1(b) or (c) of the
Exchange Agreement.
9.02 CONDITIONS PRECEDENT TO THE EFFECTIVE DATE. The Plan shall
not become effective and the Closing Date shall not occur unless all conditions
precedent to the obligations of the Debtors and Tom Brown pursuant to Article
VIII (Conditions to Closing) of the Exchange Agreement have been satisfied or
duly waived in accordance with the provisions of the Exchange Agreement.
ARTICLE X
EFFECT OF PLAN CONFIRMATION,
DISCHARGE INJUNCTION AND
SUBORDINATION RIGHTS
10.01 DISCHARGE OF THE DEBTORS. Except as otherwise expressly
provided in the Plan, confirmation of the Plan shall (i) bind all holders of
Claims and Equity Interests, whether or not they accept the Plan, and (ii)
discharge each Debtor from any Claim and any "debt" (as that term is defined in
subsection 101(12) of the Bankruptcy Code) incurred before the Confirmation
Date, together with any obligation under any Subsidiary Guaranty, and each
Debtor's liability in respect of each of the foregoing shall be extinguished
completely, including, without limitation, any liability of a kind which is
disallowed pursuant to the Bankruptcy Code, including subsections 502(b)(6),
502(g) and 502(e) thereof. In addition, except as otherwise provided in the
Plan, confirmation of the Plan pursuant to the Confirmation Order shall act as
a discharge, effective as of the Confirmation Date, as to each holder of a
Claim or Equity Interest in respect of any direct or indirect right or Claim or
Equity Interest such holder had or may have had against or in any of the
Debtors that arose at any time prior to the Effective Date.
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10.02 REVESTING. On the Confirmation Date, each of the Debtors will
be revested with all of the property of its respective Estate, free and clear
of all claims, liens, encumbrances, charges and other interests of holders of
Claims and Equity Interests except as otherwise provided in the Plan, and may
thereupon operate its business free of any restrictions imposed by the
Bankruptcy Code or by the Bankruptcy Court.
10.03 POST-CONFIRMATION RELEASES AND INJUNCTIONS GENERALLY. Holders
of Claims and Equity Interests will be deemed to forever release, waive and
discharge, and to be enjoined from asserting, to the fullest extent permitted
under applicable law, all claims (as defined in subsection 101(5) of the
Bankruptcy Code), demands, debts, rights, causes of action, and liabilities in
connection with or related to the Exchange Agreement, the Chapter 11 Cases, the
Debtors, or the Plan, whether such claims are liquidated or unliquidated, fixed
or contingent, matured or unmatured, known or unknown, foreseen or unforeseen,
then existing or thereafter arising, that are based in whole or in part on any
act, omission, or other occurrence taking place on or prior to the Effective
Date and that may be asserted by or on behalf of such parties against the
Debtors, the Reorganized Debtors, Tom Brown, or their respective agents,
advisors, attorneys and representatives (including current and former
directors, officers, employees, members and professionals) acting in such
capacity.
10.04 POST-CONFIRMATION INJUNCTION WITH RESPECT TO OIL AND GAS
ASSETS. From and after the Effective Date, each and every owner or holder of a
working interest, royalty interest, overriding royalty interest, production
payment or other interest in any well or pool of wells for which any Debtor
serves or served as lessee or operator, as the case may be, and any partner,
limited partner, or joint venturer with any Debtor in any well, pool of wells,
or oil, gas or mineral estate, shall, as of the Petition Date(s) and
thereafter, and in accordance with the Designated Contract Order, be
permanently enjoined from asserting or taking any action to assert, directly or
indirectly, that (i) the occurrence of a Bankruptcy Event and (ii) the
insolvency or financial condition of any Debtor prior to the Effective Date
constitutes a basis for removal of any Debtor as operator under any Designated
Contract.
10.05 FAILURE OF COURT TO EXERCISE JURISDICTION. If the Bankruptcy
Court abstains from exercising or declines to exercise jurisdiction, or is
otherwise without jurisdiction over any matter arising out of the Chapter 11
Case(s), including the matters set forth in this Article X, this Article X
shall not prohibit or limit the exercise of jurisdiction by any other court
having competent jurisdiction with respect to such matter.
10.06 TERM OF INJUNCTIONS OR STAYS. Unless otherwise provided, all
injunctions or stays provided for in the Chapter 11 Case(s) pursuant to
sections 105 or 362 of the Bankruptcy Code or otherwise and in effect on the
Confirmation Date shall remain in full force and effect until the Closing Date.
10.07 DEEMED RELEASE OF CLAIMS BY THE DEBTORS AND BY THIRD-PARTIES
AGAINST OFFICERS AND DIRECTORS. (a) All claims for liability which the
Debtors may otherwise have been entitled to
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assert, whether in their capacities as corporations or as debtors in possession
by operation of the Bankruptcy Code, against the present directors and officers
and any former directors or officers that were directors or officers of one or
more of the Debtors on or before the Petition Date, pertaining to any
obligations, actions, or omissions which may have arisen or occurred prior to
the Effective Date, or as may arise or which may have arisen on, before, or in
connection with the Effective Date and Closing, shall be deemed released upon
the occurrence of the Effective Date, without the need for the execution of any
further agreement or release, and such release shall be binding upon any party
who may otherwise have asserted such claims derivatively.
(b) On the Effective Date, each holder of a Claim or Equity
Interest shall be deemed to release any claim for liability which such holder
may otherwise have been entitled to assert against the Debtors' present and
former directors or officers that were directors or officers of one or more of
the Debtors on or before the Petition Date, pertaining to any obligations,
actions, or omissions which may have arisen or occurred prior to the Effective
Date or as may arise or which may have arisen on, before, or in connection with
the Effective Date and Closing, without the need for the execution of any
further agreement or release, unless such holder shall have affirmatively
opted, in the appropriate space provided in the official ballot approved by the
Bankruptcy Court for accepting or rejecting the Plan, not to grant such release
(and thereby elects instead to retain its rights against such non-debtor
directors and officers). All brokers and intermediaries who receive ballots
from any holder of public debt and who submit summary ballots based thereon
shall be required to maintain any and all ballots wherein the holder has opted
not to grant such release for a period of three (3) years following the
Effective Date.
ARTICLE XI
RETENTION OF JURISDICTION
11.01 Notwithstanding entry of the Confirmation Order or the
Effective Date having occurred, the Bankruptcy Court will retain jurisdiction:
(a) to determine the allowed amount of Disputed Claims;
(b) to determine the allowed amount of any Miscellaneous Secured
Claims and the extent of any liens asserted in connection therewith;
(c) to determine Fee Claims and requests for payment of Claims
entitled to priority under subsection 507(a)(1) of the Bankruptcy Code,
including compensation of and reimbursement of expenses of parties entitled
thereto;
(d) to resolve controversies and disputes regarding the
interpretation and implementation of this Plan;
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(e) to enter orders in aid of this Plan, including, without
limitation, appropriate orders (which may include contempt or other sanctions)
to protect Reorganized Debtor(s);
(f) to modify this Plan or to remedy any apparent defect or
omission in this Plan;
(g) to determine any and all applications, claims, adversary
proceedings and contested matters pending on the Confirmation Date or timely
filed pursuant to the Bankruptcy Code, this Plan, or an order of the Bankruptcy
Court;
(h) to allow, disallow, estimate, liquidate or determine any Claim
or Fee Claim and to enter or enforce any order requiring the filing of any such
Claim or Fee Claim before a particular date;
(i) to determine any and all pending applications for the
assumption or rejection of executory contracts or unexpired leases, or for the
assignment of assumed executory contracts and unexpired leases, and to hear
determine and liquidate, any Claims arising therefrom;
(j) to recover all assets and property of the Debtors' Estates
pursuant to sections 542, 543, 544, 545, 547, 548, 549, 550, 551 or 553 of the
Bankruptcy Code;
(k) to enter a final decree closing the Chapter 11 Case(s); and
(l) to determine such other matters that may arise in connection
with the Chapter 11 Case (s), this Plan or the Confirmation Order.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01 SUBSTANTIAL CONSUMMATION. Substantial consummation, for
purposes of Section 1127 of the Bankruptcy Code, shall occur concurrently with
the completion of Closing.
12.02 NO LIABILITY FOR UNCLAIMED OR ESCHEATED DISTRIBUTIONS. None
of the Debtors, Tom Brown, the Exchange Agent, or any other person shall be
liable to any Distributee or holder of any other Claim or Equity Interest for
any amount properly delivered to any public official pursuant to any applicable
abandoned property, escheat, or similar law. Any amounts remaining unclaimed
for a period of two (2) years following the Closing (or such earlier date
immediately prior to the time at which such amounts would otherwise escheat to
or become property of any governmental entity) shall, to the extent permitted
by applicable law, become the property of the Reorganized Debtors, free and
clear of any Claims or Equity Interests of any such Distributee or of any
holder of any other Claim or Equity Interest or their successors, assigns, or
personal representatives previously entitled thereto.
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12.03 MODIFICATION OF PLAN. Subject to the limitations set forth in
the Bankruptcy Code and the Exchange Agreement, the Plan may be amended or
modified (a) upon the mutual consent of Tom Brown and the Debtors or, (b) in
the event the Exchange Agreement is terminated in accordance with its terms, by
the Debtors.
12.04 WITHDRAWAL OF PLAN. In the event the Exchange Agreement is
terminated in accordance with its terms, the Debtors reserve the right, at any
time prior to entry of the Confirmation Order, to revoke or withdraw the Plan.
12.05 NOTICES. From and after the Effective Date, all notices which
are required or may be given pursuant to the Plan or the Exchange Agreement
shall be sufficient in all respects if given in writing and delivered
personally, by telecopy or by registered or certified mail, postage prepaid, as
follows:
IF TO PRESIDIO OR ANY OTHER DEBTOR:
c/o Presidio Exploration, Inc.
5613 DTC Parkway, Suite 750
P.O. Box 6525
Englewood, Colorado 80155-6525
Attention: President
Telephone: (303) 773-0100
Fax: (303) 850-1111
IF TO TOM BROWN:
Tom Brown, Inc.
508 West Wall, Suite 500
Midland, Texas 79702
Attention: Donald L. Evans
Telephone: (915) 682-9715
Fax: (915) 683-9327
All notices shall be deemed to have been duly given at the time of receipt by
the party to which such notice is addressed.
12.06 COMMITTEES. The appointment of all statutory committees shall
terminate on the Effective Date except as provided in the Confirmation Order.
12.07 CONSTRUCTION. In the event of any conflict between the terms
of the Plan and the Disclosure Statement, the terms of the Plan shall control.
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12.08 WITHHOLDING AND REPORTING REQUIREMENTS. In connection with
the Plan and all instruments issued in connection herewith and distributions
hereunder, Reorganized Presidio shall comply with all withholding and reporting
requirements imposed by any federal, state, local or foreign taxing authority
and all distributions hereunder shall be subject to such withholding and
reporting requirements.
12.09 BINDING EFFECT. This Plan shall be binding upon and inure to
the benefit of each Debtor, Tom Brown, the holders of Claims, the holders of
Equity Interests, other parties enumerated herein, all other parties in
interest, and their respective successors and assigns.
12.10 GOVERNING LAW. THE EXCHANGE AGREEMENT, THOSE PROVISIONS OF
THIS PLAN WHICH ARE SUBJECT TO STATE LAW, AND THE LEGAL RELATIONS BETWEEN THE
PARTIES TO THE EXCHANGE AGREEMENT AND
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UNDER THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.
Dated: Wilmington, Delaware
August 5, 1996
PRESIDIO OIL COMPANY
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
George P. Giard, Jr.
Its: Chairman of the Board
and Chief Executive Officer
- and -
PRESIDIO EXPLORATION, INC.
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
George P. Giard, Jr.
Its: Chairman of the Board
and Chief Executive Officer
- and -
PALISADE OIL, INC.
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
George P. Giard, Jr.
Its: Chairman of the Board
and Chief Executive Officer
- and -
PRESIDIO WEST VIRGINIA, INC.
By: /s/ GEORGE P. GIARD, JR.
-----------------------------------
George P. Giard, Jr.
Its: Chairman of the Board
and Chief Executive Officer
- and -
TOM BROWN, INC.
By: /s/ DONALD L. EVANS
-----------------------------------
Donald L. Evans
Its: Chairman of the Board
and Chief Executive Officer
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